Boston, MA 01/16/2013 (wallstreetpr) – Wells Fargo & Co (NYSE:WFC) has overcome JPMorgan Chase (NYSE:JPM) as the most profitable U.S. bank on annual basis. For nearly a decade, JPM remained top of the league in terms of big annual profits. In the latest earnings data, Wells managed to outsmart the slowdown in mortgage market to record better than anticipated earnings.
The company earned $5.6 billion profit in the fourth quarter which represented 10 percent upside from a year ago. For the full-year, the company earned $21.8 billion profit which represented 16 percent growth over 2012. In comparison, JPM ended fourth quarter with unpopular profit at $5.28 billion which represented a 7.3 percent slowdown from a year earlier. The full-year profit was $17.9 billion, indicating 16 percent drop from 2012.
According to the available data so far, Wells Fargo now leads the major U.S. banks in profits, although we are waiting for full-year results from Citigroup (NYSE:C) and Bank of America Corp (NYSE:BAC).
What happened?
As for Wells, the management tried to make the most out of what the situation could allow in terms of revenue. The bank succeeded in realizing better profits for the fourth quarter and full year due to its continued optimization of available resources and cost-reduction. This is why it was possible for profits to soar to 10 percent in Q4 even as revenue declined in the quarter.
Regarding JPM, legal costs cut the profits and the bank’s settlement payout increased over 2012. The bank paid out about $11.1 billion in legal expenses in 2013. These payments trickled down to its bottom line with negative effect.
Financial environment
Although JPM plummeted in profits while Wells managed to post record figures in that column, the overall picture is that the U.S. economy is becoming healthier. This means that financial stocks still have enough room to make money for investors.
And as for Wells Fargo & Co (NYSE:WFC), improvement in mortgage refinancing will have a big boost to the bank’s earning since it is the leader in this segment.
