![]() Wells Fargo also remains under a costly Fed-imposed asset cap limiting its size to its level at the end of 2017. Headcount fell to 243,674 at the end of the second quarter, from 246,577 three months earlier. Cost-cutting has been a key part of Chief Executive Officer Charlie Scharf’s plan to remake the firm since taking over almost three years ago, including by trimming the workforce. temporarily suspended share buybacks and reported second-quarter results that fell short of analysts’ estimates on Thursday, driving its shares down 3.5%.Īt Wells Fargo, non-interest expenses totaled $12.9 billion in the quarter, down 3.4% from a year earlier while higher than analysts expected. The report offers another look at how the biggest US lenders fared through a quarter marked by rate hikes, persistent inflation and recession fears. That marks a turnaround from a year earlier, when a $1.26 billion release of provisions padded results. The lender reported a $580 million loan-loss provision, more than the $414.7 million analysts had expected. Wells Fargo is among firms that have been laying off and reassigning staff in its mortgage division. “It will be a challenging market in the mortgage business for the next couple quarters as things start to stabilize and we see where the path of rates are going to go,” Santomassimo said. Rising rates already have sharply reduced the number of customers refinancing their mortgages and have weighed on home-sales activity as well, Santomassimo said. That missed analysts’ $392.4 million estimate and helped bring second-quarter net income down to $3.12 billion, below the $3.19 billion analysts had expected. Mortgage-banking income fell 79% to $287 million in the quarter. Wells Fargo’s overall profit trailed analysts’ estimates, hurt by a decline in mortgage lending and a $576 million impairment of equity securities, predominantly in its affiliated venture capital business. The stock had fallen 19% this year through Thursday. “Net interest income will be driven by a lot of factors, but higher loan balances and higher rates are definitely helping us have a better result there,” Chief Financial Officer Mike Santomassimo said on a conference call with reporters Friday. Wells Fargo’s net interest income is expected to rise 20% this year, the bank said in a presentation. ![]() The Fed’s rapid rate increases, intended to tamp down surging inflation, have made banks’ core lending businesses more profitable, even while they threaten to squelch consumers’ demand for loans.
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