The San Francisco-based bank said it earned $394m (£242m) after paying preferred dividends, or eight cents per share, compared with analysts’ expectations for a loss of one cent per share. Earnings were reduced by 47 cents per share due to the cost of repaying the $25bn Wells Fargo had received in government bailout money under the Troubled Asset Relief Programme.
Wells Fargo set aside $5.9bn for loan losses in the fourth quarter, 30 per cent less than what it set aside a year earlier. When firms decrease their loan loss provisions, the expectation is that earnings will start to improve in 2010, said Rochdale Securities analyst Richard Bove.
For the full year, Wells Fargo reported a profit of $7.99bn after paying preferred dividends, or $1.75 per share. It earned $2.37bn, or 70 cents per share, in 2008.
Excluding dividends, Wells Fargo reported a record annual profit of $12.28bn.
“While losses remained elevated during the quarter as expected, a more favourable economic outlook and improved credit statistics in several portfolios further increase our confidence that our credit cycle is turning,” said the bank’s chief credit and risk officer, Michael Loughlin.