The bank’s expenses fell
nearly five per cent in the quarter, helped by lower borrowing costs and a
wrongful foreclosure settlement that ended fees to consultants. The lower costs
offset a slight decline in revenue as mortgage lending slowed.
Net income rose to $4.93
billion from $4.02 billion a year earlier. On a per-share basis, earnings were
92 cents, beating the 89 cents forecast by Wall Street. Revenue fell 2 per cent
to $21.3 billion and missed expectations.
The bank’s expenses fell
$593 million to $12.4 billion. Wells says expenses will fall further from first
quarter levels in the coming three months.
Wells Fargo and nine
other banks reached with the government in January to end charges that they had
wrongfully foreclosed on some homeowners. The lender said that the costs
associated with reviewing its foreclosure policies had amounted to about $125
million a quarter.
Wells Fargo said it would
pay $766 million and set aside an extra $1.2 billion for “foreclosure
prevention actions,” such as modifying mortgages for struggling homeowners.
Wells Fargo was little
known outside the Western U.S. before scooping up a teetering Wachovia in the
depths of the financial crisis in 2008. The bank has turned a profit every
quarter since 2009, the year it wrapped up its acquisition of Wachovia.
The Federal Reserve said
last month that Wells Fargo passed its annual checkup, a “stress test” to
measure how a bank would fare in a severe recession. The Fed cleared the bank
to raise its quarterly dividend by a nickel to 30 cents per share.
Investors weren’t blown
away by the results. The bank’s stock fell 74 cents, or 1.6 per cent, to
$36.72, paring this year’s advance to 7.5 per cent.
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