Wells Fargo continues to struggle with the fallout from a phony account scandal that engulfed it last year.
The bank said Friday that new credit card applications were down 43 percent in the fourth quarter of 2016 from a year ago, and that new checking account openings fell 40 percent.
The results reflected the first full quarter since September, when Wells Fargo, which is based in San Francisco, announced that its employees had, over the course of years, created as many as 2 million unauthorized credit card and checking accounts.
Wells Fargo has vowed to upend its aggressive sales culture, doing away with sales goals in the retail banks and backing down from its cross-selling strategy of pushing multiple products on a single customer. That strategy played out in the bank’s national network of thousands of branches, where employees’ compensation was tied to how many accounts they could sell. The pressure led thousands of them to create sham accounts in customers’ names.
The fourth quarter reflected a broad slowdown in branch activity: Teller transactions fell 6 percent from a year ago, while customers’ interactions with the bankers in the branches declined 14 percent.
Yet even as its retail business showed some signs of trouble, Wells Fargo managed to increase its deposits in the quarter. And spending on its credit and debit cards also rose from a year ago.
It reported a larger-than-expected loss in the quarter, with profit falling 4.3 percent to $21.9 billion.
Wells Fargo said the loss had little to do with the account scandal. Rather, it said, it was driven by an accounting quirk in the way the bank hedges, or tries to minimize, the fluctuating value of its debt holdings. The bank’s hedges were ineffective in mitigating the effect of volatile interest rates in the fourth quarter.
Investors were apparently looking on the bright side — including solid growth in the bank’s loan portfolio and signs that customers were still paying back their loans on time. The bank’s shares were up about 1.5 percent on Friday.
For years, Wells Fargo has been known as a profit-making machine, based in part on its aggressive sales culture. It was also one of the best in the banking industry at keeping its expenses low. But as its legal bills pile up and the bank spends on advertising to win back skeptical customers, its expenses have also climbed.
The company’s expense ratio — which are the bank’s expenses divided by revenue — climbed to 61 percent. That is outside its typical range.
Wells Fargo Chief Executive Timothy Sloan took over in the fourth quarter from the bank’s longtime leader, John Stumpf, a native of Minnesota who was felled by the scandal.
“While we have more work to do,” Sloan said in a statement, “I am proud of the effort of our entire team to make things right for our customers and team members and to continue building a better Wells Fargo for the future.”