Wells Fargo chief says the economy is healing
John Stumpf acknowledges that growth has been slow, but he says he's still optimistic.
Stumpf acknowledged that economic growth has been slow. He said the economy was healing but that he doesn't think 2014 will be a breakout year.
He said government progress on a budget deal, lower unemployment and signs businesses are looking to expand give him reason to be optimistic. "As I'm talking with our customers, especially our small business and middle-market customers, I'm starting to hear a little more about expanding businesses," he said.
"I think it was five years ago to the day when I came here. . . and we were just weeks away from closing the merger with Wachovia," Mr. Stumpf said at a Goldman Sachs (GS) investor conference in New York.
He said the merger, Wells Fargo's largest, has brought the bank up to 70 million customers, 9,000 stores, and 12,000 ATMs. Through the acquisition of Wachovia's investment bank, Wells Fargo has increased its market share in that business from 4.1% in 2009 to 5.7% in the first nine months of 2013, he said.
Improving credit has bolstered financial results at banks across the industry and Mr. Stumpf said he expects the trend to continue. "It would not surprise me that this favorable tailwind on credit would last longer than we think," he said.
Net charge-offs, or loans that banks think aren't collectible, fell to 0.48% of average loans, from 1.21% a year earlier. Mr. Stumpf said he couldn't recall figures like that during his entire career.
Mr. Stumpf also said he expects the U.S. housing recovery to continue, expecting more than one million new homes to be built in the next year, in a $1.5 trillion mortgage market. A wane in refinancing activity will continue and home purchases will make up a larger percentage of mortgage activity, he said.
Wells Fargo, the largest U.S. home lender, is often viewed as bellwether for the larger housing market. The San Francisco-based bank saw its mortgage-banking income drop 43% in the third quarter to $1.61 billion from a year earlier.
Stumpf said he expects the Federal Reserve to begin to reduce the size of its bond-buying program. But, he said, that is good since it is a reflection of a better economic environment.
He also reiterated his plans to request an increase to the bank's dividend and an increase in share buybacks from the Federal Reserve as part of the bank's annual stress test process.
Don`t tell the Repubs the economy is booming.They missed the bull market and suffer from
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