Wells Fargo 2Q net income hits $5.7B
Mortgages recover from rough start to 2014
Net income is up 4% from last year, while earnings per share is up 3% from the prior quarter.
The mega bank reported revenue of $21.1 billion, compared to $21.4 billion in 2013.
This matched analyst estimates of $1.01 per share. However, revenue beat expectations of $20.76 billion, according to Briefing.com.
“Wells Fargo shares hit a multi-year high of $53.08 on July 3, but it has seen some profit taking ahead of its earnings report,” Briefing.com said.
Originations increased from $36 billion in the previous quarter to $47 billion, and applications grew from $60 billion last quarter to $72 billion.
In addition, application pipeline came in at $30 billion at quarter end, up from $27 billion at March 31.
Wells Fargo also reported a residential mortgage-servicing portfolio of $1.8 trillion.
“By continuing to serve customers we grew loans, increased deposits and deepened our relationships. Our results also reflected strong credit quality driven by an improved economy, especially the housing market, and our continued risk discipline,” said Chairman and CEO John Stumpf.
“We are committed to both maintaining strong capital levels and returning more capital to our shareholders,” he added.
Although Wells Fargo recorded stronger numbers from last quarter, it is just the first bank to hit the wires.
While the bank is the market-share leader in the origination and servicing of 1-4 family mortgage loans, Kroll Bond Rating Agency cautioned: “Given the decline in mortgage lending volumes experienced by WFC and other large banks, as well as the zero-rate policy of the FOMC, it may be difficult for the bank to deliver positive revenue growth in 2014 and beyond.”
“Wells Fargo will set the tone for the banking industry but unfortunately will not provide a strong read into investment banking performance as JPMorgan Chase (JPM) is not reporting until next Tuesday, which is a rare occurrence for the bank,” Briefing.com said.