San Francisco, CA, United States (4E) – Wells Fargo reported Friday a 13 percent increase in third quarter net income, as lower allocations for bad loans made up for soft results from the lender’s mortgage business.
Third quarter net income climbed to a record $5.58bn, or 99 cents per share, from $4.94bn, or 88 cents per share, a year ago, according to the San Francisco-based bank in a statement. The bank’s mortgage banking revenue shrank 43 percent but reclaimed $900mn from its loan-loss reserves.
Revenue dropped 3.5 percent to $20.48bn, below estimate of $20.97bn. Non-interest expense stayed virtually flat at $12.1bn.
Wells Fargo Chief Executive John Stumpf also said that the bank continues its three-year run of record profits, outstripping major rival as JPMorgan Chase & Co., which recorded a loss of $380mn. Investors were also told by Mr. Stumpf that he will ask for approval to increase the dividend.
The bank, however, forecasts fourth quarter home lending will continue to decline, making analysts to question the company’s ability to fill the void and generate profits.
Home lending originations dropped to $80bn, 42 percent lower than the previous year’s $139bn. The bank’s mortgage originations were at $112bn in the second quarter. Applications fell to $87bn from $188bn a year ago and $146bn in the previous three months.