Significant improvement in consumer credit helped Wells Fargo & Co. to cross-sell a record of combined products per household during the first quarter, the company announced April 20.
The San Francisco-based bank, which cross-sells products primarily through its branches, said customers on average had 5.79 Wells products per household, up 19 basis points from 5.6 during the same period last year. Such products include credit cards, debit cards, checking accounts and mortgages.
“We continue to sell more products to more customers across our banking footprint,” Tim Sloan, Wells’ chief financial officer, told analysts during a conference call to discuss the quarter’s earnings. “Cross-sell improvement reflects record sales, with core product sales up 16% on the West Coast reaching 3 million sales in a single month for the first time ever.”
Cross-sell in the West reached an average of 6.21 products during the quarter, Sloan noted.
Only about 14% of households in the eastern U.S. have a Wells card, but the average number of products Wells customers held in the region increased to 5.22 from 5.02 a year earlier, “which is huge because we used to add three or four basis points per year, and adding 20 basis points is not something we usually see,” John Strumpf, Wells chairman and CEO, told analysts during the call.
Gwenn Bézard, co-founder and research director at Boston-based Aite Group LLC, tells PaymentsSource he is not surprised by Wells’ ability to build product offerings across households. “For the last couple of years, many banks have not focused on cross-selling, but Wells is the exception,” he says.
For many years, the company has been very vocal and has focused on cross-selling, and it has effectively coordinated the way it cross-sells its products, Bézard says.
Many banks have been able to “get away from cross-selling because a lot of their individual products do well on their own to generate revenue,” Bézard notes. But because banks are under more pressure because of the economy, many will “get serious about cross-selling to make up for lost revenue,” he adds.
Wells’ credit card receivables stood at $21 billion at the end of March, down 8.7% from $23 billion a year earlier. Wells charged off $422 million in credit card loans during the quarter, up 8.5% from $389 million.
The net charge-off rate for the quarter was 7.21%, down 98 basis points from 8.19% the previous quarter because of tightened underwriting policies, including fewer balance transfers and approved balance increases, according to the company.
Charge-offs also declined for the fifth consecutive quarter because of significant improvement in credit quality, Sloan said during the call.
During the quarter, Wells announced plans to issue 15,000 EMV cards to U.S. residents in a test this year, which would make it the largest bank to offer smart cards to domestic customers (
As a company, Wells reported a record quarterly net income of $3.76 billion, up 47.5% from $2.55 billion a year earlier. Revenues, however, decreased 5.1%, to $20.3 billion from $21.4 billion.
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