Wells Fargo & Co, the biggest US mortgage lender, reported a slight increase in quarterly profit as it lent more to commercial and industrial customers in an improving economy. Banks have been relaxing their lending standards to boost loans to businesses. J. P Morgan Chase & Co, which reported a drop in quarterly profit on January 14, also made more commercial loans in the fourth quarter.
Wells Fargo's total loans rose 2.8 percent to $862.6 billion in the quarter, driven by a 15.5 percent rise in commercial and industrial lending. Credit card loans increased 16 percent.
Net interest margin, however, fell to 3.04 percent from 3.27 percent a year earlier, implying that the bank might be settling for a lower profit to shore up commercial lending.
Mortgage lending fell to $44 billion from $50 billion a year earlier and $48 billion in the third quarter.
"Credit quality continued to improve," Chief Financial Officer John Shrewsberry said in a statement. Wells Fargo released $250 million from reserves for credit losses.
Net income applicable to the bank's common shareholders rose to $5.38 billion, or $1.02 per share, from $5.37 billion, or $1.00 per share, a year earlier.
Net interest income rose 3.5 percent to $11.2 billion due to growth in total loans and higher income from investments and trading assets.
Revenue increased 3.3 percent to $21.4 billion.
Analysts on average had estimated earnings of $1.02 per share and revenue of $21.23 billion, according to Thomson Reuters I/B/E/S.
Wells Fargo had mortgage applications of $26 billion in the pipeline at the end of the fourth quarter, compared with $25 billion at the end of the prior quarter.
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