Record profit can't ease Wells Fargo bad loan fear

WELLS Fargo, the largest mortgage lender in the US, reported record second-quarter net income yesterday but gave a bleak assessment of its rising bad loans problem.<br /><br />Net income for the three months to the end of June rocketed 81 per cent to a record quarterly profit of $2.58bn (&pound;1.57bn), or $0.57 a share, compared to $1.75bn, or $0.53, in the second quarter of 2008.<br /><br />The record profit reflected the doubling in size achieved via the acquisition of Wachovia at the end of last year, pushing revenues for the quarter to $22.5bn.<br /><br />But the bank warned that non-performing assets had jumped 45 per cent from the first quarter to $18.34bn, with commercial real estate loans particularly weak.<br /><br />Chief financial officer Howard Atkins conceded that commercial real estate was worrying, but said there were signs that the decline in the economy was bottoming out.