US banking giant Wells Fargo projected on Thursday a “record” US$3 billion profit in the first quarter, sparking hopes of recovery from a financial crisis that is battering the economy.
The bank said “it expects to report record net income of approximately US$3 billion for first quarter of 2009,” thanks in part to a stronger than anticipated performance by its new unit Wachovia.
Wells Fargo also said it expects earnings per share of about US$0.55, much better than analysts’ consensus forecast of US$0.23.
MOMENTUM
“Our business momentum is strong, and we expect our operating margins to remain at the top of our peer group,” Wells Fargo chief executive John Stumpf said.
The upbeat guidance sent Wells Fargo shares flying, lifting other major banks with it and producing a powerful Wall Street rally that capped a holiday-shortened week. The market was closed yesterday.
Wells Fargo soared 31.70 percent to US$19.61 while Bank of America was up 35.27 percent to US$9.55 and Citigroup by 12.59 percent to US$3.04.
“Investors, always concerned about the banks and whether they are beginning to recover, should get a boost today from Wells Fargo,” said Frederic Dickson, chief market strategist of DA Davidson & Co.
Briefing.com analysts said in a client note that Wells Fargo “raises the bar for its peers” and provides leadership to the broader market “as many investors hold to the notion that a broader market recovery will come on the back of a rally in financials.”
‘HOPEFUL SIGN’
Investors see the Wells Fargo outlook “as a hopeful sign that the sector is turning the corner from the worst of times,” Briefing’s Patrick O’Hare said.
Also lifting sentiment on the sector was a New York Times report that all 19 banks, including Wells Fargo, would pass federal regulators’ ongoing “stress test” about their viability, citing officials involved in the examinations.
Wells Fargo said it expected revenue to climb 16 percent in the first quarter to US$20 billion, with 40 percent of the increase due to sales from its newly acquired Wachovia bank.
“Wachovia’s outstanding franchise has proven to be everything we thought it would be when we announced this acquisition and the financial contribution from Wachovia exceeded our expectations in the first quarter,” Stumpf said.
Wells Fargo’s cautious management has left the bank relatively unscathed in the collapse of the real-estate boom that began in 2006. For the full year last year, Wells Fargo had posted profit of US$2.84 billion, a drop of 65 percent.
The company will report its first-quarter financial results on April 22.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS