Through its core consumer banking and lending business, San Francisco-based Wells Fargo outperformed rivals with greater exposure to Wall Street trading. JMPorgan Chase and Citigroup took investment banking hits to their fourth-quarter earnings because of volatile stock and bond markets.
In the fourth quarter, Wells Fargo earned $4.11 billion on revenue of $20.6 billion. Compared to same quarter a year ago, profits were up 20.5 percent, but revenue fell 4.1 percent. Per-share profits were 73 cents, surpassing analysts’ projections of 72 cents and revenue of $20.08 billion.
For 2011, Wells Fargo earned $15.9 billion on revenue of $80.9 billion. Compared to 2010, profits jumped 28 percent and revenue fell 5 percent.
Although not as exposed to trading markets as competitors, Wells Fargo nonetheless made $430 million in net gains from trading activities in the fourth quarter, compared with a $442 million loss in the third quarter.
Wells Fargo is the fourth largest bank in the nation by assets and the biggest U.S. home lender. Its new mortgages rose 35 percent to $120 billion, compared to the three months ended September.
Net interest margin, the difference between what Wells Fargo pays for funds and what it earns on loans and securities, edged up to 3.89 percent in the fourth quarter, compared to 3.84 percent in the third quarter.
Wells Fargo has completed the absorbing of Wachovia Corp.’s retail business. Wachovia was saved from collapse in 2008.
“I’m extremely pleased with Wells Fargo’s performance in 2011 – including strong deposit and loan growth, record cross-sell and record earnings,” said Chairman and CEO John Stumpf. “We achieved these results while completing the conversion of Wachovia’s retail banking stores – the largest such conversion in banking history – and now all of our 6,239 retail banking stores are on a single platform serving customers coast to coast.”