Wells Fargo & Co. (WFC), the fourth-largest bank in the U.S. by assets, Friday reported a 23 percent increase in profit for the first quarter, helped by lower loan loss provisions, despite a marginal drop in revenues.
Larger rival JPMorgan Chase & Co. (JPM) Friday reported a 33 percent jump in first-quarter profit, reflecting strong growth in Corporate & Investment Banking business, as well as lower expenses and provision for credit losses. Total revenues declined and missed view.
Net income applicable to common stock increased 23 percent to $4.931 billion or $0.92 per share from $4.022 billion or $0.75 per share in the prior year. On average, 33 analysts polled by Thomson Reuters expected earnings of $0.88 per share for the quarter. Analysts' estimates typically exclude special items.
Revenue for the quarter edged down to $21.3 billion from last year's $21.6 billion. Analysts expected revenues of $21.60 billion.
Net interest income slid 4 percent to $10.499 billion, while total noninterest income was nearly flat at $10.760 billion.
Provision for credit losses fell 39 percent to $1.219 billion, amid a sharp fall in provision at Community Banking. Total average loans were up $29.5 billion at $798.1 billion.
Chairman and CEO John Stumpf said, "Quarterly earnings and EPS increased at double-digit rates compared with first quarter 2012, while loans and deposits demonstrated continued growth in a challenging economic environment...expenses continued to decline as we improved efficiency across the franchise...''
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.
Community Banking net income increased nearly 25 percent to $2.924 billion. Revenue decreased 4 percent from last year to $12.9 billion, primarily due to lower net interest income, equity gains, and volume-related mortgage banking revenue.
Home loan originations dropped to $109 billion from $129 billion in the previous year. Mortgage banking non-interest income slid nearly 3 percent to $2.8 billion.
Wholesale Banking net income was $2.045 billion, up 9.5 percent from last year. Revenue edged up 1 percent to $6.09 billion, driven by broad-based business growth and strong loan and deposit growth.
Wells Fargo expects second-quarter 2013 expenses to decline sequentially and to remain within the target efficiency range.
WFC, which closed at $37.51 on Thursday, is losing around 2 percent in pre-market trading.
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