The past year has been tough for the bank's overall results although assets under management in the wealth side of the business improved in the fourth quarter of 2019.

The wealth and investment management arm of Wells Fargo, which includes the Abbot Downing business that serves ultra-high net worth clients, sustained a drop in this segment’s net income in the fourth quarter of 2019 from the previous quarter and a year ago, with higher costs taking a toll. The parent bank's profit was hit hard by costs related to its long-running fake-account scandal and weakness in some business areas.

Net income in Q4 was $254 million, down from $$689 million a year earlier, and slumping from $1.28 billion in Q3 2019, Wells Fargo said in a statement earlier this week.

Wells Fargo said non-interest expense increased to $685 million, or 23 per cent in Q4 from the same quarter of 2018, primarily driven by higher employee benefits expense from an increased deferred compensation plan expense (largely offset by net gains from equity securities), higher operating losses, higher equipment expense related to the strategic reassessment of technology projects, and higher regulatory, risk and technology expense, partially offset by lower core deposit and other intangibles amortization expense.

Across the wealth and investment management arm as a whole, total client assets stood at $1.9 trillion, up by 10 per cent from a year ago, primarily due to higher market valuations, partially offset by net outflows in the Correspondent Clearing business, it said.

Within wealth management specifically, client assets were $240 billion at the end of 2019, up by 7 per cent from the prior year.

Wells Fargo made a net income across all its business lines of $2.87 billion in Q4, falling from $6.06 billion a year earlier.

Non-interest costs rose sharply: Wells Fargo said the cost was $15.6 billion in Q4, rising by $415 million from the prior quarter. Fourth-quarter non-interest expense included higher employee benefits costs, driven by $263 million of deferred compensation costs and higher equipment expense driven by higher capitalized software impairment expense, and higher computer software licensing and maintenance costs. Operating losses of $1.9 billion in fourth quarter 2019 were flat compared with third quarter 2019, and included $1.5 billion of litigation accruals in the fourth quarter for a variety of matters, including previously disclosed retail sales practices.

The banking group is recovering from a scandal in which some of its staff engaged in fraudulent sales practices, including opening sham deposit and credit card accounts. The affair has spawned a round of litigation costs.

Chief financial officer John Shrewsberry said of the results: ““Wells Fargo reported $2.9 billion of net income in the fourth quarter and diluted earnings per share of $0.60, which included the impact of $1.5 billion, or $(0.33) per share, of litigation accruals for a variety of matters, including previously disclosed retail sales practices matters.”

“Our net interest income declined in the fourth quarter driven predominantly by the impact of the lower interest rate environment. In addition, while we are spending what is necessary in order to improve risk management, our other expenses were too high and becoming more efficient remains a top priority,” he added.