Wells Fargo on Thursday reported lower-than-expected first-quarter revenue amid a drop in mortgage lending, but beat earnings expectations as the bank decreased its credit reserves. The company’s shares closed 4.5% lower on Thursday.
Profit dropped 20.8% from a year ago to $3.67 billion in the first quarter, Wells Fargo reported. Slowing mortgage demand weighed on results as the Federal Reserve hikes interest rates to fight inflation and mortgage rates climb. Wells Fargo reported home lending fell 33% from the year prior.
“The Federal Reserve has made it clear that it will take actions necessary to reduce inflation and this will certainly reduce economic growth,” CEO Charlie Scharf said in a statement. Wells Fargo’s first-quarter results also come as Russia’s invasion of Ukraine has injected volatility into financial markets and has raised concerns about global economic growth.
“The war in Ukraine adds additional risk to the downside,” Scharf added.The bank’s first-quarter earnings were helped by a decrease of $1.1 billion in allowances for credit losses. The reduction added 21 cents of profit per share, Wells Fargo said.
