NEW YORK — Wells Fargo says the economy is getting better — it sees signs of recovery in its loan business.
But the big bank may be more of an exception than a leading indicator.
Breaking from the cautious, even downbeat forecasts of such rivals as JPMorgan Chase & Co., Wells Fargo on Wednesday used such words as “favorable” and “confidence” about its future amid tentative signs that its loan defaults are close to a peak or already have peaked. The company believes the recession-weary consumer could be making a comeback.
The company is way ahead of other banks, although the chief executive of Bank of America, which lost more than $5 billion last quarter, expressed mild optimism that sagging consumer sentiment may be turning around.
Many banking analysts aren’t so sure. The reason: Ongoing problems including the deteriorating commercial-real- estate market and rising credit-card defaults could still trip up a recovery. And while Wells’ profit report was good news, the bank is ahead of its competitors by having already taken losses on many of its bad loans.
Wells Fargo said it earned $394 million, or 8 cents per share, during the fourth quarter. That surprised analysts polled by Thomson Reuters who were expecting a loss of 1 cent per share.
Bank of America, meanwhile, said it lost $5.2 billion after payment of preferred dividends, an amount that reflects the costs of repaying government bailout funds as well as continuing losses from loans. The bank’s Merrill Lynch investment-banking operations helped offset the lending losses. Bank of America’s loss, which translated to 60 cents per share, was larger than the 52 cents analysts expected.
