Wells Fargo & Co. (WFC: Quote) reported Friday a profit for the fourth quarter that increased 25 percent from last year, reflecting higher mortgage banking revenue and decline in loan-loss provisions. However, net interest margin declined 8 percent. Both earnings per share and quarterly revenues topped analysts' expectations.
"We saw the continued benefits of our diversified business model and reported record full year and fourth quarter earnings, robust deposit and solid loan growth, and strong performance across our business units," Chairman and CEO John Stumpf said in a statement.
Wells Fargo is the largest originator of home mortgages in the U.S. and under a federal program, has the mandate to originate, underwrite, and certify mortgages for FHA insurance.
San Francisco, California-based Wells Fargo reported net income applicable to common stock of $4.86 billion or $0.91 per share for the fourth quarter, up 25 percent from $3.89 billion or $0.73 per share in the prior-year quarter.
On average, 24 analysts polled by Thomson Reuters expected earnings of $0.89 per share for the fourth quarter. Analysts' estimates typically exclude one-time items.
Total revenue for the quarter grew 7 percent to $21.95 billion from $20.61 billion in the same quarter last year, and topped twenty-two Wall Street analysts' consensus estimate of $21.29 billion by a whisker.
Wells Fargo, the fourth-largest bank in the U.S. by assets, noted that the revenue growth mainly reflected a 16 percent increase in non-interest income, including 30 percent growth in mortgage banking revenue, and 8 percent rise in card fees.
Net interest income declined 2 percent to $10.64 billion, and net interest margin dropped 8 percent to 3.56 percent from last year's 3.89 percent. Meanwhile, non-interest income grew 16 percent to $11.31 billion from last year. Provision for credit losses declined 10 percent year-over-year to $1.83 billion.
Average loans for the quarter increased 2 percent and average core deposits grew 7 percent from last year.
Segment-wise, community banking net income grew 14 percent and revenue increased 6 percent on higher mortgage banking revenue and above-average quarterly equity gains, partially offset by lower net interest income.
Wholesale banking net income increased 24 percent, as 11 percent higher revenue was partially offset by a 2 percent increase in non-interest expense and higher provision for credit losses. Wealth, brokerage and retirement segment net income also advanced 13 percent, and revenues grew 2 percent from last year.
For fiscal 2012, the company reported net income of $18.9 billion or $3.36 per share, higher than $15.95 billion or $2.82 per share in the prior year. Analysts expected the company to report earnings of $3.35 per share for fiscal 2012.
Total revenues for the full year grew 6 percent to $86.1 billion from $80.9 billion in the previous year. Street was looking for full-year 2012 revenues of $85.69 billion.
WFC closed Thursday's regular trading session at $35.40, up $0.37 on a volume of 37.49 million shares. In the past 52-week period, the stock has been trading in a range of $28.77 to $36.60.
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by RTT Staff Writer
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