Wells Fargo 2nd-qtr profit rises
NEW YORK (Reuters) - Wells Fargo & Co. (WFC.N), the fifth-largest U.S. bank, said on Tuesday second-quarter profit rose 9 percent, as growth in several fee categories offset a decline in mortgage banking income.
Net income for the San Francisco-based company increased to a record $2.28 billion, or 67 cents per share, from $2.09 billion, or 61 cents, a year earlier. Revenue rose 13 percent to $9.89 billion.
Analysts on average forecast profit of 67 cents per share on revenue of $9.63 billion, according to Reuters Estimates.
John Stumpf, who replaced Richard Kovacevich as chief executive last month, said Wells Fargo won more business from existing customers, offsetting "industry headwinds of a weaker housing market, a flat yield curve and slower deposit growth."
Fee income rose 23 percent to $4.7 billion, as larger gains from trust and investment fees and card fees helped make up for a 6 percent drop from mortgage banking for the second-largest U.S. mortgage lender.
Mortgage revenue fell 13 percent from the first quarter, hurt by a decline in the value of servicing rights. Home loan applications rose 6 percent to $114 billion as refinancings increased, while originations fell 1 percent to $80 billion.
Wells Fargo has not been hit as hard as many rivals by the housing downturn. It does not make "negative amortization" loans that let homeowners pay less than principal and interest due, and passes off some credit risks to investment banking partners.
Lending income rose 4 percent to $5.2 billion, as net interest margin rose to 4.89 percent from 4.76 percent.
Wells Fargo shares closed Monday at $35.45 on the New York Stock Exchange. The shares are little changed this year, compared with a 2 percent drop in the Philadelphia KBW Bank Index .BKX.
CREDIT LOSSES RISE
Profit rose 14 percent to $1.55 billion from retail banking, and 13 percent to $570 million from wholesale business banking. At Wells Fargo Financial, which lends to less creditworthy people, profit fell 31 percent to $156 million.
Customers also bought more products. The bank said it sold an average of 5.4 products to each retail customer, up from three when Norwest Corp. and Wells Fargo merged in 1998.
Total credit losses rose 67 percent to $720 million from $432 million a year earlier, and 1 percent from the first quarter's $715 million.
Wells Fargo has more than 3,200 branches, mainly in the western two-thirds of the United States, and $539.9 billion of assets.
Billionaire Warren Buffett's Berkshire Hathaway Inc. (BRKa.N) (BRKb.N) is the bank's largest investor, owning 7 percent of its stock as of March 31, Thomson ShareWatch said.
(Reporting by Jonathan Stempel)
