Wells Fargo posts Q2 revenue, profit declines

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.

Investors appeared less concerned with the bank's topline numbers and more impressed with an 8% increase in loan balances, however. Wells saw growth in consumer and corporate lending and new credit card products.

This week, Wells Fargo launched its fourth new credit card since the beginning of the year and it expects to offer several more rewards-based cards. The bank said its new credit card accounts are up more than 60% from a year ago and credit card spending increased 28%.

Wells' revenue from its home lending division fell by 53% in the quarter, as the housing market cooled in the face of rapidly rising interest rates. Mortgage loan originations, including refinancing, fell sharply in the quarter.

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.