SAN FRANCISCO–Its brand may be tarnished, it’s been paying a record number of fines and it continues to operate under a rare growth cap imposed by the Fed, but none of that has hurt profits at Wells Fargo, which is reporting third-quarter earnings were up 59%.
But like many credit unions and other banks, that number is inflated significantly as a result of having reduced the allowance for loan losses it had earlier set aside for loans that never went bad as the pandemic spread during 2020.
The bank posted net income of $5.1 billion, or $1.17 a share, topping forecasts from a number of analysts.
Wells Fargo was not alone. All of the major Wall Street banks also reported robust third-quarter profits.
"The actions we're taking to improve operating effectiveness and financial returns are coming through in our results, in addition to the benefits we're experiencing from the economic recovery," said Wells Fargo CEO Charlie Scharf.
In the second quarter of 2020, Wells Fargo raised the reserves it had set aside for loan losses by $8.4 billion, which caused the bank to post its first quarterly loss since the Great Recession at the time.
‘Significant Progress’
As CUToday.info has reported, Wells Fargo has been mired in numerous scandals, beginning with a bogus account opening scheme that led to the termination of thousands of employees and hundreds of millions of dollars in fines. It has, however, also seen some good news, as a 2018 consent order with the CFPB related to its retail sales practices was allowed to expire.
"I believe we are making significant progress, and I remain confident in our ability to continue to close the remaining gaps over the next several years, though we may continue to have setbacks along the way,” said Scharf.