REUTERS: Wells Fargo & Co reported higher quarterly earnings on Tuesday, due in part to lower expenses, but the bank reined in its outlook for cost cuts to invest in improving its risk management.
"We've seen a greater need for us to make investments in terms of risks, compliance and audit, all those things that we're going to need to make investments in, in order to satisfy the requirements of our regulators," said Interim Chief Executive Allen Parker. Wells Fargo has been under a regulatory microscope since revelations that the bank had opened potentially millions of unauthorized accounts in 2016. Internal and regulatory probes have since discovered other issues in each of the bank’s primary segments, resulting in billions of dollars in fines, penalties and an unprecedented cap on its balance sheet by the Federal Reserve.During his tenure so far, Parker has prioritized resolving lingering issues from the bank's scandals.
The fourth largest U.S. bank by assets, has leaned on cost cuts to stabilize its bottom line amid sluggish revenue trends in the wake of its scandals. Now the San Francisco-based bank must also contend with fresh macroeconomic uncertainty from a changing interest rate environment that's pressuring lending margins across the industry. The U.S. Federal Reserve is widely expected to cut rates later this month.
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