Wells Fargo CFO says there will be stress as economy slows

A Wells Fargo logo is seen in New York, U.S. January 10, 2017. REUTERS/Stephanie Keith

NEW YORK, Sept 13 (Reuters) – Wells Fargo & Co (WFC.N) is seeing slowing loan growth after strong growth so far this year and downward pressure on mortgage income as consumers feel the effect of rising interest rates, his main financial problem. the officer said Tuesday.

“There will be stress as the economy slows down. So it’s going to come from some of these portfolios. So far it’s holding up pretty well,” Mike Santomassimo told Barclays Investor Conference .

His comments came after the chief financial officer of US Bancorp (USB.N) told the same conference on Monday that he expects mortgage income to fall 30% to 35% in the third quarter compared to the second. quarter as the housing market slows. Read more

Hopes of a landing soft enough to avert recession are fading as the US central bank remains firm in its decision to keep raising rates until data shows a pullback in consumer prices.

American consumers and businesses are still in good financial shape despite high inflation and worries about a looming recession, some of the country’s top bankers said at a conference in New York last week. Read more

“The Fed is tightening a little more than we expected,” said Robert Reilly, chief financial officer of PNC Financial Services Group (PNC.N).

The bank saw a 40% chance of a recession in 2023, but even if that were to happen, it would be a “shallow” recession, Reilly added.

Santomassimo warned that the macroeconomic environment affects low-income segments of the population, even though this segment represents a smaller part of the bank’s business.

“It’s not going to be a big driver. But you’re starting to see that and that’s what you should expect, given the inflation we’ve seen,” he said.

Santomassimo said the bank was seeing strong net interest income due to higher rates.

“We still feel very comfortable with the 20% increase over a full year,” he said.

While the bank has seen 5% loan growth so far this year, that growth is moderating from the second quarter, Santomassimo said.

Reporting by Saeed Azhar and Lananh Nguyen in New York, Mehnaz Yasmin and Niket Nishant in Bengaluru; Editing by Mark Porter

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