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.
Not a member yet?Sign up now for a free account
|The medical marijuana ad that never aired, despite contrary media headlines|
|2 million students missing out on college aid|
|China to fight pollution with drones|
|GM raising Corvette prices|
|Boeing reports wing cracks on Dreamliners|