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Wells Fargo Sees Uptick in Loan Demand

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Speaking at the Morgan Stanley (MS) US Financials Conference this morning, Wells Fargo (WFC) Chairman, President and CEO John Stumpf said the bank is seeing a pickup in loan demand for the "first time in a long time."

Stumpf spent a few minutes making the usual CEO presentation (see the presentation slides here), but during the question and answer period opened up a bit about the uptick in loan demand the bank is seeing.

"[Loan demand] was actually quite broad-based in the fourth quarter," Stumpf said, noting that there has been good growth in auto lending, particularly in the used auto market where Wells Fargo is the largest lender in the U.S.

More interesting, however, were Stumpf's comments on Small Business Administration lending. "We've seen growth in SBA lending, so we're seeing some activity in the small business space," he said, adding that the growth is coming more from new relationships as opposed to existing customers borrowing more. Utilization rates for existing customers have not increased much, however he did note that he is "starting to hear more discussion from companies about, thinking about adding another production line or I am thinking about adding some equipment," which was not the case a year ago.

Of course, the overhang in residential real estate and consumer borrowing remains a drag on the overall economy, as seen in the Federal Reserve Senior Loan Officer Survey charts shows on The Daily Feed yesterday.

"Where we're not seeing growth is in the overall consumer portfolios, personal lines and loans, home equity, those tend to be going back," Stumpf said. "We'll see more cases when people finance a home, refinance their home putting cash in as oppose to taking cash out, which is a different phenomenon than it was a number of years ago." In other words, ongoing consumer debt reduction.
POSITION:  No positions in stocks mentioned.