Wells Fargo & Co. said Thursday it expects record first-quarter earnings of $3 billion, easily surpassing analysts' estimates and providing an encouraging sign for the banking industry.
Wells Fargo is the first major bank to give an indication of how the first quarter looked, and the unexpectedly upbeat news gave an immediate boost to stock futures. Several pessimistic forecasts about potential loan losses have jolted the market in recent days, and investors have been anxious, as Citigroup Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. all report next week.
Wells Fargo's stock surged $4.71, or 31.6 percent, to $19.60 in early trading. Broader markets also surged on the Wells Fargo report, with the Dow Jones industrial average gaining 151.01, or 1.9 percent, to 7988.12.
San Francisco-based Wells Fargo, which has received $25 billion in funds as part of the government's bank bailout plan, anticipates earnings after preferred dividends of about 55 cents per share. Revenue for the period ended March 31 is expected to climb 16 percent to $20 billion.
Analysts polled by Thomson Reuters forecast profit of 23 cents per share on revenue of $19 billion. Analysts' estimates typically exclude one-time items.
Wells Fargo earned $2 billion during the first quarter last year.
But Howard Atkins, the bank's chief financial officer, cautioned that the economy hasn't necessarily recovered yet.
"It's premature to conclude the economy has turned," said Atkins. "All I can tell you is we're seeing a lot of business." NPR
