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Wells Fargo said Friday that second-quarter profit declined 48% from a year earlier as the firm set aside funds for bad loans and was stung by declines in its equity holdings.
Here are the numbers:
Profit of $3.12 billion, or 74 cents per share, fell sharply compared to $6.04 billion, or $1.38, a year earlier, the bank said in a statement.
For the second quarter, analysts surveyed by Refinitiv had estimated Wells Fargo would earn 80 cents. It's not immediately clear if the numbers are comparable.
«While our net income declined in the second quarter, our underlying results reflected our improving earnings capacity with expenses declining and rising interest rates driving strong net interest income growth,» CEO Charlie Scharf said in the release.
Analysts and investors have been closely poring over bank results for any signs of stress on the U.S. economy. While borrowers of all types have continued to repay their loans, the possibility of a looming recession triggered by surging interest rates and broad declines in asset values have begun to appear in results.
Wells Fargo said that «market conditions» forced it to post a $576 million second-quarter impairment on equity securities tied to its venture capital business. The bank also had a $580 million provision for credit losses in the quarter, which is a sharp reversal from a year earlier, when the bank benefited from the release of reserves as borrowers repaid their debts.
Last month, Wells Fargo executives disclosed that second-quarter mortgage revenue was headed for a 50% decline from the first quarter as sharply higher interest rates curtailed purchase and refinance activity.
It's one of the impacts of the Federal Reserve's campaign to fight inflation
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