Despite Tough Earnings Climate, Wells Fargo Tops JPMorgan

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“I think banks will be relatively optimistic on 2014,” Bernstein analyst Brad Hintz told MarketWatch ahead Tuesday’s earnings report release from JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC), announcements that kick off the banking earnings season. “They are getting an idea where the regulators are pushing them, they know what they have to do.”

Plus, the worldwide markets are recovering, Europe appears to be recovering, and the Chinese government has started to address its financial problems, he said. “We would expect forward guidance to reflect some cautious optimism about fundamental trends for the coming year,” Credit Suisse analyst Moshe Orenbuch said in a research note, per MarketWatch.

There was also reason for banks to be optimistic about 2013. While JPMorgan reported that fourth-quarter profits slid 7.3 percent year over year, the bank did manage to beat analyst expectations. No such slowdown in profits marred Wells Fargo’s results. Even though the bank’s lucrative mortgage business weakened over the three-month period, Wells Fargo posted a better-than-expected 10 percent increase in net income, with results benefiting from strong expense controls and a continued improvement in loan credit quality.

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