Wells Fargo & Co., the world's most valuable bank, said profit increased 3.8 percent on lower costs even as the lender snapped a 17-quarter streak of rising per- share earnings.
Second-quarter net income advanced to $5.73 billion, or $1.01 a share, from $5.52 billion, or 98 cents, a year earlier, the San Francisco-based lender said today in a statement. The average estimate of 31 analysts surveyed by Bloomberg was $1.01 a share excluding special items.
Chief Executive Officer John Stumpf, 60, has sought to counter a drop in mortgage revenue as higher interest rates crimp new home loans. He's expanded in businesses including credit-card and auto lending, investment banking and retail wealth management to help cover the shortfall.
"They have a lot of other businesses beyond mortgage," Jason Goldberg, a New York-based analyst with Barclays Plc, said in an interview before the results were announced. "They are one of the largest retail banks, they are one of the largest commercial banks, they are one of the largest brokerage firms."
Wells Fargo accounted for about 28 percent of U.S. home loans in the first quarter of 2012, before a 1 percentage point rise in conventional mortgage rates slowed refinancings and drove that share to 16 percent two years later. Lenders probably refinanced $109 billion of housing debt in the second quarter, less than a quarter of the amount in the final period of 2012, according to the Mortgage Bankers Association.
The quarter was the first for new Chief Financial Officer John Shrewsberry, 49, who succeeded Tim Sloan, 54, in May when the latter moved to run Wells Fargo's wholesale-banking division. Shrewsberry had been in charge of the securities unit.
Wells Fargo is the first of the largest U.S. banks to report second-quarter results. JPMorgan Chase & Co. is scheduled to announce results on July 15, when the biggest U.S. bank by assets is expected to say adjusted profit fell 19 percent to $5.1 billion from a year earlier, according to the average estimate of analysts surveyed by Bloomberg.
Bank of America Corp., the second-largest lender, will probably say adjusted profit slid 15 percent to $3.02 billion, while New York-based Citigroup Inc., the third-largest, is estimated to report a 15 percent slide to $3.26 billion, according to analysts.
Wells Fargo gained 14 percent this year through yesterday in New York trading, the best performance on the 24-company KBW Bank Index, which advanced 2.3 percent.
The lender's market capitalization of about $273 billion makes it more valuable than JPMorgan and Industrial & Commercial Bank of China Ltd., according to data compiled by Bloomberg.