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News Link • Central Banks/Banking

Wells' Interest Income Tumbles In Urgent Warning How Fed Will Cripple US Banks

•, By Tyler Durden

However, it was Wells Fargo, America's former mortgage powerhouse, that showed just how ugly the hit to bank net interest income would be, or rather already is, as long-term rates continue to slide. 

Wells Reported Q2 EPS of $1.30, beating expectations of $1.15, on revenue of $21.6BN, up 0.1% Y/Y also above the $20.93BN expected.

This revenue was made up of the two traditional components: Noninterest Income and, of course, Net Interest Income. Looking at the former first, revealed no major surprises: Noninterest income up $191 million to $1.206 billion due to the following:

Trust and investment fees up $195 million on higher asset-based fees and investment banking fees
Card fees up $81 million on higher debit and credit card purchase volumes from a seasonally low 1Q
Other fees up $30 million largely driven by higher commercial real estate brokerage commissions
Mortgage banking up $50 million:  i) Servicing income down $87 million due to the impact of lower interest rates including higher loan payoffs; ii) Net gains on mortgage loan originations up $137 million on higher origination volumes reflecting seasonality, as well as lower mortgage loan interest rates;
Trading gains down $128 million driven by lower credit products trading results
Net gains on debt securities down $105 million from a 1Q19 which included the sale of non-agency residential mortgage-backed securities (RMBS)
Net gains from equity securities down $192 million and included $258 million lower deferred compensation gains

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