Wednesday, July 15, 2015

Seeking Alpha: Wells Fargo Managing Through Low Growth

Based off of the results posted Tuesday by JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC), this is shaping up as another low-to-no growth quarter for the larger banks. Low rates are offsetting most of the benefits of loan growth, and net interest leverage is coming more from shrinking the balance sheet and reducing excess deposits, while expense reduction is not really driving strong profit growth.

Wells Fargo needs higher rates and/or a stronger economy to really thrive, but I think the bank is well-placed for the realities of the market today. It is far less complex than JPMorgan, Citi (NYSE:C), and Bank of America (NYSE:BAC) and that will reduce its capital requirements, but it is large enough to benefit from significant economies of scale in marketing and distribution (cross-selling and the like). While I like the business and have no issues with Wells Fargo as a core holding, the valuation doesn't really argue for it as a must-buy today.

Continue here:
Wells Fargo Managing Through Low Growth

No comments: