Mortgage

Wells Fargo’s $5.8 billion profit easily tops expectations – Daily News

Wells Fargo’s $5.8 billion profit easily tops expectations – Daily News
Written by Publishing Team

by MATT OTT

SILVER SPRING, Md. (AP) — Wells Fargo handily beat Wall Street expectations for the fourth quarter as interest rates begin to take off, and there’s likely to be another boost to the nation’s largest mortgage lender going forward.

The San Francisco bank earned $5.8 billion, or $1.38 per share, easily exceeding the $1.11 industry analysts had been expecting, according to a survey by data firm FactSet. Wells generated $20.86 billion in sales in the quarter, also beating Wall Street expectations of $18.8 billion. The bank achieved revenues of $ 18.49 billion in the same quarter last year.

For the full year, Wells collected $21.5 billion in dividends, or $4.95 per share. 2021 sales came to $78.49 billion, up 5% from 2020, when the bank reported $74.26 billion in revenue. Wells said his situation improved last year in part due to his ability to cut expenses while deposits grew as the economy recovered from the slowdown caused by the coronavirus in 2020.

Wells reported $9.26 billion in net interest income in the period, down slightly from a year ago, but is expected to rebound this year with long-term interest rates appearing to rise rapidly. The Federal Reserve announced last month that it would begin to roll back its monthly bond purchases – which are aimed at lowering long-term interest rates – to slow accelerating inflation. Even with expected three or four rate increases in 2022, the Fed’s benchmark interest rate will still be historically low at around 1%.

Average long-term mortgage rates in the US jumped again last week to 3.45%, the highest level since March 2020, as the coronavirus pandemic spreads in the US, economists expect them to rise further as the Fed tightens Federal Credit, which means more profits for banks. , particularly Wales, which relies heavily on mortgages.

The company said it cut money it held aside for credit losses by $875 million. Banks set aside tens of billions of dollars to protect against customer defaults early in the pandemic; Some of those billions are now being returned to the positive side of their balance sheets.

Wells is still trying to break out of strict federal guidelines that cap its assets at less than $2 billion, hampering its ability to grow.

The Federal Reserve limited the size of Wells Fargo’s assets in 2018 after a series of scandals, most notably the revelations of millions of fake checking accounts opened by its employees to meet sales quotas.

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