Wells Fargo & Co has set aside $3.25 billion in the fourth quarter to cover legal expenses related to probes into its mortgage and sales practices.
But the US bank said its 2018 cost outlook met analyst expectations as it tries to rebound from the scandal in its consumer banking business.
The bank, which has been under intense scrutiny because of its actions, set a 2018 expense target of up to $54.5 billion, indicating that efforts to control costs are gaining traction.
Analysts and investors have kept close tabs on the San Francisco-based lender's expenses, which topped 60 cents per dollar of revenue after the sales scandal erupted in September 2016.
The bank has since struggled to improve that key metric.
Today it introduced a 2018 cost target of $53.5 billion to $54.5 billion in its fourth-quarter earnings statement.
"We've made progress on our efficiency initiatives and remain committed to our target of $2 billion of expense reductions by the end of 2018, which are being used to support our investments in the business, and an additional $2 billion by the end of 2019," its chief financial officer John Shrewsberry said.
Wells Fargo had vowed to slash $4 billion in costs by 2019 through closing hundreds of branches and other measures, half of which will be reinvested into businesses.
The bank's chief executive Tim Sloan has called expense levels "unacceptable" several times and said in December the bank would offer more detail on costs.
It reported non-interest expenses of $16.80 billion for the fourth quarter, bringing total non-interest expenses for the year to $58.48 billion.
Analysts had estimated on average that non-interest expense would be $54.62 billion for 2017.
It also booked a $3.25 billion pre-tax expense from litigation costs for regulatory probes, its sales practices and other consumer-related matters.
Its efficiency ratio - a closely watched measure of revenue divided by expenses - was 76 cents on the dollar for the fourth quarter, driven by higher operating losses.
For all of 2017, it came to 66.2 cents - well above its target range of 55 to 59 cents in costs per dollar of revenue.
The quarter included a $3.35 billion one-time boost from writing down its deferred tax liabilities to reflect the new US corporate tax rates.
While other banks have reported one-off charges related to the tax law, Wells gets a boost to its bottom line because it will owe less tax in the future on income from a set of businesses, including mortgage servicing.
Additionally, the 14 percentage point corporate tax cut applies to income earned in the US, and unlike lenders with a larger global footprint, Wells Fargo does very little business outside the US.