Wells Fargo Posts First Profit Decline in Six Years
Wells FargoWednesday said fourth-quarter profit fell 38 percent, the first decline in more than six years, hurt by rising losses from home equity loans.
Credit losses are mounting industrywide as the U.S. housing sector slumps and credit markets
tighten. Wells Fargo is the nation's fifth-largest bank and second-largest mortgage lender.
Net income for the San Francisco-based bank fell to $1.36 billion, or 41 cents per share, from $2.18 billion, or 64 cents, a year earlier. Revenue increased 8 percent to $10.21 billion.
Analysts on average expected a profit of 39 cents per share on revenue of $10 billion.
Wells Fargo added $1.4 billion to reserves for credit losses, reducing after-tax profit by 27 cents per share.
The bank also said it expects a challenging environment in 2008, especially in the consumer sector.
Chief Financial Officer Howard Atkins in prepared comments on the company's Web site said charge-offs will likely rise in 2008 "given the weakness in housing and overall state of the U.S. economy."
Wells Fargo shares closed Tuesday at $26.49 on the New York Stock Exchange. Through Tuesday, they had fallen 27 percent in the last year compared with a 31 percent drop in the Philadelphia KBW Bank Index.