Posted on 09 Apr 2009
Exceeding the most optimistic Wall Street estimates and spurring a rally in bank shares on speculation that the industry is shaking off the global credit crunch, Wells Fargo & Co., the second-biggest U.S. home lender, earned about $3 billion in the first quarter.
Net income rose about 50 percent from $2 billion a year earlier, the San Francisco-based lender said today in a statement. Per-share profit fell to about 55 cents from 60 cents after the bank sold more than $12 billion of shares in November to help fund the purchase of Wachovia Corp., which Wells Fargo said is exceeding expectations. The stock jumped 27 percent.
Wells Fargo joins Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. in citing improved results early this year. Banks benefited from a surge in new home loans and refinancings as average interest rates fell below 5 percent. Wells Fargo reported $100 billion in mortgage loans during the quarter, and said second-quarter originations are likely to be strong.
“There is a lot of activity at the lower end of the housing market,” Chief Financial Officer Howard Atkins said in a telephone interview. “We are a lot closer to the bottom.”