Chillin' out till it needs to be funded
JP Morgan had already set the tone for the day, overperforming the most optimistic analyst estimates ith a return to $1.40 EPS on $5.7B Profits from $26B + in Revenues.
While Wells Fargo dwarfed its bigger Wall Street neighbour ith $139B in Mortgages in the quarter and a lower ratio of REfi business than $47B and 90% for JP Morgan, it was already expected to do as much and more. The Bank’s $2.81B in NII from Mortgages and a Bottomline of $4.94 B that took EPS to 88 cents , an increase sequentially and more than 20% higher over Q3 2011 failed to pacify investors and analysts awho had already expected $21.47 B in Revenues and the fall in NIMs from 3.84% to 3.66% did not help as they were expected to go that low from Stumpf’s own commentary at the end of June
Wells Fargo also increased its Deposits up 6% and is now no. 2 in deposits ( Interest bearing) behind Bank of America at nearly $800 B With a Tier I Basel II Capital of 8.04% the bank scored a low RoE opf 13.34% expecting to pass muster on the new post regulatory benchmarks at big banks but the others have much more Wall Street exposure and pretty low NIMs The conference focussed on growth of 46% in its Card business from last year and its SME lending of $11.4 B compares with over $18.1 B at JP Morgan
The new regulatory guidance for mortgages under 60 days delinquent as non accruing caused them damages to $563 M against $825 m at JP Morgan. The bank had $131 Bln in Mortgage Origination in Q2 when JP Morgan had achieved another $47 B
Retail DEposits were up $22 B from June and Retail Loans up more than $8 B mortgage Servicing repricing (MSR Valuations) and high increases in Deposits caused a larger income dip as apparently run off assets from its bad bank portfolio that were pegged to higher rates.