The mortgage business has been under immense pressure for the third quarter due to the rising interest rates. There remained a slow down in refinancing activities and fresh originations. Also, the weakness has been surrounded in the commercial and industrial as well as overall real estate loans.
Loan growth is expected to have a lesser scope due to the past misconducts arising from the Federal Reserve’s restrictions on the company’s balance sheet growth. The slowdown in loan growth is also impacting net interest income, which is likely to grow marginally. Expenses for the company is predicted to trend higher on more significant franchise investments in certain areas.
The company is expected to experience disappointing non-interest revenues as market declines have led to the outflows from the asset-management business. The muted trading activities will impact related fees due to the persistent trade-war tensions. Disappointing mortgage originations could hurt mortgage banking fees.
Related: Wells Fargo Q2 2018 Earnings Call Transcript
For the second quarter, Wells Fargo posted an 11% dip in earnings due to lower revenue. During the quarter, Wells Fargo was slammed with a $1 billion fine by the federal regulators for misselling its products and for having fake accounts.
Meanwhile, its peers Citigroup (C) PNC Financial (PNC), and JPMorgan Chase (JPM) are also scheduled to report their results on Friday. Investors are clueless in cracking the banking industry’s performance for the recently completed quarter in the midst of the persistent trade war and rising interest rates.
Shares of Wells Fargo opened Wednesday’s regular session higher, but it has been fluctuating between the positive and negative zone. The stock had fallen over 11% in the year so far and more than 2% for the past year.
Wells Fargo slides after missing Q2 earnings
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