Wells Fargo said fourth-quarter profit rose 1.8% as a strengthening U.S. economy boosted lending.
Net income climbed to $5.71 billion, or $1.02 a share, from $5.61 billion, or $1, a year earlier, the San Francisco-based lender said Wednesday. The average estimate of 22 analysts surveyed by Bloomberg was for profit of $1.01 a share under generally accepted accounting principles.
Wells Fargo, led by Chief Executive Officer John Stumpf, has expanded through lending and deposit-taking as larger rivals battle a slowdown in trading. The bank has outpaced smaller competitors by cutting prices and selling more products to each client, according to Jennifer Thompson, a Portales Partners LLC analyst. Last month, its market value surpassed Citigroup Inc.'s 2001 record for the highest in U.S. bank history.
"Because of their diversity and long track record of cross selling, they are able to be a little more aggressive on price than their competitors," Thompson said before the results were announced. "That's allowed them to put up a little bit better loan volume than average."
The U.S. economy, which increased 5% in the third quarter, will expand faster in 2015 than many economists estimate, Stumpf said last month. The median estimate of 85 economists surveyed by Bloomberg was for 3% growth this year.
"While we don't expect next year to be a breakout year, we're probably on the upper end of expectations of the consensus of economists," Stumpf, 61, said Dec. 8 in an interview on Bloomberg Television. "This is a very diverse economy."
Wells Fargo's stock climbed 21%in 2014, beating the 7.2 gain for the 24-company KBW Bank Index and bringing its market capitalization at year-end to $284 billion. It reached $289 billion on Dec. 29, setting the most-valuable mark.
That valuation has spurred analysts to recommend against buying the shares. Six analysts including Sanford C. Bernstein's McDonald and JPMorgan Chase's Vivek Juneja have lowered their rating on the stock since June. More than half of the 36 analysts that cover the stock now assign a hold rating or the equivalent.
Macquarie Group Ltd.'s David Konrad, who has cited the firm's overreliance on one-time items such as equity gains, is the only analyst assigning the equivalent of a sell rating. Credit Suisse Group AG's Susan Roth Katzke assigns an outperform rating and a $65 12-month price target, the highest among her peers.