Wells Fargo expects its book of commercial real estate loans to shrink as the bank struggles with governance issues.
CFO John Shrewsberry said during a conference Friday that he expects commercial real estate and industrial loans to fall from second-quarter levels, the Wall Street Journal reported.
Shrewsberry pointed to the bank’s deliberate lending discipline and a competitive lending environment with an influx of alternative funding sources as reasons for the decline.
But Wells Fargo is also facing fallout from scandals relating to the bank’s 2016 account-sales controversy. In the second quarter, the bank booked $171 million in costs to compensate consumers who were wrongly charged for currency trades, and the Justice Department is probing whether employees in the bank’s wholesale unit committed fraud by adding information to customer documents without their consent.
Wells Fargo’s total book of outstanding loans shrunk by $3 billion in the second quarter from the previous three-month period. Meanwhile, competitors like Citigroup and JPMorgan Chase gave rosy lending forecasts. [WSJ] – Rich Bockmann