Wells Fargo beats the Street

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Wells Fargo, the biggest U.S. mortgage lender, reported a 20 percent rise in second-quarter profit on Friday as it set aside less money to cover bad loans.

Earnings excluding items rose to 98 cents per share from 82 cents a share in the year-earlier period .

Revenue edged up to $21.4 billion from $21.29 billion a year ago.

Analysts had expected the country's biggest mortgage originator to report earnings excluding items of 93 cents a share on $21.22 billion in revenue, according to a consensus estimate from Thomson Reuters.

(Read More: Why Banks Have a Friend in Bernanke )

Wells Fargo was among four U.S. banks that saw their shares move lower Wednesday following downgrades to "hold" from "buy" by Sandler O'Neill analyst Scott Siefers, who cited high valuations relative to peers.

Investors are waiting to hear what the big banks expect from the economy in the second half of 2013, Stephanie Link, co-portfolio manager of Action Alerts Plus, told TheStreet.com . She added that it will be a "sell-the-news" type of event, citing limited top-line growth.

Earlier Friday, JPMorgan Chase also posted earnings that topped expectations.

(Read More: JPMorgan Earnings, Revenue Top Estimates )

-Reuters contributed to this report.

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