Wells Fargo & Co. (NYSE: WFC) flat quarterly earnings as the company warned that costs remain high due to its sales practices scandal that weakened its reputation. Legal fees, personnel costs and lower mortgage banking revenues resulted in the bank’s first-quarter net income being flat at $5.5 billion.
Although the bank has made attempts to put the scandal behind them, consumer doubt still lingers in the company’s brand. The company announced this week that it will retrieve $75 million of compensation from the two former executives it blamed the most for the scandal.
Revenues for the U.S. bank fell about 1 percent to $22 billion and missed the average estimate of $22.32 billion. Profit rose to $1.00 beating the average analyst estimate or $.97 cents.
Even though the Federal Reserve’s decision to raise interest rates in March have aided Wells Fargo to earn more from lending with a 5 percent increase to $12.3 billion in its net interest income the bank still suffers from the sales scandal. Costs rose 6 percent versus a year ago as the bank distributed more for salaries as well as legal costs directly related to the scandal.