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People walk by a Wells Fargo bank branch on October 13, 2017 in New York City.
Wells Fargo’s earnings beat expectations Friday as the bank reported a 5.5 percent gain in first-quarter profit as it tries to move past its regulatory troubles.
Profit of $1.12 a share beat the average analyst forecast of $1.06 from Thomson Reuters. Revenue also beat expectations, coming in at $21.93 billion compared with the $21.73 billion forecast.
The bank cautioned that the results are preliminary and subject to change depending on the outcome of settlement talks with regulators over sales of certain auto insurance and mortgage products. A settlement could cost the bank $1 billion.
Share prices fell 1.4 percent in early trading Friday.
“I’m confident that our outstanding team will continue to transform Wells Fargo into a better, stronger company; however, we recognize that it will take time to put all of our challenges behind us,” CEO Tim Sloan said in a statement.
The bank said it is making progress on hitting planned expense savings that aim to cut costs by $4 billion by the end of next year. It expects to cut expenses by $2 billion annually by the end of this year.
Wells Fargo is still grappling with regulatory scrutiny and potential legal settlements. In February, the Federal Reserve slapped it with sanctions for failing to have adequate risk controls that could have detected issues in its sales practices. It is still talking with the Consumer Finance Protection Bureau and the Office of the Comptroller of the Currency about settling over the auto insurance and mortgage rate lock sales practices.
Net income of $5.9 billion in the quarter could be adjusted once the CFPB settlement is finalized, the bank said.
Wells Fargo has also significantly increased purchases of its own stock, up 78 percent since last year, to $2.1 billion.
Also Friday, Citigroup and J.P. Morgan reported earnings that beat on the top and bottom lines.
