Business

Wells Fargo profits hit by legal costs

A man walks past a Wells Fargo branch Image copyright Ben Margot
Image caption Wells Fargo has been fined $185m over the fake accounts scandal

US bank Wells Fargo has reported a fall in quarterly profits after setting aside funds for potential costs related to its fake accounts scandal.

Third quarter profit fell 2% to $5.64bn (£4.6bn) from $5.8bn the year before.

The scandal saw bank employees open as many as two million accounts without customers' knowledge or permission in order to meet aggressive sales targets.

In September, the bank was fined $185m over the illegal accounts and this week Wells Fargo boss John Stumpf resigned.

Wells Fargo has fired about 5,300 employees in connection with the scandal.

The bank, which faces numerous federal and state investigations, said expenses rose in part due to anticipated litigation costs. Third-quarter fixed costs increased to $13.3bn from $12.9bn in the previous quarter.

JP Morgan and Citigroup

Separately, JP Morgan Chase reported a drop in third-quarter income, but the results still beat analysts' expectations.

Net income fell 8% to $6.286bn (£5.1bn) in the quarter, compared with $6.8bn last year.

It reported higher revenue in retail and investment banking, but this was offset by the bank putting aside more money to cover loans that might go bad.

Its investment banking division recorded a big rise in profits, climbing to $2.9bn from $1.46bn the year before.

"We delivered strong results this quarter with each of our businesses performing well," said chief executive Jamie Dimon.

Citigroup also reported third-quarter results on Friday, with net income falling 10.5% to $3.8bn.

Despite the fall the figure was still higher than analysts' estimates.

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