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Wells Fargo expects record profit | Wells Fargo expects record profit |
(about 2 hours later) | |
US bank Wells Fargo has surprised investors by bucking the recession, saying it expects a record net profit. | US bank Wells Fargo has surprised investors by bucking the recession, saying it expects a record net profit. |
The bank said profit will be $3bn in the first quarter, thanks to better-than-expected results at newly-acquired lender Wachovia. | The bank said profit will be $3bn in the first quarter, thanks to better-than-expected results at newly-acquired lender Wachovia. |
Wells Fargo bought Wachovia, which was the fourth-largest US bank, after it almost collapsed last year. | Wells Fargo bought Wachovia, which was the fourth-largest US bank, after it almost collapsed last year. |
"Wachovia's outstanding franchise has proven to be everything we thought it would," the bank said. | "Wachovia's outstanding franchise has proven to be everything we thought it would," the bank said. |
Wachovia merger | Wachovia merger |
The bank said it expected revenue of $20bn for the quarter, translating into "another quarter of double-digit revenue growth" of 16%. | The bank said it expected revenue of $20bn for the quarter, translating into "another quarter of double-digit revenue growth" of 16%. |
Banking giant Citigroup had initially tried to block the merger between Wachovia and Wells Fargo. | Banking giant Citigroup had initially tried to block the merger between Wachovia and Wells Fargo. |
But the US Federal Reserve approved Wells Fargo's $12bn takeover after its all-stock offer. | But the US Federal Reserve approved Wells Fargo's $12bn takeover after its all-stock offer. |
Wells Fargo's results are set to include $372m in dividend payments to the US Treasury, which took a stake in many banks in exchange for a cash injection. | Wells Fargo's results are set to include $372m in dividend payments to the US Treasury, which took a stake in many banks in exchange for a cash injection. |
US financier Warren Buffett has a stake in Wells Fargo through his holding company, Berkshire Hathaway, which has lost its top credit rating from Moody's. | US financier Warren Buffett has a stake in Wells Fargo through his holding company, Berkshire Hathaway, which has lost its top credit rating from Moody's. |
Bank shares | Bank shares |
Wells Fargo's announcement is the latest in a line of positive statements from banks such as Citigroup, Bank of America and Deutsche Bank about their performances in 2009. | |
Shares in the bank surged 20.8%, to $17.97, in morning trading on Wall Street. | |
Its shares led US banking stocks higher and helped to push the broader Dow Jones average of US stocks up 2.3%. | |
Bank of America shares gained 20.7%, Citigroup rose 8.5% and JP Morgan climbed 11.4%. |