Wells Fargo profit up 17 percent, mortgage banking strong

SAN FRANCISCO, Fri Jul 13, 2012 – Wells Fargo & Co. reported a 17 percent increase in second-quarter profit on strong mortgage banking income and improved credit quality.
The nation’s fourth-biggest bank on Friday said net income was $4.6 billion, or 82 cents a share, compared with $3.9 billion, or 70 cents a share, a year earlier.
Analysts’ average estimate was 81 cents a share, according to Thomson Reuters I/B/E/S.
Wells Fargo, the U.S. leader in home loans, posted mortgage banking income of $2.9 billion, up from $1.6 billion a year ago and up slightly from the first quarter.
The bank also benefited by releasing $400 million in reserves previously booked for loan losses.
“Wells Fargo’s strong financial results this quarter again reflect the benefit of our diversified business model,” CEO John Stumpf said in a statement.
Revenue was $21.3 billion, up from $20.4 billion a year ago. Expenses totaled $12.4 billion, down slightly from a year earlier.
The bank previously said it expected expenses to fall to $11.25 billion by the fourth quarter as part of an efficiency push. But on Friday it said it would miss that target.
The bank’s shares were down 5 cents at $32.80 in premarket trading.
Wells Fargo and JPMorgan Chase & Co. kicked off bank earnings season on Friday.
JPMorgan, the largest U.S. bank, reported net income of $4.96 billion, or $1.21 a share, including a $4.4 billion trading loss. That compared with $5.43 billion or $1.27 a share, a year earlier.