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Wells Fargo on Tuesday said fourth-quarter profits fell as persistent low interest rates and litigation charges weighed on its financial results.

  • Earnings: 93 cents per share versus $1.12 per share forecast by Refinitiv
  • Revenue: $19.86 billion versus $20.14 billion forecast by Refinitiv

Quarterly profit at the San Francisco-based bank was $2.87 billion, compared with $6.06 billion in the year-ago period, a decline of 53%. Per-share adjusted earnings were 93 cents, well short of the $1.12 per share forecast by Refinitiv.

Shares fell more than 3.2% in premarket trading following the financial results.

The bank also took a financial loss in part related to the retail sales scandal that has plagued Wells Fargo since 2016. The company booked a $1.5 billion charge for legal costs related to litigation stemming from its fake-account problems and others.

The results, which reflect the bank’s performance for the three months ended Dec. 31, mark Wells Fargo’s first quarter under new management. Charles Scharf took over as Wells Fargo’s chief executive in October, replacing Tim Sloan and charged with navigating the bank through a host of regulatory issues that have kept costs elevated.

“Wells Fargo is a wonderful and important franchise that has made some serious mistakes, and my mandate is to make the fundamental changes necessary to regain the full trust and respect of all stakeholders,” Scharf said in a press release. “During my first three months at Wells Fargo my primary focus has been on advancing our required regulatory work with a different sense of urgency and resolve, while beginning to develop a path to improve our financial results.”

The nation’s fourth-largest bank, Wells Fargo remains muddled in restructuring and regulatory reforms since 2016. The government crackdown came under former CEO John Stumpf, who presided over a scandal in which Wells Fargo employees created millions of fake bank accounts to meet sales quotas.

Still, investors and analysts alike also hope Scharf can bring to Wells Fargo the success he oversaw at BNY Mellon, where he previously served as CEO and helped upgrade its technologies.

Chief Financial Officer John Shrewsberry also blamed low interest rates for a decline in the bank’s net interest income, a main engine of bank profits. The Federal Reserve cut interest rates three times in 2019.

That meant the yield the bank earned on assets such as loans dropped to 3.51% from 3.76% in the September quarter, while the rate the bank paid on interest-bearing liabilities such as customer deposits dropped to 1.3% from 1.46%. All together, that pushed the bank’s net interest margin to 2.53% from 2.66% in the previous quarter.

Shares of Wells Fargo are up just 7.6% over the last 12 months compared to 33% at Bank of America and 36.9% at Citigroup.