Wells Fargo sees 'record' 3B-dlr profit for Q1
US banking giant Wells Fargo said Thursday it sees "record" net income of some three billion dollars for the first quarter, thanks to a better than expected performance by its new unit Wachovia.
Wells Fargo said "it expects to report record net income of approximately three billion dollars for first quarter 2009."
Earnings per share were projected at about 55 cents, after preferred dividends including those of the government, the San Francisco, California-based bank said in a statement.
The results would be much better than analysts' consensus forecast of earnings per share of 23 cents, excluding exceptional items.
The expected record profit would include 372 million dollars in dividends paid to US taxpayers on the US Treasury's Capital Purchase Program (CPP) investment, the bank said
Under the CPP, designed to help stabilize a financial system reeling from the global credit crisis, the Treasury pumps cash into a company in exchange for an equity share.
"Our business momentum is strong, and we expect our operating margins to remain at the top of our peer group," said Wells Fargo chief executive John Stumpf.
The bank said it expected total revenue of 20 billion dollars, including "another quarter of double-digit revenue growth," estimated at 16 percent.
Wells Fargo highlighted a better-than-expected boost from Wachovia, the troubled bank it snapped up last year, and its "solid operating margins."
"Wachovia's outstanding franchise has proven to be everything we thought it would be when we announced this acquisition, and the financial contribution from Wachovia exceeded our expectations in the first quarter," said Stumpf.
The acquisition of Wachovia, the fourth-largest US bank by assets, was completed at the beginning of the year. The Charlotte, North Carolina-based bank had faced a near collapse of its share price and weakening confidence because of its exposure to the subprime mortgage crisis.
"With the acquisition of Wachovia, we're now serving almost one of every three US households. Revenue synergies from cross-sell are a huge opportunity much like the Wells Fargo-Norwest merger 10 years ago," Wells Fargo chief financial officer Howard Atkins said.
Wells Fargo confirmed it sees synergy savings of about five billion dollars from the takeover, beginning in the second quarter.
The company will report its first-quarter financial results on April 22.