Per a Bloomberg article, Wells Fargo & Company (WFC - Free Report) plans to boost auto lending business as CEO Tim Sloan finds the commercial real estate (CRE) unit to be a concern.
In an interview with Bloomberg, Sloan commented on auto lending by saying, “we’ve pulled back enough and now we’re going to be growing that business again”. In mid-2017, the bank had reduced focus on this business due to fall in reselling value for cars. Decline in prices made it difficult for the bank to offset losses by repossessing cars in cases of default by borrowers.
However, in February 2018, Wells Fargo indicated plans to consolidate its auto lending units and put the division back on track within two quarters.
Regarding CRE, Sloan said that some deals had been insignificant. He noted that 2018 gave a good start to the business. The market at the time was enjoying benefits from lower tax rates and improved consumer spending, which made the buyers more aggressive.
Having seen so much since the fake account scandal in September 2016, troubles at Wells Fargo still seem to continue. Last week, the bank brought to the notice of the regulators that employees at its Wholesale Banking segment added or changed some personal information of clients, without their knowledge, between late 2017 and first few months of 2018.
Affected by a horde of scandals, Wells Fargo has been trying hard to control costs and concentrate on more profitable segments. In its Investors’ Day, held on May 10, the bank said that it expects to reduce expenses by $2 billion in 2018, followed by another $2 billion in 2019.
We believe that Wells Fargo’s impressive cost-control plan will help it deal with persistent legal expenses. Also, the bank’s efforts to revamp its financial position supported by lower tax rates and rising rate environment might help it overcome the negatives.
Shares of Wells Fargo have gained 2.2% in the past year, significantly underperforming the industry’s rally of 18.1%.
Wells Fargo currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
BOK Financial Corporation (BOKF - Free Report) has witnessed 4% upward estimate revision for current-year earnings in the last 60 days. Over the past year, the company’s share price has been up more than 25%. It currently carries a Zacks Rank of 2 (Buy).
GAIN Capital Holdings’ (GCAP - Free Report) 2018 earnings estimates has been revised 8.6% upward for the last 60 days. Additionally, the stock has jumped more than 30%, in a years’ time. It currently carries a Zacks Rank #2.
M&T Bank Corporation (MTB - Free Report) has witnessed upward estimate revision of 2.2% for the current-year earnings, over the last 60 days. Also, the company’s shares have risen more than 10% in the past year. It carries a Zacks Rank of 2, at present.
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