(Bloomberg News) -- Wells Fargo & Co. (WFC), the largest U.S. home lender, reported a 13 percent rise in first-quarter profit, setting a record as the bank made more money on new mortgages and curbed losses from old ones.
Net income rose to $4.25 billion, or 75 cents a share, from $3.76 billion, or 67 cents, a year earlier, the San Francisco-based firm said in a statement today. While results beat the 73-cent consensus of analysts, they included a $400 million release from reserves and the company said expenses for this year may be at the high end of its forecast. The shares dropped 2.5 percent in New York.
The new guidance is “not a big change, but it is in the wrong direction and thus takes away hopes of upside,” Brian Foran, a New York-based analyst at Nomura Holdings Inc., wrote in a note to clients.
Chief Executive Officer John Stumpf, 58, is taking advantage of weakness among rivals at home and abroad by expanding U.S. mortgage lending and buying assets from European banks. Thirteen straight quarters of profit made Wells Fargo the most valuable U.S. bank by market capitalization and allowed Stumpf to raise the dividend 83 percent and buy back shares.
“Mortgage lending is extremely important for strategists as well as Wells Fargo investors,” Jeffrey Davis, chief investment officer at Lee Munder Capital Group in Boston, said today in an interview on Bloomberg Television. “All in all, we’re happy with what we see. It confirms what we think about Wells Fargo.”
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