By KIMBERLEY HAAS
Wells Fargo released its fourth quarter 2023 financial results on Jan. 12 and leaders there say as they continue to streamline their home lending business profitability will improve.
The company reported a net income of $3.4 billion, or $0.86 per diluted share.
CEO Charlie Scharf said in his comments that the continued execution of their more focused home lending strategy should produce higher returns and earnings over the next several years.
“As we look forward, our business performance remains sensitive to interest rates and the health of the U.S. economy, but we are confident that the actions we are taking will drive stronger returns over the cycle,” he said.
Scharf said their new credit card products have driven an increase in consumer spending at a rate significantly better than the industry average. They have also been investing in the Corporate and Investment Bank where revenue grew 26% from a year ago.
During an earnings call, CFO Michael Santomassimo said home lending revenue increased 7% year-over-year. The company continued to reduce its headcount in the fourth quarter to reflect market conditions as well as its new strategy.
“Mortgage originations declined 69% from a year ago and 30% from the third quarter, reflecting the progress we made on our strategic objectives for this business as well as the decline in the mortgage market,” Santomassimo said.
Formerly the nation’s largest mortgage lender, leaders at Wells Fargo announced last January that they were exiting the correspondent lending channel and shrinking their mortgage servicing portfolio.
That news came just days before the company released its Q4 2022 results. Net income had fallen to $2.9 billion, driven by a drop in mortgage demand.
Lawrence White, a professor of economics at the New York University Leonard N. Stern School of Business, said at the time that he hoped the move signaled a change after some turbulent times. The bank had been under fire for setting up fake accounts; mismanaging mortgages, auto loans, and deposit accounts; and allegedly discriminating against Black customers.
By the end of Q2 2023, there were signs that Wells Fargo was recovering and would continue to be a key player in the banking industry. Net income was reported at $4.9 billion, or $1.25 per diluted share.
Stock for Wells Fargo rallied more than 19% last year.
Read More Articles:
Wells Fargo Contribution To Help Train Veterans For Careers In Construction
Blackmail Threat Leads To Resignation Of NAR President
What The Top Republican Presidential Candidates Are Saying About The Housing Market
Sign up for our free newsletter.