Wells Fargo reported a 4% decline in total commercial loans for the third quarter compared to the same period last year. This decrease reflects a more cautious approach by businesses this year. CEO Charlie Scharf mentioned during a call with analysts that loan demand remains weak.
CFO Mike Santomassimo explained that rising interest rates and uncertainties surrounding the economy and elections have led companies to hesitate in increasing inventory and capital expenditures. He suggested that confidence among clients could improve once there is a clearer outlook on economic conditions, election outcomes, and a slight decrease in interest rates.
Although the Federal Reserve reduced rates by half a percentage point in September, Santomassimo noted that while this reduction is helpful, it is not a significant driver for increased borrowing. A more substantial decrease in interest rates might be necessary to stimulate borrowing.
