Boston, MA 01/15/2013 (wallstreetpr) – Wells Fargo & Co (NYSE:WFC) did the unexpected by posting strong profit growth at a time where it is taking a hit from the housing market due to its big presence there. The bank has routinely posted double-digit growth in earnings, but what happened in the recent quarter was rare.
The company earned profit of $5.6 billion, meaning $1 per share, suggesting 10 percent upside from a year ago. This earning figure exceeded analysts’ expectation by about 2 cents. The margin of beating expectation not withstanding, the bank has proven that its fundamentals are strong enough to allow growth even under tress condition.
Perhaps Wells Fargo & Co (NYSE:WFC) is finding it normal to operate under unrewarding housing condition, but hoping that when things adjust in the mortgage market, it will perform even better.
Low mortgage transaction
Wells Fargo & Co (NYSE:WFC) is experiencing its lowest mortgage transaction in years. The company transacted only $50 billion in the last quarter of fiscal 2013, suggesting a big drop from what it used to perform in the past years. Nonetheless, the management is optimistic that this segment is now ripe for recovery and the company will continue to boost beating data going forward.
Strength areas
That Wells Fargo & Co (NYSE:WFC) didn’t rely on mortgage transaction to post these attract earning figures suggest that it relied on some other opportunities. The just reported profit growth was fueled by strong gains in investment security, card fees, brokerage transactions and trust fees. These segments helped to offset the impact of tepid mortgage market.
Profits on revenue decline
Moreover, the company’s efforts to curb expenses also contributed to higher earnings. Wells Fargo & Co (NYSE:WFC) is cutting more than 5,000 full-time jobs in its mortgage production segment. These job-cuts resulted in cost savings which in turn gave way for profit gains. Perhaps this is better explained by the fact that the bank has realized higher earnings growth amid revenue decline on year-over-year basis.
