You are here: Home » Reuters » News
Business Standard

Sales scandal costs Wells Fargo; JPMorgan and Citi please Wall St

Reuters  |  NEW YORK 

By David Henry and Dan Freed

NEW YORK (Reuters) - JPMorgan Chase and Citigroup trounced third-quarter estimates on Friday on a sharp rebound in trading revenues while Wells Fargo & Co barely beat expectations as a sales scandal engulfed the bank.

Wells Fargo is under pressure to keep its profit engine humming while dismantling the aggressive sales culture at the heart of its woes, since unlike JPMorgan and Citigroup it does not have a big trading arm.

"We're prepared for things to get worse before they get better," Chief Executive Tim Sloan, who took over as boss on Wednesday after John Stumpf, the bank's veteran leader, announced he was leaving amid a public furore over the scandal.

Revelations that Wells' branch staff had opened as many as 2 million accounts without customers' knowledge to meet internal sales targets has shattered the bank's folksy image.

Once a darling for its ability to sell multiple products to individual customers, Wells Fargo said on Friday that new account openings had dropped sharply.

New consumer checking accounts were 30 percent lower than in August, and applications for consumer credit cards fell 30 percent in September from the prior month.

Wells Fargo's staff are in a period of flux after the bank scrapped sales targets for branches last month and in a note following Sloan's presentation, Brian Kleinhanzl, an analyst at KBW, said, "Management doesn't know what the consumer bank will look like in the future."

The bank has said the scandal will minimally affect its wealth management business and was unlikely to alter its plans to return capital to shareholders.

On Friday, the state of Ohio joined a growing list of municipalities to suspend business relationships with Wells Fargo. The bank makes less than 1 percent of its revenue from working with local governments but Ohio's decision is a blow, coming days after Stumpf, a lightning rod for much of the criticism around the scandal, had departed.

Sloan must navigate federal and state investigations in coming months. The scandal has renewed left-leaning lawmakers' attacks on and bolstered their mission to introduce stricter oversight.

JPMORGAN MOMENTUM CONTINUES

While Wells Fargo's overall profit dropped for a fourth straight quarter, net income in the third quarter topped estimates, helped in part by lower-than-expected loan-loss provisions.

JPMorgan and Citi also beat expectations as bond trading roared back in the third quarter, boosted by Brexit-inspired volatility along with changing expectations for monetary policy in the United States, Europe and Japan as well as money market reforms.

got a fillip from a rise in the London interbank offered rate, which moved to a seven-year high during the quarter as U.S. money market funds scaled back holdings of short-term bank debt in advance of new U.S. regulations.

JPMorgan's chief financial officer, Marianne Lake, said the fourth quarter so far is showing positive signs.

"The momentum that I just characterized as fairly broad and fairly consistent across the (third) quarter, has somewhat continued so far," she told journalists.

JPMorgan's after-tax income dropped 7.6 percent after recording a tax expense, compared with a rare tax benefit of $2.2 billion a year earlier. But revenues and profits both topped analysts' estimates.

Citigroup, the fourth-biggest U.S. bank by assets, beat expectations for third-quarter net profit after trading revenue surged 35 percent.

While net income fell 11 percent to $1.24 per share, it exceeded the average estimate of $1.16 per share. Total adjusted revenue fell 4 percent to $17.76 billion, but beat the average estimate of $17.36 billion.

The strong trading performance helped U.S. financial stocks snap a three-day losing streak, with markets-focused bank shares such as Goldman Sachs and Morgan Stanley up 2 percent and 1.4 percent, respectively, ahead of their next week.

Citigroup was up over 0.8 percent in late trade after earlier rising as much as 3 percent. JPMorgan tipped into negative territory after earlier gaining as much as 2 percent. Wells Fargo was up 0.25 percent. The S&P financial index <.SPSY> gained 0.85 percent.

The British government's tougher line on immigration in the wake of the Brexit vote has bankers preparing for a scenario in which London loses access to the single market, meaning they would have to move parts of their operations elsewhere in Europe.

"As a result, we will be starting to build out technology systems and operations in Europe," JPMorgan's Lake said.

(Additional reporting by Olivia Oran and Elizabeth Dilts in New York; Writing by Carmel Crimmins; Editing by Jeffrey Benkoe and Leslie Adler)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

RECOMMENDED FOR YOU

Sales scandal costs Wells Fargo; JPMorgan and Citi please Wall St

NEW YORK (Reuters) - JPMorgan Chase and Citigroup trounced third-quarter estimates on Friday on a sharp rebound in trading revenues while Wells Fargo & Co barely beat expectations as a sales scandal engulfed the bank.

