Wells Fargo profit falls

(Reuters) - Wells Fargo & Co (WFC.N: Quote, Profile, Research) on Wednesday said its fourth-quarter profit fell 38 percent, the first decline in more than six years, hurt by rising losses from home equity loans.

However, the decline was smaller than expected, and shares of the financial company were up 41 cents, or 1.5 percent, to $26.90 in early trading on the New York Stock Exchange after climbing to a session high of $28.11.

The weaker results reflect how the housing slump and tight credit markets have affected even mortgage providers such as Wells Fargo, whose lending practices are considered conservative.

"Except for the admitted slip of getting involved in third-party home equity loans, they've done a fine job in a challenging market in avoiding credit missteps," said Thomas Russo, who helps invest more than $3 billion at Gardner, Russo & Gardner in Lancaster, Pennsylvania, including 4 percent in Wells Fargo. "They're not immune, but have less exposure."

Net income for the San Francisco-based bank, which is the nation's fifth-largest bank and second-largest mortgage lender, fell to $1.36 billion, or 41 cents per share, from $2.18 billion, or 64 cents, a year earlier. Revenue increased 8 percent to $10.21 billion.

Analysts on average expected a profit of 39 cents per share on revenue of $10 billion, according to Reuters Estimates.

Wells Fargo said it tripled the amount set aside for loan losses to $2.6 billion, including $1.4 billion tied to home equity loans. The latter reduced after-tax profit by 27 cents per share. In November, the bank significantly scaled back offering home equity loans through brokers.

 

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