Freddie Mac’s Net Worth Doubles Annually, Reveals Q2 2021 Profit

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Freddie Mac had a successful second quarter as its profit more than doubled from last year, thanks in large part to the release of the credit reserve.

The net profit of a government-funded enterprise of $ 3.7 billion increased from $ 2.8 billion in the first quarter and $ 1.8 billion a year earlier. Total revenue also increased to $ 3.6 billion in the second quarter, up from $ 2.4 billion in the quarter and $ 1.9 billion in the year.

Total income increased to $ 5.9 billion from $ 5.3 billion in the first quarter and $ 4.1 billion a year earlier. “Freddie’s single-family business was primarily profitable thanks to high net interest income and the release of reserves,” CFO Chris Lone said in the income statement.

“Implemented rise in price of a house and improved economic conditions resulted in the release of the reserve this quarter, resulting in a $ 200 million lending benefit, compared to a $ 700 million lending cost in the second quarter of 2020, ” Lown said.

The single-family business generated nearly $ 2.9 billion in net income, almost $ 2.8 billion in combined revenues and $ 4.7 billion in net revenues. They were $ 1.7 billion, $ 1.4 billion and $ 3.8 billion, respectively, in the first quarter and $ 772 million, $ 875 million and $ 2.7 billion in the second quarter of 2020. Freddie’s growth in mortgage portfolio, higher average guarantee fees, and higher recognition of deferred income income have led to single-family surges.

The multi-family sector saw a decline across all three profit levels: to $ 824 million in net income, $ 830 million in total revenue and less than $ 1.2 billion in net revenue. For comparison: 1 billion, 968 million and 1.4 billion dollars for the quarter and 1 billion, 1.1 billion and 1.5 billion dollars on an annualized basis.

“The lower net return on investment has led to a decline, primarily due to a smaller narrowing of the certificate spread and the impact of lower volume,” said Lown. “The multi-family business has shown new business activity of $ 27 billion since the beginning of the year, down $ 3 billion from the previous year, driven by increased competition and a lower ceiling on loan repurchases.”

Meanwhile, Freddie’s capital position surged to $ 22.4 billion in the second quarter, up from $ 18.8 billion at the end of the first quarter and nearly double the $ 11.4 billion from last year.

New CEO Michael DeVito – whose lending experience is 24 years in Wells Fargo before joining Freddie Mac – outlined GSE’s commitment to being a world-class risk manager, building capital and investing in capital to achieve its long-term goals. the desire to leave guardianship. It also refocused its focus on reaching underserved markets with affordable housing funds.

“I am confident that Freddie Mac can have a positive impact on solving the problem. long-standing problems of fundamental justice for people in communities of color at all income levels, ”said DeVito. “This mission and these opportunities are some of the main reasons I joined the firm.”



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