Wells Fargo (WFC) posted a 22 percent rise in first-quarter profit that beat forecasts as the company curbed expense growth.

Net income advanced to a record $5.17 billion, or 92 cents a diluted share, from $4.25 billion, or 75 cents, a year earlier, according to a statement today from the San Francisco- based bank. That topped the 88-cent average estimate of 19 analysts surveyed by Bloomberg.

Chief Executive Officer John Stumpf has concentrated on reducing expenses as demand for corporate and consumer loans sputtered. Stumpf, 59, has been helped by waning costs tied to faulty mortgages and foreclosures as housing prices rebounded and has sought more revenue from the bank's mortgage business, which originated almost 1 in 3 U.S. home loans last year.

"In an environment where revenues are under pressure, people want to see banks control expenses," Jason Goldberg, a New York-based analyst with Barclays Plc, said in a phone interview before the results were announced. Wells Fargo "does have some levers" to pull, he said. Goldberg has a buy rating on Wells Fargo's stock.

The bank previously set a target range of 55 percent and 59 percent for its efficiency ratio, or expenses as a percentage of total revenue. Wells Fargo cut 5,300 workers last year, consolidated offices and updated technology to control spending.

Stumpf has vowed to return more capital to shareholders, increasing the quarterly dividend to 30 cents last month from 25 cents and promising more stock buybacks. The boost came after the Federal Reserve approved Wells Fargo's capital plan and the firm passed annual tests by the central bank to gauge the ability of U.S. lenders to weather an economic shock.

Wells Fargo declined 0.2 percent to $37.51 yesterday in New York. The shares gained 9.7 percent this year through yesterday, trailing the 11 percent rise in the 24-company KBW Bank Index. Warren Buffett's Berkshire Hathaway Inc. is the largest shareholder, with a stake of more than 8 percent, according to data compiled by Bloomberg.

The stock sells for about 1.8 times tangible book value, the company's theoretical price if it were liquidated, compared with about 1.5 percent for commercial lenders in the KBW Bank Index.

"For investors looking at Wells Fargo, the revenue outlook is relatively more important," said Richard Staite, a London- based analyst at Atlantic Equities LLP. "You need to see revenue growth to justify the slightly higher valuation." Staite, who was interviewed before results were released, had a neutral rating on the stock and a $37 price target for the next 12 months.

JPMorgan Chase & Co., the biggest U.S. bank, said today that first-quarter profit rose 33 percent to an all-time high as improving consumer credit quality allowed the bank to cut loan- loss reserves. While mortgage volume jumped 37 percent, mortgage-banking net income dropped 31 percent.

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