Wells Fargo expects record profit

Wachovia has boosted Wells Fargo's profits

US bank Wells Fargo has surprised investors by bucking the recession, saying it expects a record net profit.

The bank said profit will be $3bn in the first quarter, thanks to better-than-expected results at newly-acquired lender Wachovia.

Wells Fargo bought Wachovia, which was the fourth-largest US bank, after it almost collapsed last year.

"Wachovia's outstanding franchise has proven to be everything we thought it would," the bank said.

Wachovia merger

The bank said it expected revenue of $20bn for the quarter, translating into "another quarter of double-digit revenue growth" of 16%.

Banking giant Citigroup had initially tried to block the merger between Wachovia and Wells Fargo.

But the US Federal Reserve approved Wells Fargo's $12bn takeover after its all-stock offer.

Wells Fargo's results are set to include $372m in dividend payments to the US Treasury, which took a stake in many banks in exchange for a cash injection.

US financier Warren Buffett has a stake in Wells Fargo through his holding company, Berkshire Hathaway, which has lost its top credit rating from Moody's.

Bank shares

Wells Fargo's announcement is the latest in a line of positive statements from banks such as Citigroup, Bank of America and Deutsche Bank about their performances in 2009.

Shares in the bank surged 32% by the end of trading on Wall Street.

Its shares led US banking stocks higher and helped to push the broader Dow Jones average of US stocks up 2.3%.

Bank of America shares gained 20.7%, Citigroup rose 8.5% and JP Morgan climbed 11.4%.