The first real indications of how Wells Fargo’s phony accounts scandal is impacting its business are in, and they aren’t pretty.
Wells Fargo reported financial results Friday from the fourth quarter of 2016, the first complete period since the bank’s employees were caught opening millions of fake accounts for unwitting customers. After eliminating aggressive sales quotas that were blamed for the fraudulent behavior, Wells Fargo is now struggling to attract new business and grow revenue. The bank said it plans to close at least 400 branches by the end of 2018—a departure from the past several years in which it rapidly opened new locations even as other banks shuttered their own.
There were signs that the sham account scandal had scared potential customers away from Wells Fargo, according to metrics the company reported along with its financial earnings. The number of new checking accounts opened at the bank in December plummeted 40% from a year earlier, and that’s after falling 44% in November. Applications for Wells Fargo credit cards also declined 43% in December year over year.
In Wells Fargo’s community banking unit—the retail division in which the scandal took place—quarterly revenues declined 5% while profits sank 14% compared to the same period in 2015. While the bank’s new CEO Tim Sloan said the impact of the scandal itself on Wells Fargo’s revenue “has not been significant,” he acknowledged that if the slowdown in customer account growth were to continue at the current rate, “that would have a bigger impact.”
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