NEW YORK --- Wells Fargo says the economy is getting better -- it sees signs of recovery in its loan business. But the big bank might be more of an exception than a leading indicator.
Breaking from the cautious, even downbeat forecasts of rivals such as JPMorgan Chase & Co., Wells Fargo on Wednesday used words such as "favorable" about its future amid tentative signs that its loan defaults are close to a peak or already have peaked. The company believes the consumer could be making a comeback.
The company is way ahead of other banks, although the CEO of Bank of America, which lost more than $5 billion last quarter, expressed mild optimism that sagging consumer sentiment might be turning around.
Many banking analysts aren't so sure. Ongoing problems including the deteriorating commercial real estate market and rising credit card defaults could still trip up a recovery. And while Wells' profit report was good news, the bank is ahead of its competitors by having already taken losses on many of its bad loans.
So while Mike Loughlin, Wells Fargo & Co.'s chief credit and risk officer, said a better economic outlook and an improved credit forecast "increase our confidence," that assessment might be a little premature.
Bert Ely, a banking analyst in Alexandria, Va., said several pitfalls could upend the bank's statements. Specifically, yet-to-be-realized losses on commercial real estate, prime mortgages and credit cards could weigh on all bank earnings well into 2010.
Wells Fargo said it earned $394 million, or 8 cents per share, during the fourth quarter.