United States  

It's Not All Bad News For Wells Fargo's Earnings and the Economy

Video Credit: The Street - Duration: 01:18s - Published
It's Not All Bad News For Wells Fargo's Earnings and the Economy

It's Not All Bad News For Wells Fargo's Earnings and the Economy

Wells Fargo earnings weren't exactly what investors were looking for, but there was one positive in the report the could bode well for the bank and will bode well for the economy.

Wells Fargo shares fell 1.32% to $48.62 apiece Tuesday after the consumer banking giant missed earnings estimates.

Here were the results: Earnings per share for the third quarter came in at $1.12, missing Wall Street's forecast of $1.15.

Revenue, though, was $22.01 billion, better than analysts estimates of $21.19 billion.

Negatively, Wells Fargo's net interest margin, or the marginal difference between the interest at which the bank borrows at and lends at, missed estimates.

The margin was 2.66%, missing expectations of 2.69%.

Net interest income was $11.63 billion, missing expectations of $11.7 billion.

Lower interest rates in the U.S. put pressure on Wells Fargo's ability to lend at attractive rates.

But here's the good news: The lower interest rates spurred loan growth, especially in home loans.

Wells Fargo's loan originations grew to $38 billion in the third quarter, better than the second quarter's $33 billion.

The company said this was a direct result of lower rates, spurring demand for houses.

The volume growth in home loans was "primarily due to lower mortgage loan interest rates," Wells Fargo said in its earnings release.

Of course, this was not enough to offset the lower results for the rest of the company's operations, but is certainly a tailwind for Wells Fargo going forward.

For the rest of the economy, lower rates and stronger demand for housing is a positive.

The broader U.S. market responded in kind.

The S&P 500 rose 0.29%, with the other two major U.S. indices higher as well.

The 10 year treasury yield fell to 1.69%, as investors are expecting to hear from several Federal Reserve members, who may point to further interest rate cuts.

Stick with Real Money all day for the last on Stock of the Day Wells Fargo.

Bull Market Fantasy: LIVE TUESDAY & THURSDAY @10:45AM Subscribe to our Youtube Channel for more videos : Listen our latest Podcasts on Soundcloud Catch Up: Today's Top News Videos Below


You Might Like


Tweets about this


Related videos from verified sources

Cramer: Trading on Fed Predictions or China Trade Headlines Will Cost you Money [Video]

Cramer: Trading on Fed Predictions or China Trade Headlines Will Cost you Money

In his latest column on Real Money, Jim Cramer noted that this market is playing two of its favorite parlor games: predicting the Fed and overacting to trade headlines. And by "favorite," he means the..

Credit: The Street     Duration: 04:40Published
What's Spooking the Market This Halloween? Cramer on Fed, Trade, Earnings [Video]

What's Spooking the Market This Halloween? Cramer on Fed, Trade, Earnings

Never fear, Jim Cramer is here. As you open what's destined to be only your first bag of candy, Jim Cramer and Action Alerts PLUS research analyst Zev Fima are breaking down what could have this market..

Credit: The Street     Duration: 14:24Published
Facebook's Healthy Earnings Beat Drives Optimism About Its Prospects [Video]

Facebook's Healthy Earnings Beat Drives Optimism About Its Prospects

Facebook's top and bottom line beat lifted shares Thursday, driving optimism about the stock. Shares rose 4.39% to $188.25 a share Thursday after the social networking giant reported third quarter..

Credit: The Street     Duration: 01:30Published