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The San Francisco bank and Riverwoods, Ill., credit card company could "marry their existing attributes, by both building upon existing strengths while solving each side's challenges," it argues.
September 5 -
Loan demand is soft and competition for borrowers is intense, creating tension between building portfolios and sustaining yields. Some banks have posted leaps in volume just to tread water in profitability.
August 10 -
It's not too soon for CEOs to think about how they'll fill the profit hole sure to come when interest rates rise and the number of borrowers eligible to refinance ultimately drops.
July 30
Wells Fargo's (WFC) chief financial officer Tim Sloan on Tuesday threw cold water on the idea that the San Francisco bank would acquire credit card issuer Discover Financial Services (DFS) — though he never mentioned Discover by name.
Rumors of a merger between the two giants swirled last week when analysts with Susquehanna Financial Group issued a report titled, "Call Me Maybe … Wells Fargo Should Buy Discover."
Speaking at the Barclays Global Financial Services Conference in New York, Sloan admitted that Wells' growth in credit cards has been "disproportionately low relative to competitors." But he said Wells is far more focused on cross-selling credit cards to its existing customers than on buying credit card assets.
"We think there is an opportunity to grow our credit card business organically," Sloan said during a question-and-answer session. "We don't feel that we need to do an acquisition in credit cards to grow the portfolio."
During the Q&A, Sloan also fielded questions about whether Wells was preparing for an eventual slowdown in refinance activity. Wells, now the largest mortgage lender and servicer in the U.S., had $102 billion in its mortgage pipeline at the end of the second quarter and Sloan said he expects third quarter originations will be strong as well.
Still, "at some point the volume and activity in our mortgage business is probably going to decline," Sloan said. "One of the keys to a good margin in this business is making quick but difficult decisions when volumes decline. It's important to have targets for origination activity and volume levels that once you begin to hit those targets you would begin to bring down expenses."
Sloan did not try to pinpoint when such a slowdown would occur since interest rates are expected to stay low for some time. He said Wells had been "very fortunate" in the last few cycles to have revenue to offset the decline in mortgage originations.
"Whether or not we can grow earnings to exactly offset any decline in the mortgage business, I can't promise you," Sloan added.