By David Henry and Dan Freed

NEW YORK (Reuters) - JPMorgan Chase and Citigroup trounced third-quarter estimates on Friday on a sharp rebound in trading revenues while Wells Fargo & Co barely beat expectations as a sales scandal engulfed the bank.

Wells Fargo is under pressure to keep its profit engine humming while dismantling the aggressive sales culture at the heart of its woes, since unlike JPMorgan and Citigroup it does not have a big trading arm.

"We're prepared for things to get worse before they get better," Chief Executive Tim Sloan, who took over as boss on Wednesday after John Stumpf, the bank's veteran leader, announced he was leaving amid a public furore over the scandal.

Revelations that Wells' branch staff had opened as many as 2 million accounts without customers' knowledge to meet internal sales targets has shattered the bank's folksy image.

Once a darling for its ability to sell multiple products to individual customers, Wells Fargo said on Friday that new account openings had dropped sharply.

New consumer checking accounts were 30 percent lower than in August, and applications for consumer credit cards fell 30 percent in September from the prior month.

Wells Fargo's staff are in a period of flux after the bank scrapped sales targets for branches last month and in a note following Sloan's presentation, Brian Kleinhanzl, an analyst at KBW, said, "Management doesn't know what the consumer bank will look like in the future."

The bank has said the scandal will minimally affect its wealth management business and was unlikely to alter its plans to return capital to shareholders.

On Friday, the state of Ohio joined a growing list of municipalities to suspend business relationships with Wells Fargo. The bank makes less than 1 percent of its revenue from working with local governments but Ohio's decision is a blow, coming days after Stumpf, a lightning rod for much of the criticism around the scandal, had departed.

Sloan must navigate federal and state investigations in coming months. The scandal has renewed left-leaning lawmakers' attacks on and bolstered their mission to introduce stricter oversight.

JPMORGAN MOMENTUM CONTINUES

While Wells Fargo's overall profit dropped for a fourth straight quarter, net income in the third quarter topped estimates, helped in part by lower-than-expected loan-loss provisions.

JPMorgan and Citi also beat expectations as bond trading roared back in the third quarter, boosted by Brexit-inspired volatility along with changing expectations for monetary policy in the United States, Europe and Japan as well as money market reforms.

got a fillip from a rise in the London interbank offered rate, which moved to a seven-year high during the quarter as U.S. money market funds scaled back holdings of short-term bank debt in advance of new U.S. regulations.

JPMorgan's chief financial officer, Marianne Lake, said the fourth quarter so far is showing positive signs.

"The momentum that I just characterized as fairly broad and fairly consistent across the (third) quarter, has somewhat continued so far," she told journalists.

JPMorgan's after-tax income dropped 7.6 percent after recording a tax expense, compared with a rare tax benefit of $2.2 billion a year earlier. But revenues and profits both topped analysts' estimates.

Citigroup, the fourth-biggest U.S. bank by assets, beat expectations for third-quarter net profit after trading revenue surged 35 percent.

While net income fell 11 percent to $1.24 per share, it exceeded the average estimate of $1.16 per share. Total adjusted revenue fell 4 percent to $17.76 billion, but beat the average estimate of $17.36 billion.

The strong trading performance helped U.S. financial stocks snap a three-day losing streak, with markets-focused bank shares such as Goldman Sachs and Morgan Stanley up 2 percent and 1.4 percent, respectively, ahead of their next week.

Citigroup was up over 0.8 percent in late trade after earlier rising as much as 3 percent. JPMorgan tipped into negative territory after earlier gaining as much as 2 percent. Wells Fargo was up 0.25 percent. The S&P financial index <.SPSY> gained 0.85 percent.

The British government's tougher line on immigration in the wake of the Brexit vote has bankers preparing for a scenario in which London loses access to the single market, meaning they would have to move parts of their operations elsewhere in Europe.

"As a result, we will be starting to build out technology systems and operations in Europe," JPMorgan's Lake said.

(Additional reporting by Olivia Oran and Elizabeth Dilts in New York; Writing by Carmel Crimmins; Editing by Jeffrey Benkoe and Leslie Adler)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Sales scandal costs Wells Fargo; JPMorgan and Citi please Wall St

By David Henry and Dan Freed

NEW YORK (Reuters) - JPMorgan Chase and Citigroup trounced third-quarter estimates on Friday on a sharp rebound in trading revenues while Wells Fargo & Co barely beat expectations as a sales scandal engulfed the bank.

