Gains in mortgages and other lending helped Wells Fargo, the nation’s No. 2 mortgage lender, produce a 13 percent jump in quarterly profit, helping offset losses from consumer bankruptcies and Hurricane Katrina, the company said today.
Mortgage banking revenue nearly tripled amid a surge in home loans, Wells Fargo reported today, helping the company score net income of $1.98 billion for the third quarter, or $1.16 a share. A group of analysts polled by Thomson Financial had predicted that the company would report $1.15 a share.
Almost every one of the company’s consumer and commercial business lines achieved double-digit profit growth, the company said. Wells Fargo also fared better than most of its rivals in keeping its lending margins from shrinking.
Net income in the third quarter rose to $1.98 billion, or $1.16 per share, from $1.75 billion, or $1.02, a year earlier. Earnings per share have increased at least 10 percent in 15 of the last 16 quarters. The company’s revenue rose 16 percent to $8.5 billion.
Mortgage banking revenue totaled $743 million, as residential originations surged 51 percent to $103 billion and applications rose 40 percent to $116 billion.
“People have been predicting the end of the mortgage cycle every quarter for eight quarters,” Chief Financial Officer Howard Atkins said in an interview. “But interest rates remain at relatively low levels, and consequently the mortgage business remains robust.”
Even so, Wells Fargo set aside $100 million for damage caused by Katrina, which makes mortgage payment defaults more likely, and said it may set aside more. Wells Fargo is the second-largest U.S. mortgage lender.
The company’s stock was trading at $59.02 shortly before noon Eastern time today, down 12 cents from its opening price this morning.
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