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The country’s largest home lender, Wells Fargo & Co., reported better-than-expected second quarter earnings before the opening bell today, as profits surged 17 per cent to $4.62 billion, or $0.82 a share.Wells Fargo said revenues improved 4 per cent to $21.2 billion as mortgage originations advanced to $131 billion in the period, $2 billion more than the first three months of 2012.
“While the economic recovery remains uneven, we continued to meet our customers’ financial needs and benefited from signs of stabilisation in the housing market,” Wells CEO John Stumpf said.
The company’s investment banking division saw year-to-date revenue from commercial customers improve 22 per cent as markets loosen.
However, the San Francisco, Calif., based bank is less reliant on capital markets like peers J.P. Morgan Chase and Bank of America Merrill Lynch.
“We see Wells Fargo as one of the better managed companies in the bank sector and the company should benefit from its strong mortgage origination and retail brokerage franchises, as well as see further expense gains from optimising the Wachovia franchise,” Citi Analyst Keith Horowitz said before today’s announcement.
Net-charge offs at the firm, or loans Wells Fargo assumes it will never collect, declined to 1.15 per cent of its total portfolio, or $2.2 billion, the lowest level since the financial crisis began in 2007.
Shares are little changed in pre-market trade.