Wells Fargo CFO says property market mixed
SAN FRANCISCO (Reuters) - Wells Fargo & Co expects the U.S. housing market to remain mixed as consumers digest conflicting news about the economy, Chief Financial Officer Tim Sloan said on Wednesday.
"You've got consumers getting good economic information one week and then another week it's not as good. There's a lot for the consumer to be concerned about, for certain," Sloan said in an interview following release of the bank's first-quarter results.
He said the housing market will "continue to be mixed" and "the primary driver for the housing industry is the economy and jobs."
San Francisco-based Wells Fargo, the fourth-largest U.S. bank and the largest U.S. housing lender, reported lower first-quarter revenue, sending its shares down 4.9 percent.
While the company posted record earnings in the first quarter, much of that increase came as it set aside less money for soured loans and released $1 billion of bad-loan reserves, sources of profit for many of Wells Fargo's competitors.
Sloan said he was proud that improving credit quality was boosting the bank's earnings.
"In saying that we recorded record earnings, part of that is that our portfolio is improving," Sloan said in the interview. "We are really proud of that. The underlying portfolio has performed much better than we expected, so quarterly charge-offs were down."
The mortgage business, Sloan added, is inherently volatile, and other lines of business, such as auto dealer services, asset-backed finance, brokerage and commercial real estate had higher loan books in the first quarter.
"This isn't the first time or the last time you're going to see a decline in the mortgage business based on the fact that refinancings have declined," Sloan said. "You don't adjust to that overnight."
Sloan added that the bank has increased cross-selling of products to retail customers, especially since its 2008 merger with Wachovia Corp
"Cross-selling is up across the board, which we are very pleased with," he said.
Sloan shrugged off the stock's decline following the earnings report. "When you look at the history of Wells Fargo, sometimes the stock goes up when you have great earnings, sometimes it goes down," he said.
"We don't run the company based upon the stock price on a daily basis. We run the company based on how we return income to shareholders," Sloan said. (Reporting by Philipp Gollner; editing by John Wallace, Dave Zimmerman)