Wells Fargo, Bank of America Post Big Drops In 2Q Earnings
Summary
Wells Fargo said home-lending revenue declined 53% from a year ago and 35% from the first quarter, driven by lower mortgage originations and compressed margins, “given the higher rate environment and continued competitive pricing in response to excess capacity in the industry,” Scharf said. Chief Financial Officer Mike Santomassimo told analysts during an earnings webcast that the mortgage market is expected to remain challenging in the near future, and that reductions in force may continue to be necessary. “The Federal Reserves commitment to an aggressive rate hike cycle as a means to tame high persistent inflation continues to fuel market volatility and is expected to slow the economy, which will impact our consumer and commercial customers,” Scharf said, while adding that, “despite the economic environment, I remain optimistic about our future.” Meanwhile, Bank of America, the nation’s second-largest bank, today reported second quarter net income of $6.2 billion, or $0.73 per diluted share, down 32.6% from $9.2 billion in the second quarter of last year. With last week’s report that inflation had risen to 9.1% annually, the Feds Federal Open Market Committee is expected to boost its rate another 75 basis points, following a similar increase in June. Bank of America also reported during its earnings webcast that it had reduced its staff by 700 people, and company officials said they were doing “many things to tackle challenging labor market conditions.”