Recently Wells Fargo & Co. (NYSE: WFC) surpassed Industrial & Commercial Bank of China Ltd. As the lender with the largest market value in the world thus far. Wells Fargo & Co. currently have $42 billion more than J.P. Morgan Chase & Co. (NYSE: JPM) and $120 billion more than Citigroup Inc. (NYSE: C).
Wells Fargo &Co has seen healthy growth throughout the year – a gain of 13.5% within 12 months, making Wells Fargo & Co. the seventh largest stock in the S&P 500 Index. KBW Bank Index, an index which measures large U.S. bank stocks, is trading close to a post crisis high. Large banks are worth owning as J.P. Morgan, which is the largest U.S. bank by assets, the second largest market value after Wells Fargo, just reached their 52-week high last month of $69.75.
“There’s just no question the industry is so much stronger than what it was six, seven, eight years ago... The U.S. economy is doing quite well, especially in relative terms to the rest of the world”, said John Stumpf, Wells Fargo’s President and CEO.
Wells Fargo rises from all the large banks by relying less on risky trades and derivatives using loaned money. Top player in U.S. mortgages, Wells Fargo is relatively small in terms of trading compared to the other large banks. A division of competitor J.P. Morgan, their corporate and investment banks which trade, made 36% of their revenue through trading this second quarter, while the relatively same division in Wells Fargo made 29% of their revenue through trading; By relying less on trading for revenue, Wells Fargo is arguably more stable, one of the many factors which contribute to naming Wells Fargo the world’s most valuable bank.
A portfolio manager at Hennessy Funds further comments on Wells Fargo, “At this point now, we’re starting to see companies’ actions start to impact the bottom line, whether it be cost initiatives, repositioning the balance sheet… we’re seeing the benefits of a good banking system.”