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Wells Fargo Bank to Benefit from Better Credit

12-Apr-14
Wells Fargo Bank to Benefit from Better Credit

Wells Fargo, the largest market capitalization of Bank of America, recorded a 14% growth in net income in the first quarter of 5.9 billion, exceeding the expected improvement, helped offset the reduction in the credit quality of the mortgage bank.
America's largest home loan increased by one half of its three -game winning streak and a record quarterly profit, $ 5.1 billion higher than analyst expectations. The bank reported earnings per share of $ 1.05, much higher than the estimated 96 cents.

The results of the bank, which provides a strong U.S. housing market and economic recovery gauges, reflecting the economic slowdown has prompted banks to cut mortgage banking thousands of jobs in the United States. With rising interest rates, reduce customer choice to refinance mortgages.

“The headline numbers look great, but there are a few things in there that help support a profitable, “Portales Partners analyst Jennifer Thompson said.
Revenue also flattered to improve the performance of a $ 500 million credit loan loss reserve release. Last quarter, the Bank issued $ 600 million from its allowance for doubtful accounts. Tim Sloan, chief financial officer, said that the release rate will decline, but it will continue to happen.

“Credit strong performance in the first quarter was a loss is still at historically low levels, non-performing assets continued to decline, we continue to originate quality loans, “Chief Risk Officer Mike Loughlin said.

Revenue fell 3.4%, from $ 21.3 billion $ 20.6 billion a year ago, Bank of America to improve cross- industry analyst broader decline in concern "because they released next week. JP Morgan reported earlier Friday 8% decline in revenue.
"This is just the first shot across the bow that we will see an increase in revenue related to weak banks," Ms. Thompson said.
She pointed out that the total revenue in the stock and bond investment banks nearly $ 1 billion, and $ 423 m tax benefits in the country report. When combined, these two items contributed 20 cents to earnings per share, she estimates.

The bank reports its community banking business grew 31%, to approximately $ 3.8 billion in net income - its largest division - but 15 percent of its wholesale banking business in a slump, as it lost market share in investment banking.
Mortgage banks, community banks fall into the division, see Non-interest income decreased to $ 1.5 billion, 46 percent decline from a year earlier. Mortgage collapse to $ 36 billion, representing 67% of the decline.

"There is frankly more cash buyers today, said the truth, " John Stumpf, Chairman, Chief Executive Officer and Wells Fargo said.
In housing loans, the share of new purchases increased to 66% , because the refinancing slowed , reversing the trend of last year. The bank also announced 1,100 job cuts in the first quarter of businesses.

"This is a more normalized market,” Sloan said. "We are very optimistic that we are entering the spring selling season, we think it will be mainly driven by the purchase money market which is just in the mortgage market has become accustomed to the decline in refinancing challenge for everyone ."

The bank’s net interest margin - a key performance indicator - fell by 7 basis points, to 3.4% of the lower float income, deposit growth and liquidity.
Wells Fargo shares rose 0.8 percent to $ 48.08, for a broader sell-off after the Bank of America shares; JP Morgan Chase revealed poor fixed-income trading.

Mr. Sloan said the bank is expected to return more than $ 11.4 billion to shareholders last year, this year, including dividends and buybacks.