Wells Fargo (NYSE: WFC) Q1 Profit Takes Modest Dip As Mortgage Activity Tumbles
Wells Fargo (NYSE: WFC) announced Wednesday that first quarter earnings dipped slightly, down 1 percent, compared to a year ago as mortgage activity slowed and loan losses continued to weigh on results.
The bank reported first quarter net income of $2.55 billion or 45 cents a share, down from $3.05 billion or 56 cents a share in the same period a year earlier. Profits applicable to common shareholders totaled $2.37 billion, slightly lower than the $2.38 billion booked last year.
Wells Fargo said that all of its business units posted profits, with community banking earnings $1.5 billion; wholesale banking earnings $1.2 billion, and brokerage and retirement earnings $282 million.
Revenue rose in the quarter to $21.4 billion, up 2 percent from last year. A seven percent rise in fees helped push the revenue growth.
“Once again the resiliency and advantages of Wells Fargo’s diversified business model proved themselves in a difficult business environment, even as we continued to make smooth progress with our industry’s largest merger, our integration with Wachovia,” said Chairman and CEO John Stumpf.
Wells Fargo did see a 2 percent drop in net interest income during the first quarter, to $11.1 billion.
Profits from mortgage originations sagged in the quarter as activity declined 25 percent compared to last year. The decline was largely attributed to a decline in refinancing activity.
The banks said it believes it has turned a corner on loan losses, booking a $5.3 billion provision for sour loans, down 9.9 percent from the $5.9 billion booked in the fourth quarter, but higher than the $4.6 billion incurred a year ago.
“We’re encouraged by signs of improvement in the credit cycle, and by the savings and cross sell opportunities we’re realizing as more Wachovia bank stores convert to Wells Fargo,” added Stumpf.
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