Wells Fargo, the nation's largest mortgage lender, saw its second-quarter revenue and profit decline as rising interest rates pushed people out of the housing market.
The San Francisco bank earned $3.1 billion in the period, or 74 cents per share, coming up short of the 80 cents per share forecast by analysts surveyed by data provider FactSet. Revenue was $17 billion, down 16% from last year and below the $17.5 billion Wall Street projected. The bank had revenue of $20.3 billion and earnings per share of $1.38 in the same period a year ago.
The Mortgage Bankers Association reported Wednesday that mortgage applications have declined 14% from last year and refinancings are down 80%. Sales of existing homes have fallen for four straight months, during what is generally the busiest time of year in real estate. Wells did see an increase in interest income, which jumped 16% to $10.2 billion from $8.8 billion in last year's second quarter. The bank said that its non-interest income declined by 40%, partly reflecting a decline in deals and fewer companies going public. The bank wrote down $576 million in losses related to its venture capital investments as the stock market continued its decline in the second quarter.
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