Wachovia first-quarter profit rises 33 pct
NEW YORK (Reuters) - Wachovia Corp. WB.N, the fourth-largest U.S. bank, said on Monday first-quarter profit rose 33 percent, helped by commercial lending growth and the acquisition of mortgage lender Golden West Financial Corp.
Earnings topped the average Wall Street forecast despite narrower lending margins, higher credit losses and slower consumer loan growth.
Net income for Charlotte, North Carolina-based Wachovia rose to $2.3 billion, or $1.20 per share, from $1.73 billion, or $1.09, a year earlier.
Excluding merger costs, profit was $2.31 billion, or $1.20 per share, topping the analysts' average forecast by 4 cents per share according to Reuters Estimates.
"The main positive was very good cost control," said Kevin Fitzsimmons, an analyst at Sandler O'Neill & Partners LP. "There is (also) relative relief. Many people expected mortgage industry problems to translate into a shortfall because of Golden West. At the end of the day, Wachovia did better."
Wachovia shares rose 93 cents to $54.93 in morning trading on the New York Stock Exchange.
Revenue rose 17 percent to $8.24 billion, short of the average forecast of $8.55 billion, while non-interest expense increased 8 percent to $4.59 billion.
Compared with the fourth quarter, revenue fell 4 percent and expenses fell 7 percent. Wachovia plans this year to finish a cost-cutting drive that may save $1 billion annually.
Wachovia was accused of overpaying when it bought Golden West -- an adjustable-rate mortgage specialist and 285-branch thrift -- for $24.2 billion on October 1.
Like many rivals, the former Golden West has been reporting declining mortgage originations and increasing delinquencies as the U.S. housing market slows.
Still, Wachovia Chief Executive Ken Thompson said "the integration of Golden West is on track, and we're pleased with the cross-sell potential of our expanded mortgage platform."
MARGINS SHRINK
Wachovia now expects 2007 growth in lending income to be unchanged to up 2 percent, compared with its January forecast for low-single-digit growth.
It also expects mid-single-digit growth in consumer loans and low-double-digit commercial loan growth, reversing the percentages it had forecast in January.
First-quarter results benefited from a 10 percent increase in average commercial loans, which helped drive a 27 percent increase in lending income, Wachovia said. Continued...
