Wells Fargo, once the nation’s largest home lender, reduced staff in its mortgage business, which suffered a sharp drop as high borrowing costs have spooking buyers and stalled the housing market.
Nearly seven years after its sham accounts scandal came to light, the bank remains under an asset cap restriction imposed by the Federal Reserve in 2018 that limits its growth. Charles W. Scharf, the bank’s chief executive, described the penalties Wells Fargo paid last quarter as “an important milestone in our work to resolve historical issues.”
Goldman Sachs, which reports earnings next week, on Friday disclosed for the first time that its misbegotten effort to expand into consumer banking had resulted in $3 billion in losses since 2020. The investment bank cut around 3,200 jobs this week.
Investment banking was a sore spot for many banks, with falling markets and rising interest rates leading to a drop in corporate lending and deal-making that cut into banks’ profits. JPMorgan’s investment banking revenue plunged to $1.4 billion in the fourth quarter, down 57 percent from a year earlier, and Bank of America’s fees fell to $1.1 billion, a 54 percent decline.
Understand Inflation and How It Affects You
Jeremy Barnum, JPMorgan’s finance chief, said on a call with analysts that the investment banking division’s pipeline was “relatively robust,” but that closing deals was “very sensitive to market conditions and sentiment about the economic outlook.”
But the bank chiefs generally described consumers as healthy and resilient, with account balances still fattened by pandemic savings. Higher interest rates bolstered profits in consumer units by allowing them to charge more on loans, and defaults on credit cards and other loans remain very low by historical standards.
“The labor market remains strong and holiday spending was better than expected, in part because consumers have been dipping into their savings,” Jane Fraser, the chief executive of Citigroup, said on a call with analysts.
