Strong loan growth
Wells Fargo’s (WFC) loans ended in 1Q 2015 loans were up $34.8 billion, or 4%, year-over-year. Core loans were up $54.2 billion, or 7%. Commercial and industrial loans grew 13%, credit card loans grew 15%, and auto loans grew 7% year-over-year.
Credit card loan growth was driven by strong new account growth and the acquisition of Dillard’s credit card portfolio in the fourth quarter. Commercial loan growth over fourth-quarter 2014 was driven by real estate construction and lease financing.
The above graphs show Wells Fargo’s year-over-year loan and deposit growth.
Auto loan originations decline
While the bank benefits from the strong auto market, new auto loan originations were down 10% compared to a year ago. This change shows that pricing discipline might affect shares in a competitive market.
Consumer loans grew slightly compared to 4Q 2014, as growth in non-conforming mortgage, auto, security-based lending, and student loans was largely offset by pay-offs in the junior lien portfolio and seasonality in credit card loans.
JP Morgan (JPM) reported a period-end year-over-year loan growth of 5% and a core loan growth of 10% in its 1Q results, which it announced on April 14. The loan growth of Bank of America (BAC) and Citigroup (C) typically lags behind the loan growth of JP Morgan and Wells Fargo. Together, these four banks form ~27% of Financial Select Sector SPDR ETF (XLF).
Rapid deposits growth
Period-end deposits were up 9% year-over-year. The average deposit cost for 1Q 2015 was 9 basis points. It remained unchanged from the prior quarter and improved 2 basis points from a year ago.
The bank grew primary checking customers by 5.7% compared to a year ago. Primary small business and business banking checking customers increased 5.5%. Primary checking customers typically interact more with the bank, allowing for higher cross-selling opportunities. They are therefore more profitable to the bank than non-primary checking customers.