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Wells Fargo's Q1 Profit Falls 7% as Costs Rise and Borrower Demand Declines

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Wells Fargo,Profit,First Quarter

Wells Fargo reported a 7% decrease in profit for the first quarter due to increased costs of paying customers for deposits and a decline in demand from borrowers. However, the bank's adjusted profit of $1.26 per share exceeded analysts' expectations. The bank's net interest income also fell by 8% to $12.23 billion, primarily due to higher interest rates on funding costs and lower loan balances.

profit fell 7 per cent in the first quarter on Friday as it became more costly to pay customers for deposits and demand from borrowers declined.

The bank’s net interest income – the difference between what it earns on loans and pays out for deposits – fell 8 per cent to $12.23-billion. The shifting U.S. interest rate outlook is an important factor that will drive banks’ future profits. U.S. consumer prices increased more than expected in March, leading financial markets to anticipate that the Federal Reserve would delay cutting rates until September.

Tighter monetary policy could also crimp borrower demand and dampen economic activity, including Wall Street deal making. The lender still has eight open consent orders after the U.S. Office of the Comptroller of the Currency terminated a 2016 punishment in February.

Source: Loan Digest (loandigest.net)

Wells Fargo Profit First Quarter Costs Borrowers Demand Analysts Net Interest Income Loans

 

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