The nation's fourth largest bank by assets booked $1 billion less in its provision for loan losses than the actual amount of loans it charged off as uncollectable--a so-called reserve release. The overall provision fell by almost half, to $1.8 billion, helping the bank to its $3.9 billion profit.
The San Francisco bank is one of the nation's largest commercial lenders and has made efforts to expand business banking, including its capital markets business.
Commercial loans rose 7.5% from a year earlier and 4% from the first quarter, to $157 billion. The bank's commercial real estate business also continued to grow; commercial banking revenue rose 3% from the first quarter, to $5.6 billion.
Compared to the first quarter, consumer banking revenue was flat and overall revenue was virtually flat.
Wells Fargo reported a profit of 70 cents a share, up from 55 cents a year earlier. Analysts polled by Thomson Reuters most recently forecast earnings of 68 cents a share on revenue of $20.5 billion.
Wells Fargo was the first big bank to say in January it wanted to slim down, and on Tuesday specified that it wants to trim 12% off its expenses by the end of next year. Second quarter expenses fell 2% from a year earlier, to $12.5 billion. Banks are looking at expense cuts as they have trouble growing revenue.
The bank's net charge-offs, or loans lenders don't think are collectible, were down at 1.52% from 2.33% a year earlier and 1.73% in the prior quarter.
Wells Fargo's stock rose 2.4% to $27.52 in recent trading, For the latest updates PRESS CTR + D or visit Stock Market news Today
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