Wells Fargo loan growth slows from second quarter as economy cools, chief financial officer says (NYSE:WFC)

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Wells Fargo (New York Stock Exchange: WFC) Chief Financial Officer Mike Santomassimo said Tuesday that loan growth is slowing from high levels seen in the second quarter as the U.S. economy slows.

During the second quarter, WFC loans increased from $898.0 billion to $926.6 billion. in Q1, while deposits of $1.45T fell by $1.46T in Q1.

Santomassimo noted that the bank’s mortgage income is also coming under downward pressure due to falling volumes as interest rates rise. Its mortgage banking business has already hampered second-quarter earnings in the wake of significantly slower economic growth and tighter financial conditions.

“There will be stress as the economy slows down, so that’s going to come in terms of some of these portfolios,” Santomassimo told the Barclays Global Financial Services Conference, noting that the current macroeconomic environment has an impact on low-income segments of the population. . This cohort, however, represents a smaller portion of the lender’s business.

As the Federal Reserve has raised its overnight lending rate by 225 basis points so far in its latest tightening cycle to rein in inflation that is at a four-decade high, the CPI reading d August is still higher than expected, hence the central bank may need to raise rates more and longer.

For Wells Fargo (WFC), meanwhile, rising interest rates are helping to boost net interest income. In fact, “we still feel very comfortable with the 20% increase over a full year,” Santomassimo said.

In mid-August, Wells Fargo took a step back from its dominant position in mortgage lending.

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