Wells Fargo & Co’s (WFC.N) Chief Executive Officer Charlie Scharf said on Wednesday that there will be losses in the office loan space but the lender was proactively managing its portfolio.
“We will see losses, no question about it. But in the context of the overall portfolio and the overall size of our loan portfolio with the company, we are not overly concentrated in office (loan space),” Scharf said while speaking to investors at a conference.
The bank’s outstanding commercial real estate (CRE) loans stood at $154.7 billion, or 16% of total loans, with $35.7 billion in office loans at the end of March.
Office loans have posed concerns for some lenders as property values decline and more borrowers default on their loans.
Scharf also said that consumer spending and credit quality remain strong but the bank has tightened credit in its card business in areas where the lender was beginning to see early signs of weakness.