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NEW YORK: Wells Fargo reported on Wednesday third-quarter profit fell 24 percent from a year ago to 1.64 billion dollars, but managed to beat expectations despite the crisis rocking the banking system.
Earnings per share were 49 cents, the bank said in a statement, topping analysts' consensus forecast of 41 cents.
In the process of buying troubled banking rival Wachovia, Wells Fargo underscored its "conservative financial position" and a "disciplined acquisition strategy" amid the financial meltdown that is battering many of its rivals.
"Despite the dramatic changes in our industry and economy, the Wells Fargo team rose to the challenge this quarter and achieved solid growth in loans and deposits, a truly remarkable accomplishment," John Stumpf, president and chief executive, said in the statement.
"Revenue year to date was up 11 percent continuing our track record of strong, double-digit growth," he added.
The Federal Reserve on Sunday approved Wells Fargo's takeover of Wachovia, a deal which would create the largest bank branch network in the United States.
Wells Fargo, which expects to complete the transaction by year-end, offered to buy Wachovia, teetering on the brink of bankruptcy, for 15.1 billion dollars in an all-stock deal that did not involve government aid.
Many thought Wachovia, the once fourth-biggest US bank by assets, would share the fate of its rival Washington Mutual, which was seized by the government and sold to investment bank JPMorgan Chase in one of the biggest-ever US bank failures.
Wells Fargo's acquisition of its bigger will extend Wells Fargo's reach in the West and the centre of the country to the East Coast.
When the merger is complete, Wells Fargo estimates the combined bank will have 1.42 trillion dollars in assets, 787 billion dollars in deposits, 48 million customers, 258 billion dollars in assets under management in mutual funds and 280,000 employees.
In the third quarter, the San Francisco-based bank reported revenue of 10.38 billion dollars, up five percent from a year ago, despite "impairment charges for investments in Fannie Mae, Freddie Mac and Lehman Brothers totalling 646 million dollars."
The write-downs for investments in Fannie Mae and Freddie Mac, the failed mortgage finance firms nationalised by the US government, and Lehman Brothers, which filed for bankruptcy protection, reduced revenue by 7.0 percentage points, the company said.
Lending rose 15 percent from a year ago to 404.2 billion dollars.
Shares in Wells Fargo climbed 2.63 percent to 34.40 dollars in New York in late morning trade. - AFP/de
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