Wells Fargo’s revenue declined 2% to $20.37 billion in the third quarter. Average loans came in at $910.3 billion versus $943.2 billion a year earlier.
Loan demand has been subdued as higher interest rates deterred commercial and consumer borrowers. At the same time, banks have had to compete for deposits by paying clients more.
Wells Fargo set aside $1.07 billion in provisions to cover souring loans. That compared with $1.20 billion a year earlier.
JPMorgan Chase (NYSE:JPM)’s profit dropped in the third quarter as a bigger provision for potential loan defaults offset gains from investment banking, the bank said on Friday.
Executives at top lenders have said that U.S. consumers remain resilient despite pockets of stress and higher loan delinquencies among lower-income households.
Wells Fargo is also reportedly doubling down on efforts to lift a $1.95 trillion asset cap imposed by the Federal Reserve that prevents the bank from growing until regulators deem it has fixed problems dating back to the 2016 fake accounts scandal.
In September, a U.S. banking regulator found its safeguards against money laundering and other illegal transactions were too lax and restricted its ability to expand in risky businesses.
The asset cap curtails Wells Fargo’s ability to take in more deposits and expand its trading business, two potential growth areas for the bank, CEO Scharf said earlier this year.
It still has eight regulatory punishments, called consent orders, that it is working to address.
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Reference;
Reuters (2024) Wells Fargo profit beats forecasts as provisions shrink, shares rise By Reuters, Investing.com. Investing.com. Available at: https://www.investing.com/news/economy-news/wells-fargos-profit-falls-on-lower-interest-income-3659521 (Accessed: 11 October 2024).
