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Wells Fargo profit jumps to record $3.2 bln
2009-10-21
NEW YORK (AFP) - Wells Fargo said Wednesday its third-quarter earnings rose to a record 3.2 billion dollars, as the banking giant managed to profit from mortgages and consumer credit despite a weak economy. The profit was up 98 percent from a year ago and amounted to 56 cents a share, far ahead of analyst expectations for earnings of 37 cents per share. Revenues doubled to 22.5 billion dollars, helped by the acquisition of troubled rival Wachovia. The San Francisco-based bank, the fourth-largest US bank by assets, said its integration costs for Wachovia were lower than anticipated, helping overall profits. "Doing what's right for our customers again proved to be right for our stockholders as our talented team members earned even more of our customers' business, enabling us to achieve our third consecutive quarter of record earnings," said president and chief executive John Stumpf. "The Wells Fargo-Wachovia merger, agreed to a year ago, is exceeding our expectations and already adding value for many of our 70 million customers across North America. Merger costs have been significantly less than originally expected. With our 80-plus businesses pulling the stagecoach, the diversity of our business model again showed significant power to generate capital internally." He cited "solid performance across our company -- especially among counter-cyclical businesses such as deposits, residential mortgages, debit card and asset-based lending." The company said it sees credit losses peaking in 2010, with consumer losses potentially peaking in first half of the year and gradually declining, based on current economic projections. The strong earnings from Wells Fargo came the same day Morgan Stanley beat expectations with third-quarter earnings of 757 million dollars, swinging to profit on improved investment banking operations after three straight quarterly losses. Last week, Bank of America Friday highlighted ongoing economic struggles posting a net quarterly loss of 1.0 billion dollars. Three other major US banks reported healthy third quarter results, suggesting the US financial sector may be slowly recovering from its worst crisis in decades even as the US economy has yet to emerge from recession. Aside from Wells Fargo, most of the banks have been hurting in the mortgage and consumer loan areas but profiting from corporate deals and trading. "It is still very much of a mixed picture for the recovery even at the major healthier banks," said Jon Ogg at 24/7 Wall Street. Wells Fargo said its community banking division that includes most consumer credit operations accounted for an operating profit of 2.66 billion dollars. Wholesale banking earned a profit of 598 million dollars while wealth management, brokerage and retirement accounted for 244 million dollars. "Third quarter results again illustrated the company's ability to profitably grow, even through the downward cycle despite elevated credit losses," said chief financial officer Howard Atkins.
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