A week after canceling its quarterly earnings results without explanation, Freddie Mac disclosed a fourth-quarter net profit of $1.76 billion on Wednesday.
Thank you for reading this post, don't forget to subscribe!The figure was a sequential gain on the $1.3 billion in net income reported in the third quarter of 2022, although it represented a 36% decline from a year earlier.
Officials at the government-sponsored enterprise mainly attributed the lower net revenue compared to last year and the build-up of credit reserves in its single-family business.
Net revenue for the fourth quarter decreased 13% year-over-year to $4.8 billion, driven by declines in both non-interest and net interest income. Fourth quarter non-interest income of $200 million was down 70% year-over-year, primarily driven by a decline in net investment gains in both single-family and multi-family. Those net investment gains resulted from lower volume on new loan purchases and securitization in multifamily due to lower leverage on loans placed for sale to single-family and lower volume and margin.
“In a year with significant volatility and a challenging macroeconomic environment, Freddie Mac made a home possible for 2.5 million families while delivering solid financial results,” Freddie Mac CEO Michael DeVito said in a statement. “Looking ahead, we look forward to driving even greater emphasis on our mission by advancing our affordable, sustainable and equitable housing schemes without compromising on safety and soundness. We look forward to leveraging our talented workforce, to innovate solutions We expect to accomplish these objectives by cooperating with market participants and working proactively to effectively manage risk. These actions will enable Freddie Mac to continue building the financial strength and stability that will fulfill our mission. is central to
Net interest income of $4.6 billion decreased 4% year-over-year, primarily driven by lower deferred fee income due to slower prepayments as a result of higher mortgage rates, according to a securities and exchange filing.
Loan loss provisions for the fourth quarter of 2022 came in at $600 million, up from $100 million in the fourth quarter of 2021.
Non-interest expense for the fourth quarter was $20 billion, up $50 million year-over-year, driven primarily by higher credit enhancement expense due to higher volumes of outstanding credit risk transfer transactions and higher spreads on recent transactions .
Overall, the total mortgage portfolio grew 6% year over year to $3.4 trillion, driven by 7% growth in the single family mortgage portfolio and 3% growth in the multifamily mortgage portfolio.
At the end of 2022, Freddie Mac had a net worth of $37 billion, but was still under-capitalized with $140.2 billion in Treasury funding commitments.
The government-sponsored venture reported that it reported net income of $9.3 billion and comprehensive income of $9 billion for the full year 2022, both down 23% from the previous year.
Its partner GSE, fannie maeSimilarly, 2022 saw a decline in its net income. Fannie’s net income is set to fall to $12.9 billion in 2022 as the housing market slumps, a steep decline from $22.1 billion in 2021.
Freddie’s executives did not explain on Wednesday’s earnings call why the call was abruptly canceled a week ago.
