Wells Fargo’s sales practice scandal weighed on the bank’s earnings but its chief financial officer thinks the decline in new account openings may have hit an inflection point.
“It might have bottomed in December or January. We’ll know more with the passage of time, but it stands to reason because we’ve rolled out a new method of doing business for our people in the branches,” John Shrewsberry said in an interview with CNBC’s “Closing Bell” on Thursday.
“Too early to declare victory but certainly the direction looks good,” he added.
Shrewsberry, a member of the CNBC Global CFO Council, called the bank’s overall performance “very solid” but acknowledged that expenses were higher because of the fallout over the opening of unauthorized accounts.
“We’ve got a lot of outside parties that we’ve invited in to do work, make investigations and give us recommendations about how to improve ourselves,” he said. “That weighed on things to the tune of about $80 million in the quarter.”
Wells Fargo also reported total average loans were $963.6 billion in the quarter, down $502 million from the fourth quarter. Mortgage banking revenue fell 23 percent to $1.23 billion.
Shrewsberry said while commercial loan growth has been “sideways,” sentiment is actually very high among its business customers.
He believes they are “enthusiastically waiting” for the implementation of President Donald Trump’s pro-growth policies, which would allow them to conduct more deals, expand and do more spending.
“Folks are waiting for a sign that those pro-growth policies are really going to happen before they pull the trigger on borrowing money to do that,” he explained.
When it comes to mortgages, Shrewsberry said the bank’s business is strong. He said things slowed down in the first quarter because there is less home buying in the winter and people were expecting rates to be higher for longer.
“The mortgage market will be there. People are buying homes. We’re coming into the home buying season and I think there will be more of that going on than there was a year ago,” he noted.
Wells Fargo’s earnings report came just days after the bank’s independent directors decided to claw back an additional $75 million in compensation from executives, following a six-month investigation into the scrutinized institution’s retail banking sales practices.
The board review indicated that former Wells Fargo Chairman and CEO John Stumpf acknowledged that he made significant mistakes and helped create a culture at the bank that resulted in abuses.
— CNBC’s Berkeley Lovelace Jr. and Wilfred Frost contributed to this report.