Wells Fargo posts flat profit as new customers stay away

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Wells Fargo posts flat profit as new customers stay away

Wells Fargo's stock fell $1.08, or 2 percent, to $52.05.

At Wells Fargo, customers have still not returned after a 2016 phony account scandal singed its reputation.

Bank employees are "more actively marketing products" to customers again in the branches, said John Shrewsberry, the company's chief financial officer. That means the bank could spend as much as $240 million this year due to its transgressions, bringing its total bill for the fake accounts as high as $425 million.

Citigroup also highlighted strong trading results, especially in interest rate-related products.

JPMorgan Chase & Co and Citigroup Inc posted higher first-quarter earnings that beat analysts' expectations on large gains in trading revenue.

"The firm's wealth and investment management business generated a 22 percent increase in income over the past 12 months on a 9 percent increase in client assets to record levels of $1.8 trillion", Sinegal said in a note this morning.

Wells Fargo is paying hundreds of millions of dollars to fix the damage from its sales scandal in which employees opened as many as 2 million fake accounts for consumers without their permission.

Wells on Thursday reported a profit of $5.46 billion, or $1 a share, about flat with a year ago.

Costs increased 6% to $13.8 billion in the March-end quarter from $13 billion from the year ago period. We remain at historic lows - going back 40 years, to when the USA had far few workers and industries - in jobless claims, with continuing claims remaining just barely above 2 million.

The bank's revenue rose almost 2.8 percent to $18.1 billion from $17.6 billion.

Total revenue fell about a percent to $22.00 billion and missed the average estimate of $22.32 billion. The bank also plans to reduce headcount in businesses such as mortgage if, as expected, business gets slower. "Someone searching for a new bank has probably moved Wells to the bottom of the list in recent months, though".

Both banks also benefited from lower reserves compared with the January-March period past year, when they set aside hundreds of millions of dollars to protect against the possibility of energy defaults due to the oil industry slump.

"Right now, the most important job of this company is rebuilding trust", said Mr Sloan said on a conference call with analysts.

The scandal-ridden bank admitted Thursday that it saw drastic declines in new applications for credit cards and checking accounts, two key products that were at the center of Wells' cross-selling controversy.

What these number disturbingly reveal, is that the average U.S. consumer cannot afford to take out mortgages at a time when rates rise by as little as 1% or so, which is where they peaked in the first quarter. Legal fees, personnel costs and lower mortgage banking revenues resulted in the bank's first-quarter net income being flat at $5.5 billion.

However, the bank's expenses for salaries and other non-interest costs rose by almost four times that amount due to higher legal costs and greater spending on compliance programmes.

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