U.S.’s fourth largest bank and leading mortgage lender, Wells Fargo & Company (NYSE: WFC) reported on Friday that its second-quarter earnings rose by 17%, surpassing analysts’ expectations.
The bank attributed its strong results to rising mortgage banking income and better credit quality. WFC said that it received record number of mortgage applications in the second quarter.
Following the earnings announcement, WFC shares jumped 1.4 % to $33.30 in the morning session.
The bank said that income from mortgage banking stood at $2.9 billion for the second quarter, up from $1.6 billion in the same quarter of the last year even as it was slightly higher than the first quarter’s income.
Wells Fargo’s second quarter net income was $4.6 billion, or 82 cents a share up from last year’s $3.9 billion or 70 cents a share.
Analysts polled by Thomson Reuters forecasted earnings of 81 cents a share for the second quarter.
Commenting over the results, Wells Fargo’s CEO, John Stumpf said in a statement, “Wells Fargo’s strong financial results this quarter again reflect the benefit of our diversified business model.”
While bank’s revenues were $21.3 billion up from last year’s $20.4 billion, expenses stood at $12.4 billion, slightly lower than the last year.
Earlier, the bank had said that it would trim down its expenses to $ $11.25 billion by the end of fiscal fourth quarter. On Friday, the bank said that it will miss the target but will continue to strive for cutting down its expenses.
Meanwhile, bank’s operating losses along with litigation expenses soared by 22% compared to last year to $ 524 million. On Thursday, Wells Fargo decided to recompense $175 million to resolve Justice Department allegations that it charged higher rates and fees on mortgages from African-Americans and Hispanics during the housing boom. The bank said that the decision was taken to avoid long legal battle.
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