With the current job losses continue to increase at a 700K per week clip, we can expect the credit losses for WFC will rise with the higher unemployment. This will reduce the company’s bottom line, and will impact their earnings going forward.
As reported by Bloomberg, WFC charge – off rate significantly increased to $3.3B in its current quarter compared to $2.8B from the last month.
Credit Suisse analyst Moshe Orenbuch stated,
“Given rising unemployment, continued home price declines and general macroeconomic headwinds, WFC’s consumer and commercial portfolios remain at risk for meaningfully higher credit losses over 2009 and 2010.”
I think this bank stock as a lot of work to do, this rise is premature, I do not hold the shares at this time and dont intend to buy in the near future.