By Nupur Anand
WASHINGTON (Reuters) – Wells Fargo Chief Executive Officer Charlie Scharf said on Thursday the U.S. lender could lose $2 billion to $3 billion on its commercial real estate loan portfolio.
“We have it all set aside, so the balance sheet is less risky, but it will play out over three, four years,” Scharf said at an event.
He added that commercial real estate is generally performing very well, adding that concerns about the sector are waning as interest rates fall.
“But there will be real losses because the level of demand simply won’t be what it was (on office loans),” he said, adding that he doesn’t expect CRE to have an impact on any other asset class. .
Earlier this month, Chief Financial Officer Michael Santomassimo had warned investors in a post-earnings call that the bank expects losses in its office loan portfolio to be significant.
The lender exceeded analyst expectations with its third-quarter earnings results.
Scharf also said that the American consumer is doing well.
“Everything is performing exactly as we would expect. Spending levels are rising consistently year-on-year,” he added.
Wells Fargo is also reportedly redoubling efforts to lift the Federal Reserve’s $1.95 trillion asset limit, which is preventing the bank from growing until regulators believe problems dating back to the counterfeit accounts scandal have been resolved. 2016.
The asset cap limits Wells Fargo’s ability to take more deposits and expand its trading business, two potential growth areas for the bank, CEO Scharf said earlier this year.
(Reporting by Nupur Anand in Washington and Jaiveer Singh Shekhawat in Bengaluru; Editing by Alan Barona and Lisa Shumaker)
