Shares of Wells Fargo & Company (WFC - Free Report) rose 2% yesterday driven by the optimistic comments of CEO Tim Sloan on loan scenario in the fourth quarter based on improved customer activity.
Despite several legal tensions, Wells Fargo remains focused on maintaining its financial position. In May 2017, it doubled its cost-cutting targets to combat escalating expenses. These efforts might help the company regain confidence of its clients and shareholders.
During the conference hosted by Goldman Sachs (GS - Free Report) , Sloan commented on the regular screening of the bank’s operations. He said, “I think actually that we’ll never say it’s finished.” According to him, some other areas of mistakes might standout as the bank continues to make improvements.
Sloan is optimistic of the economic growth in the last quarter of 2017 due to the progress on tax reforms and a favorable interest rate environment.
Growth in economy is likely to have spurred some customer activity on the consumer and commercial front during the quarter. He expects customer activity to gain momentum when Trump becomes successful in enforcing the tax bill.
Another major takeaway from the conference was about his thoughts on loan growth. In the third quarter, the bank had reported nearly 1% drop in its loan portfolio, year over year. He expects commercial and industrial (C&I) lending scenario to be better in the fourth quarter.
However, he expects the mortgage segment to be impacted by seasonality during the last quarter, resulting in sluggish growth.
Sloan anticipates the auto lending segment to improve late next year.
The fake accounts fallout marked the beginning of the bank’s downward journey. Despite efforts to maintain financial health, Wells Fargo’s expense base is likely to continue impacting its financials for some time, primarily due to high legal costs.
Shares of Wells Fargo have gained 6.3% year to date, underperforming the industry’s rally of 17.7%.
Currently, the stock carries a Zacks Rank #4 (Sell).
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