Wells Fargo posted a record profit of $4.9 billion for the third quarter as mortgage lending picked up, but weaker-than-expected revenue left investors disappointed.
The nation's largest mortgage lender said it originated $139 billion of mortgages during the third quarter, up 6% from a year earlier, as record low interest rates drove homeowners to refinance. But the low rates also weighed on the interest income that Wells Fargo earns on its loans and other investments. In fact, the bank's profit margin from lending and investing, a key financial measure for banks, fell to 3.66% from 3.88% a year ago.
Shares of Wells Fargo (WFC) closed down almost 3% on Friday, and the bank's earnings were a hot talking point on Stocktwits. So too was JPMorgan Chase (JPM), which reported a record profit for the third quarter and increased revenue in every business line.
While both Wells Fargo and JPMorgan both delivered record earnings, one user pointed out that part of the reason is that they've been trimming their reserves. That's especially worrisome, as just earlier this week, the U.S. government sued Wells Fargo over claims that the bank made reckless home mortgage loans for a decade.
Libor. How many people gave it a passing thought before this scandal? In fact, I'm surprised that more people are still not giving it much thought.
The scandal, after all, is another sign of banks doing what they want, making a lot of money and not really getting in all that much trouble (yet, anyway).
To review: The London Interbank Offered Rate is the basis for many consumer loans and investments. It MORECatherine Tymkiw - Jul 9, 2012 3:19 PM ET
|71% of Americans believe economy is 'rigged'|
|Google Earth just got way better|
|20 stocks to buy after Brexit chaos|
|The Hyperloop dream just got one step closer to reality|
|Richard Branson ditches plans to buy company employing 3,000 after Brexit|