Wells Fargo Q1 Earnings Preview: What We’re Watching

by Trefis Team
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Wells Fargo & Co.
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Wells Fargo (NYSE:WFC) seems to have some  good news to share this quarter in order to justify its decision to move up its earnings release date to this Friday so that it coincides with competitor JPMorgan Chase (NYSE:JPM) – traditionally the first bank to report earnings.

This appears to be yet another way the two banking giants are competing for attention.Wells Fargo topped JPMorgan to become the financial institution with the largest market cap last year, and it now seems to have its eyes set on becoming the largest bank in terms of assets.

See our complete analysis of Wells Fargo here

Wells Fargo proved to be the best performer among the big banks last year as the bank reported better than usual results at a time all other banks were grappling with losses across operating divisions. Wells Fargo roped in $20.6 billion in revenues for Q4 2011 which translated into $4.1 billion in earnings. The bank also reported a record $15.9 billion in earnings last year. And as the economic scenario has only improved over the first quarter of 2012, the figures for this quarter are expected to be higher.

Mortgages Expected To Continue Seeing Growth

Wells Fargo’s strength in part lies in the mortgage business as the country’s biggest home lender. Its mortgage business contributes to just over a fifth of its total value according to our analysis.

Home prices have largely been on the decline in recent months, which is expected to boost the number of mortgages Wells Fargo handed out. This should help raise the value of the bank’s outstanding mortgages.

We are currently in the process of updating our $31 price estimate for Wells Fargo’s stock in the wake of the bank’s decision to increase its dividend payout.

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