Wells Fargo chief executive officer Charlie Scharf on Thursday, October 24, said that this financial institution, which is one of the largest in the United States, may face losses in the amount of $2 billion to $3 billion on its loan portfolio in the commercial real estate area.
The head of the mentioned bank noted that the lender has reserved for the specified risk. According to him, the balance sheet of a financial institution is not under threat. He also stated that it’s going to play out over the next three to four years.
According to Charlie Scharf, the commercial real estate sector as a whole is performing very well. Also, in the relevant context, he separately noted that concerns about the state of affairs in this industry are decreasing against the background of cutting interest rates. At the same time, according to him, there are real losses that will be taken, since the level of demand for office loans will not be the same as in the past. He also does not expect that the situation in the commercial real estate sector will become an impact factor on any other asset class.
This month, Wells Fargo chief financial officer Michael Santomassimo warned investors that the financial institution expects lumpy losses on its portfolio of office loans.
It is worth noting that the bank’s earnings for the third quarter of 2024 exceeded analysts’ preliminary expectations regarding the dynamic of the corresponding indicators.
Charlie Scharf also on Thursday positively assessed the state of affairs in the consumer sector of the US. According to him, in this case, there is a dynamic of the situation, which corresponds to the preliminary expectations of Wells Fargo. Also, in the relevant context, he stated that the level of spending shows consistent growth on a year-over-year basis.