Wells Fargo is under pressure to keep its profit engine humming while dismantling the aggressive sales culture at the heart of its woes, since unlike JPMorgan and Citigroup it does not have a big trading arm.

"We're prepared for things to get worse before they get better," Chief Executive Tim Sloan, who took over as boss on Wednesday after John Stumpf, the bank's veteran leader, announced he was leaving amid a public furore over the scandal.

Revelations that Wells' branch staff had opened as many as 2 million accounts without customers' knowledge to meet internal sales targets has shattered the bank's folksy image.

Once a darling for its ability to sell multiple products to individual customers, Wells Fargo said on Friday that new account openings had dropped sharply.

New consumer checking accounts were 30 percent lower than in August, and applications for consumer credit cards fell 30 percent in September from the prior month.

Wells Fargo's staff are in a period of flux after the bank scrapped sales targets for branches last month and in a note following Sloan's presentation, Brian Kleinhanzl, an analyst at KBW, said, "Management doesn't know what the consumer bank will look like in the future."

The bank has said the scandal will minimally affect its wealth management business and was unlikely to alter its plans to return capital to shareholders.

On Friday, the state of Ohio joined a growing list of municipalities to suspend business relationships with Wells Fargo. The bank makes less than 1 percent of its revenue from working with local governments but Ohio's decision is a blow, coming days after Stumpf, a lightning rod for much of the criticism around the scandal, had departed.

Sloan must navigate federal and state investigations in coming months. The scandal has renewed left-leaning lawmakers' attacks on and bolstered their mission to introduce stricter oversight.

JPMORGAN MOMENTUM CONTINUES

While Wells Fargo's overall profit dropped for a fourth straight quarter, net income in the third quarter topped estimates, helped in part by lower-than-expected loan-loss provisions.

JPMorgan and Citi also beat expectations as bond trading roared back in the third quarter, boosted by Brexit-inspired volatility along with changing expectations for monetary policy in the United States, Europe and Japan as well as money market reforms.

got a fillip from a rise in the London interbank offered rate, which moved to a seven-year high during the quarter as U.S. money market funds scaled back holdings of short-term bank debt in advance of new U.S. regulations.

JPMorgan's chief financial officer, Marianne Lake, said the fourth quarter so far is showing positive signs.

"The momentum that I just characterized as fairly broad and fairly consistent across the (third) quarter, has somewhat continued so far," she told journalists.

JPMorgan's after-tax income dropped 7.6 percent after recording a tax expense, compared with a rare tax benefit of $2.2 billion a year earlier. But revenues and profits both topped analysts' estimates.

Citigroup, the fourth-biggest U.S. bank by assets, beat expectations for third-quarter net profit after trading revenue surged 35 percent.

While net income fell 11 percent to $1.24 per share, it exceeded the average estimate of $1.16 per share. Total adjusted revenue fell 4 percent to $17.76 billion, but beat the average estimate of $17.36 billion.

The strong trading performance helped U.S. financial stocks snap a three-day losing streak, with markets-focused bank shares such as Goldman Sachs and Morgan Stanley up 2 percent and 1.4 percent, respectively, ahead of their next week.

Citigroup was up over 0.8 percent in late trade after earlier rising as much as 3 percent. JPMorgan tipped into negative territory after earlier gaining as much as 2 percent. Wells Fargo was up 0.25 percent. The S&P financial index <.SPSY> gained 0.85 percent.

The British government's tougher line on immigration in the wake of the Brexit vote has bankers preparing for a scenario in which London loses access to the single market, meaning they would have to move parts of their operations elsewhere in Europe.

"As a result, we will be starting to build out technology systems and operations in Europe," JPMorgan's Lake said.

(Additional reporting by Olivia Oran and Elizabeth Dilts in New York; Writing by Carmel Crimmins; Editing by Jeffrey Benkoe and Leslie Adler)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Upgrade To Premium Services

Welcome User

Business Standard is happy to inform you of the launch of "Business Standard Premium Services"

As a premium subscriber you get an across device unfettered access to a range of services which include:

  • Access Exclusive content - articles, features & opinion pieces
  • Weekly Industry/Genre specific newsletters - Choose multiple industries/genres
  • Access to 17 plus years of content archives
  • Set Stock price alerts for your portfolio and watch list and get them delivered to your e-mail box
  • End of day news alerts on 5 companies (via email)
  • NEW: Get seamless access to WSJ.com at a great price. No additional sign-up required.
 

Premium Services

In Partnership with

 

Dear Guest,

 

Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard