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Tuesday
Jan172012

Wells Fargo Has Strong Earnings; Citigroup Falters

Scott Eells/Bloomberg via Getty Images(NEW YORK) -- Wells Fargo & Co. on Tuesday reported a quarterly profit increase of 20 percent, in stark contrast to an 11 percent decline at Citigroup.

Tuesday morning's announcements were as different as night and day, Raymond James analyst Anthony Polini said.

Wells Fargo's earnings announcement was generally "positive" for the last three months of 2011. Its net income rose to $4.11 billion, or 73 cents per share, while revenue decreased 4 percent to $20.6 billion.

"Wells Fargo's great quarter bodes very well for regular banks, particularly if you have less exposure to market-related items or international businesses," Polini said, referring to global concerns such as the 2-year-old European debt crisis.

Polini said the San Francisco-based bank had strong growth in loans, deposits and credit quality.

As the first traditional U.S. bank to report its fourth-quarter earnings, Wells Fargo might be an indicator of other banks without large exposure to investment banking, in contrast to Citigroup.

Citi's quarter was "ugly" and "messy," Polini said.

"More than anything else, Citi missed on market-related items, like trading, or the investment banking side of the business," he added. "The more traditional side of the business performed more in-line. The investment banking side was weaker than expected."

Citi had a profit of $1.16 billion, or 38 cents per share, on revenue of $17.2 billion, less than expected. Citigroup had a profit of $1.3 billion and revenue of $18.4 billion for the same quarter last year. The bank's full-year net income for 2011 was $11.3 billion, up 6 percent from $10.6 billion in 2010.

JPMorgan Chase, the first of the biggest banks reporting their year-end results, said Friday that fourth-quarter profit fell 23 percent but was in line with analyst expectations.

The largest bank by assets said in a statement that profit fell to $3.73 billion, or 90 cents a share, from $4.83 billion, or $1.12, a year earlier. Investment banking revenue declined by 30 percent as trading slowed because of the financial crisis in Europe.

In the third quarter, "dramatic volatility" negatively impacted bank earnings, including Goldman Sachs, which reported its second quarterly loss as a public company. Goldman Sachs will report its earnings Wednesday.

Copyright 2012 ABC News Radio

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