(Bloomberg News) Wells Fargo & Co., the biggest U.S. home lender, boosted second-quarter profit 29 percent to a record as funds set aside to cover soured loans declined for a seventh straight period.

Net income climbed to $3.95 billion, or 70 cents a diluted share, from $3.06 billion, or 55 cents, in the same period a year earlier, the San Francisco-based company said today in a statement. The average estimate of 26 analysts surveyed by Bloomberg was for earnings per share of 69 cents.

"We're seeing continued improvement in asset quality trends," Andrew Marquardt, an analyst at Evercore Partners Inc. in New York, said in an interview before the results were announced. "Wells Fargo is in a uniquely strong position where they have addressed a lot of the issues on their balance sheet."

Wells Fargo Chief Executive Officer John Stumpf, 57, is relying on loan-loss reserves and cost-cutting to boost profit as a jobless rate above 9 percent has tempered the U.S. economic recovery. Consumer borrowing rose in May for the eighth straight month, a sign that people may be ramping up credit-card debt as gasoline prices and unemployment climb.

"Our business fundamentals were strong with increased revenues, loans and deposits, lower operating costs, improved credit quality and higher capital levels," Stumpf said in the statement. "While the economic recovery continues to be slower than expected, there are signs that businesses are investing for growth."

Revenue, Loans

Revenue rose 0.3 percent from the first quarter to $20.4 billion, matching analysts' estimates. Pretax, pre-provision income advanced 4 percent to $7.91 billion, compared with the preceding three-month period. Total loans climbed $766 million to $751.9 billion as of June 30.

Wells Fargo set aside $1.8 billion to cover loan losses, on net loan write-offs of $2.8 billion.

Bank lending has picked up for businesses and corporations as well, Federal Reserve data show. U.S. commercial banks' holdings of commercial and industrial loans rose to $1.26 trillion in May, a 1 percent increase from the previous month.

Wells Fargo, the fourth-biggest U.S. bank by assets, advanced 1.6 percent to $27.30 at 8:49 a.m. in early New York trading. The shares had declined 13 percent this year through yesterday, mirroring the drop of the 24-company KBW Bank Index.

Warren Buffett's Berkshire Hathaway Inc., Wells Fargo's largest shareholder, held 342.6 million shares, a 6.5 percent stake, as of March 31.

BofA, JPMorgan, Citigroup

The lender is the last of the four largest U.S. banks to report second-quarter results. The biggest, Bank of America Corp., reported an $8.83 billion loss today on costs tied to defective mortgages. No. 2 JPMorgan Chase & Co. said last week that profit rose 13 percent to $5.43 billion as revenue unexpectedly climbed on gains from underwriting stocks and bonds. Citigroup Inc., the third-biggest, said profit surged 24 percent to $3.34 billion on higher investment-banking fees.

The four lenders, along with Ally Financial Inc., are in advanced talks with state attorneys general and federal regulators over deficiencies in their mortgage-servicing operations. The companies face penalties that may exceed $20 billion, two people familiar with the negotiations have said.

Wells Fargo may be forced to hold less capital than competitors after global central banks agreed last month to levy extra capital rules for lenders whose size or systemic importance means their failure could cause another financial crisis. Marquardt, who recommends that investors buy the stock, said the new rules will be "less burdensome" for the lender than rivals such as New York-based JPMorgan.