Shares in Wells Fargo & Company (NYSE:WFC) plunged over 4% in New York as the banking giant reported a 50% drop in profit in its latest quarter.
In the three months to end-December, the US's fourth largest lender posted a profit of US$0.67 per share, compared to US$1.38 per share in the fourth quarter of 2021.
The bank's total revenue dropped in the quarter to US$19.7 billion versus US$20.9 billion in Q4, 2021.
READ: Wells Fargo shares rise on 3Q earnings beat; bank braces for potential recession
The weaker numbers come as revenue fails to meet the bank's expectations and it has had to deal with 'one-off' costs related to litigation and regulatory and customer remediation as the company continues to deal with a six year old scandal over sales practices.
In December last year, watchdog the US Consumer Financial Protection Bureau issued Wells Fargo with a civil penalty as part of a US$3.7 billion agreement to settle charges over widespread mismanagement of car loans, mortgages and bank accounts.
The bank said its estimate of reasonable possible losses in the fourth quarter was around US$1.4 billion, down from US$3.7 billion at the end of September last year.
Big banks in the US are also suffering some pressure from higher borrowing costs, due to interest rate rises, which has softened demand for their products, like mortgages and car loans.
Wells Fargo shares shed 4.83% to US$40.76 in early deals.
Contact the writer at giles@proactiveinvestors.com