Wells Fargo reports drop in new customer accounts

Wells Fargo & Co. reported that customer interactions and new accounts both fell in October, compared with the previous month and the year-earlier period, as the bank disclosed additional retail-banking metrics Thursday following its sales-practices scandal.

Consumer checking account openings fell to about 300,000, or down 27% in October compared with the previous month and plummeted 44% versus the year-earlier period largely because of a “full month of impact of customer reaction to the sales practices settlement and reduced marketing activities,” the bank said.

Wells Fargo executives have said the impact from the sales-practice revelations in September could take a while to play out. The numbers in October back that up and raise further questions about how soon customer activity will return to normal at Wells Fargo, the nation’s third-largest bank by assets.

For October, Wells Fargo said nearly all reported metrics around customer interactions dropped compared with the previous month and the year-earlier period.

The San Francisco lender said Thursday that customer interactions with tellers dropped to 49.2 million, or down 10% in October, compared with the year-earlier period. Branch banker interactions with customers in October tallied 52.2 million, falling 3% from the previous month and 11% in the year-ago period, driven by a slowdown in new account openings, the bank said.

Credit card applications fell 35% in October to 200,000 from September and dropped 50% from the year-earlier period.

Through Wells Fargo and regulators’ analyses, credit cards made up a bulk of the sham accounts opened for customers in the sales practices scandal. But credit card balances and purchase volume were both up slightly in October, compared with September, and up from the year-earlier period.

It wasn’t all bad news: Consumer and small-business deposit balances were $745 billion, down 1% from September and up 7% year-over-year. The number of primary checking account customers tallied 23.6 million, or flat compared with the previous month and up 3.9% year-over-year.

Chief Executive Timothy Sloan and retail banking head Mary Mack reiterated in the bank’s release that the downward trend was expected because October was the first full month of metrics following the Sept. 8 settlement and enforcement action over questionable sales tactics. Mr. Sloan said the bank will provide its next update in mid-December.

“We recognize we have work to do, and we are focused on strengthening our relationships with existing customers and building new ones with potential customers,” Ms. Mack added.

The bank actively measures its “customer experience” scores. It found customer loyalty dropped to 52.3% in October from 57.7% the previous month and 61.2% in the year-earlier period. Customers’ satisfaction with their most recent branch visit tallied 73.9%, down from 75.7% the previous month and 77.4% in the year-earlier period.

Active debit cards and transactions were both up slightly from the previous month and the year-earlier period, the bank said.

The San Francisco-based bank has been in the spotlight for the past two months after its September settlement and enforcement action with two regulators and a city official. It faces investor questions about its cross-selling focused business model given the departure last month of now-former Chief Executive John Stumpf and changes it already has made to its retail-bank sales goals.

The bank also faces uncertainty because of a raft of federal and state investigations, including by the Justice Department and the Securities and Exchange Commission.

Wells Fargo refunded $2.6 million to customers at the time of its September settlement and is in the process of assessing and in some cases refunding additional customer accounts affected by the questionable sales practices over the past seven years.