A renewed marketing push has so far failed to bear fruit for Wells Fargo’s retail banking operation, which is still reeling from a scandal that badly dented its reputation.
The $1.9 trillion-asset bank said Monday that consumers opened 43% fewer checking accounts in February than they did in the same period a year earlier. On a daily basis — last month had one fewer business day than February 2016 did — the decline was 40%.
Meanwhile, Wells Fargo’s credit card business also sustained substantial damage last month.
Applications for the bank’s consumer credit cards fell by 55% in February compared with the same period a year earlier. Even after adjusting for the calendar quirk, the decline in consumer credit card applications in February was the steepest since Wells Fargo started reporting the metric in September 2016.
One month earlier, the effects of the scandal appeared to be abating, albeit gradually. In January, the number of consumer checking accounts opened at the San Francisco-based bank fell by 31% from a year earlier, which represented the company’s best year-over-year performance in four months.
The latest numbers underscore the extent of the challenge that Wells Fargo faces in restoring its once-clean public image. The bank paid $185 million in fines in September 2016 after a multiyear review found that its employees opened as many as 2 million fraudulent customer accounts.
Amid the ensuing scandal, Wells paused marketing for its retail banking unit. But marketing resumed in January, and the company increased those efforts in February, according to Mary Mack, who heads the unit.
“And starting next month, we’ll roll out a new marketing campaign across many different channels,” Mack said during a conference call Monday.
Mack put an upbeat gloss on last month’s retail banking metrics, but she also acknowledged that restoration of the company’s tarnished image will not happen overnight.
“We’ve taken many steps over the past several months to rebuild trust,” she said. “But we have more work to do, and the changes we’ve made will take time to be reflected in our results.”
In the fourth quarter of 2016, Wells Fargo’s retail banking unit reported net income of $2.73 billion, down from $3.17 billion in the same period a year earlier. The scandal’s bottom-line impact figures to grow with each passing month as long as prospective customers continue to keep their distance.
Since the scandal broke, Wells has fared much better at retaining its existing retail banking customers than it has at attracting new ones — a reflection, at least to some extent, of the inertia that keeps many consumers from switching banks.
Wells Fargo reported that deposits in consumer and small-business banking accounts rose 6% in February from a year earlier. And the amount of money that consumers spent on the firm’s credit cards rose by 3%.
Wells Fargo’s board of directors is investigating the phony-sales scandal and has committed to releasing its findings publicly in advance of the firm’s annual meeting on April 25.
The bank’s chief financial officer, John Shrewsberry, said during Monday’s conference call that he expects the board’s report to be released in early or mid-April.