On Wednesday, July 16, Wells Fargo reported net income of $1.75 billion for 2Q08, down 23% from the same quarter in 2007. Despite the fall in its net income, Wells Fargo beat consensus analyst expectations and raised its quarterly dividend by 10%.
Analyst opinions that the subprime mortgage market had essentially bottomed out gave WFC an upward push. A prevalent opinion was that with the shadier lenders already out of business from the harsh conditions, the remaining mortgage providers (including Wells Fargo) were setting stricter lending standards to protect their loans and minimize the risk of credit losses.
Wells Fargo stock shot up when the company announced its earnings for 1Q 2007. Profit in the first quarter increased 11% to $2.24 billion, compared to $2.02 billion for the previous year.
WFC stock increased in response to news that Wells Fargo is beating its home mortgage competitors. Although Wells Fargo took revenue losses as the housing bubble deflated and subprime mortgage borrowers defaulted in droves, the company showed better results than most competitors, many of which went out of business entirely.
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