Wells Fargo Has Plenty of Runway on Its Efficiency Initiatives
Nearly two years ago, Wells Fargo (NYSE: WFC) launched a big initiative to improve its efficiency ratio, which looks at a bank's expenses expressed as a percentage of its revenue. The lower the efficiency ratio the better because it means a bank is spending less for each dollar of revenue it generates.
So far, the efficiency work has been pretty well received by the market and management has lived up to its promises. However, at a recent conference, CEO Charlie Scharf said he still thought the bank was "incredibly inefficient."
He's not necessarily wrong, as Wells Fargo's efficiency ratio has still been above 70% in most of its recent quarters. Ideally, investors will want to see Wells Fargo lower that number to below 60%, at least on a core basis. Scharf recently indicated that there is plenty of room for improvement on the expense and revenue side.
Source Fool.com
