Second quarter mortgage volumes improving at Wells Fargo, JPMorgan and Citi
“Credit performance during the second quarter was in line with our expectations,” Wells Fargo CEO Charlie Scharf told analysts. “Consumers have benefited from a strong labor market and wage increases. The performance of our consumer auto portfolio continued to improve, reflecting previous credit tightening measures, and we had a net recovery in our home loan portfolio.”
Citi, the smallest of the three mortgage depositories, originated $4.3 billion in home loans from April to June, up 39% from the previous quarter but down 4% from same period in 2023.
Amid higher production levels, JPMorgan also expanded its services portfolio in the second quarter, which was not the case for Wells Fargo. JPMorgan’s mortgage servicing rights (MSRs) increased to $8.8 billion in the second quarter of 2024, compared to $8.6 billion in the first quarter of 2024 and $8.2 billion in the second quarter of 2023.
Meanwhile, Wells Fargo’s MSRs – as measured by period-end book value – fell 3% quarter-over-quarter to $7 billion in the second quarter of 2024. Unpaid principal balance (UPB) fell by 14 % compared to the same quarter last year. year.
Generate revenue
Its home lending business brought JPMorgan $1.3 billion in net revenues in the second quarter of 2024, up 11% from $1.18 billion in the previous quarter. The bank had $189 million in service revenue in the second quarter of 2024, up from $144 million in the previous quarter.
JPMorgan Chief Financial Officer Jeremy Barnum told analysts that home loan revenue performance was “primarily driven by higher net interest income.”
Wells Fargo generated $823 million in revenue from its home lending business in the second quarter of 2024. The bank said in a statement that home loans were down 3% year-on-year “due to lower net interest income from lower loan balances” and down 5% from the previous quarter. last quarter “on lower income from mortgage banks.”
Wells Fargo’s revenue decline reflects its focus on simplifying its home lending business and the continued decline in the mortgage market, according to Chief Financial Officer Michael Santomassimo. “Since announcing our new strategy in early 2023, we have reduced our home lending workforce by approximately 45%,” he said.
The bank also generated non-interest mortgage income of $243 million in the second quarter of 2024, up from $230 million in the previous quarter. Net service income declined 2% quarter-over-quarter, but increased 44% year-over-year to $89 million.
In total, JPMorgan posted a profit of $18 billion – or $13.1 billion if extraordinary items are excluded, such as a multi-billion dollar profit linked to a Visa stock swap – in the second quarter, while the economy was “making some progress and bringing inflation down,” according to CEO and Chairman Jamie Dimon.
“But multiple inflationary forces still await us: large budget deficits, infrastructure needs, trade restructuring and remilitarization of the world. Therefore, inflation and interest rates may remain higher than the market expects,” Dimon said in a statement.
Wells Fargo reported second-quarter net income of $4.9 billion, while Citi reported $3.2 billion during the period. Citi CEO Jane Fraser said the bank has made “incredible progress in simplification – both strategically and organizationally.”
