As major banks recalibrate their exposure to commercial real estate, JPMorgan Chase and Wells Fargo reported third-quarter earnings that reveal diverging strategies and outcomes within the sector. Their latest results suggest that while the broader market may be stabilizing, the path each lender is taking reflects distinct approaches to managing risk and future growth.
JPMorgan Chase reported continued modest gains in its commercial real estate business. The segment generated $901 million in revenue for the third quarter of 2025, a 4.5% increase from the previous quarter’s $862 million, though still down 6.1% from a year earlier. It remains the smallest contributor within the firm's banking and payments division, which totaled $9.48 billion in revenue for the quarter. The bank’s commercial real estate balances ticked up slightly to $146.45 billion, from $145.19 billion in the prior quarter and $144.95 billion a year ago, reflecting roughly 1% growth over the past year.
Wells Fargo’s results told a different story. The bank’s commercial banking operating segment ended the quarter with $219.4 billion, down 3% from the previous quarter and 1% year-over-year. Commercial real estate loans fell more sharply, down 15% from the second quarter to $37.6 billion and 16% from the same period in 2024. Within that portfolio, multifamily remained the largest exposure at $37.7 billion, followed by industrial and warehouse at $23.9 billion, hotels and motels at $11.9 billion, retail at $10.7 billion, shopping centers at $8.1 billion, institutional properties at $5.9 billion and other categories totaling $8.5 billion.
Office properties continued to dominate Wells Fargo’s nonaccrual loans, totaling $2.45 billion in the third quarter, though that figure improved from $2.53 billion in the prior quarter and $3.53 billion a year earlier. On the company’s earnings call, Chief Financial Officer Michael Santomassimo noted that the bank’s net loan charge-off ratio declined by four basis points quarter-over-quarter and nine basis points year-over-year.
“On the commercial side of things, you still see a little bit of a decline in the commercial real estate book,” Santomassimo said, adding that the office portfolio has fallen roughly one-third over the past two years. He described the reduction as a positive development that could pave the way for future growth as other property sectors strengthen.
Taken together, JPMorgan’s cautious expansion and Wells Fargo’s portfolio pruning suggest an industry searching for equilibrium. Analysts, including those at Harvard and other financial research groups, have noted that large banks are gradually working through the aftereffects of stressed office loans and tightening credit conditions. The latest results indicate that commercial real estate lending may be nearing a bottom, supported by improving fundamentals and a more disciplined lending posture across the sector.
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