November 2012

TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 75 of 79

LOCAL EDITION SECONDARY MARKET Wells, JPMorgan Post Record Quarterly Profits THIRD-QUARTER FINDINGS FOR BOTH FINANCIAL INSTITUTIONS WERE ON THE UPTICK, WITH RISING ORIGINATIONS PLAYING A ROLE IN THE IMPROVEMENTS. NEW YORK // Increased mortgage-related revenue pushed both Wells Fargo and JPMorgan Chase to record quarterly profits in Q3 2012, the banks reported. JPMorgan posted a record net income of $5.7 billion, with net revenue at $24.9 billion. The bank saw growth in mortgage originations, reporting $47 billion, a 29 percent increase from the prior year. Year-to-date, JPMorgan reported originating 664,000 mortgages. Meanwhile, mortgage loan they also both saw drops in their net interest income, owing largely to the low-rate environ- ment. JPMorgan reported drops in net interest income in most categories and overall, and Wells Fargo's net interest margin deflated from 3.91 percent in the second quarter to 3.66 percent in the third. according to survey results released by the Professional Risk Managers' International Association (PRMIA). The survey, conducted by PRMIA for FICO, showed that the majority of bank risk professionals expect mortgage loan delinquency to either fall or remain the same. muted confidence on the issue of supply and demand for lending products. Just more than half (51 percent) of respondents are ex- pecting an adequate credit sup- ply for new mortgage financing to match increasing demand in the housing market. Meanwhile, 59 percent of those surveyed ex- pect lending will be able to keep pace with demand for mortgage refinancing. Student loan debt became application volumes were $73.2 billion, up 26 percent year-over- year and 9 percent quarter-to- quarter. JPMorgan Chairman and CEO Jamie Dimon said the increase in mortgage revenue stems from overall improvements in the housing market. "We believe the housing the one wrench in the works, with 61.1 percent of risk man- agers expecting an increase in delinquency. Rising student debt may take a toll on housing as young adults find themselves too burdened by their current loans to take on a mortgage loan. "It looks like the consumer percent of respondents said they expect delinquency on home equity lines of credit (HELOCs) to either fall or remain flat. The American Bankers Association reported earlier a 4.09 percent increase in HELOC delinquency in Q2. Respondents expressed more At the same time, roughly 74 market has turned the corner. In our mortgage banking business, we were encouraged that credit trends continued to modestly improve, and, as a result, the firm reduced the related loan loss reserves by $900 million," Dimon said in a statement. While mortgage performance did improve, Dimon noted the level of charge-offs remains elevated and said the bank ex- pects to see high default-related expenses "for a while longer." Wells Fargo reported record credit markets are now per- forming pretty well," said Dr. Andrew Jennings, chief analyt- ics officer at FICO and head of FICO Labs. "The economy may not be going gangbusters, but credit activity seems to be picking up and lenders appear to have a handle on risk." He continued: "However, net income of $4.9 billion for the quarter, up approximately $800 million from Q3 2011. The bank posted $139 billion Risk Managers Share Positive Outlook in originations (up from $131 billion in the previous quarter), while applications fell to $188 billion (from $208 billion before). The application pipeline also dropped a bit, posting $97 billion as of quarter-end. While both banks saw record profits in the third quarter, 78 | THE M REPORT DISPLAYING OPTIMISM RELATED TO MORTGAGE AND EQUITY LOANS, BANKERS RESPONDING TO PRMIA'S RECENT STUDY CALLED FOR DROPPING DELINQUENCIES. DELAWARE // Optimism among bankers continued to rise in the year's third quarter, respondents said they expect mortgage delinquency will either stay flat or decrease in the next six months, while 24.2 percent expect delinquency will rise— a 2 percent decrease from Q2 and an 11 percent decrease from Q1. PRMIA called the drop in delinquency predictions "encour- aging," as sentiment on delin- quency usually experiences a dip in the third quarter. A combined 75.7 percent of a couple of persistent is- sues are causing problems for many households and creating a headwind for the broader economy: the tight market for new mortgage lending and the rise in student loan debt, which is weighing down many young adults." Holliday Fenoglio Lands in Fortune, S&P 600 BASED ON THE ORGANIZATION'S REVENUE, EPS GROWTH, AND THREE- YEAR ANNUALIZED RETURNS, HFF WAS NAMED THE FIFTH FASTEST-GROWING COMPANY BY FORTUNE. SECONDARY MARKET ANALYTICS SERVICING ORIGINATION

Articles in this issue

Archives of this issue

view archives of TheMReport - November 2012