Boston, MA 04/11/2014 (wallstreetpr) – Wells Fargo & Co (NYSE:WFC) has reported higher than expected net profit for the first quarter that was up by 14%, attributed to one-time gains that did more than enough to offset the slowing home loan business. This was way better than JPMorgan that reported earnings per share of $1.28 against consensus estimates of $1.40.
Wells Fargo Earnings per share up
The fourth biggest bank in the U.S saw its earnings per share surge to a high of $1.05 against 92 cents that was reported for the same period in 2013. This was also an improvement compared to analyst’s estimates of 97 cents.
The banks biggest challenge is its home loan business which continues to perform dismally as a result of the slowing economy in the U.S. Income from mortgage banking as a result, slumped by 46% to come in at $1.5 billion. Applications for refinancing also continue to drop, hitting its lowest share of total mortgage applications as experienced in 2009.
Wells Fargo & Co (NYSE:WFC) saw its new home loans revenue for the quarter come in at $36 billion down from a high of $109 billion reported for the same period last year and $50 billion from the prior quarter. The home market continues to be under heavy stress as many Americans continue to be clamped under the credit crunch. The bank is also experiencing low loan losses as net charge-off rate dropped from 0.47% in the fourth quarter to 0.41%.
Wells Fargo Performing Segments
Wells Fargo & Co (NYSE:WFC) better performing businesses included its equity investments which were 7.5 times up registering total revenues of $847 million. The bank also enjoyed tax benefits amounting to $423 million as a result of tax authorities lowering their tax rate to 27.9%. The banks net income also received a major uplift from an amount that had been set aside to cater for bad loans as the bank awaited for the home market and the overall economy to stabilize.
The first quarter also saw the bank receive a regulatory approval to increase its dividend yield to 35 cents, it also received approval to buy back stock worth $17 billion. The bank continues to perform better than expected in the market thanks to its acquisition of Wachovia.
