Countrywide, the largest U.S. mortgage lender, this morning said its net income fell slightly, but revised its forecast for its earnings this year.
The Calabasas, Calif.-based company reported a profit of $684 million, or $1.10 a share, for the first quarter, down from $689 million, or $1.13 a share, for the same time period in 2005.
Countrywide said it was challenged by the continuation of a relatively flat yield curve earlier this year, as overall interest rates continued to rise.
Revenue rose 18 percent to $2.84 billion, topping estimates for $2.5 billion. Countrywide posted higher margins on loans it sold to investors and other lenders.
Results improved despite what Chief Executive Angelo Mozilo called “a challenging environment.”
Mozilo said Countrywide managed to grow its profit over the fourth quarter of 2005, driven by a $121 million increase in pre-tax earnings in its mortgage banking segment
Like many lenders, Countrywide was hurt by the “flat yield curve,” in which long- and short-term interest rates were about the same. This made it tougher to charge enough on long-term loans to offset short-term borrowing costs.
Countrywide also raised the low end of its 2006 earnings forecast. It now expects to earn $3.90 to $4.80 per share, after projecting $3.80 to $4.80 in January.