Wells Fargo, the fifth-largest US bank, today reported better-than-expected quarterly results and raised its dividend despite a 23% decline in profit caused by a surge in bad loans.
Net income for the San Francisco-based bank fell to $1.75 billion, or 53 cents a share, from $2.28 billion, or 67 cents, a year earlier. Revenue increased 16% to $11.5 billion. Analysts on average had expected a profit of 49 cents a share on revenue of $10.7 billion.
'We're still affected by the weak economy, but we believe we're one of the best positioned in financial services to grow through this adversity,' CEO John Stumpf said in a statement. 'We are open for business and getting lots of it,' he added.
Wells Fargo more than quadrupled the amount it set aside for credit losses to $3.01 billion from $720m a year earlier, and net write-offs more than doubled to $1.51 billion. Non-performing assets nearly doubled to $5.23 billion.
The bank said its new policy of writing off home equity loans where payments were more than 180 days late, rather than 120, resulted in the deferring of $265m of write-offs.
Wells Fargo said it was increasing its quarterly dividend to 34 cents per share from 31 cents, bucking the trend among many rivals that are lowering their payouts.
The bank said its mortgage lending fell 21% to $63 billion, but dipped just 5% from the first quarter. Applications totaled $100 billion, and 44% were for refinancings.
Wells Fargo said it still benefits from cross-selling, a key strategy, which involves the sale of multiple products to each customer. The bank said it now sells an average 5.6 products to each retail customer and a record 6.3 to each business customer.
Wells Fargo has about 3,318 branches in 23 US states, and $609.1 billion in assets.
