Tags: Wells Fargo | Earnings | Profit | Mortgage

Wells Fargo Profit Rises as Mortgage Business Steadies

Tuesday, 14 October 2014 08:25 AM

Wells Fargo & Co. reported a 1.7 percent rise in third-quarter profit, helped by a slight increase in income at its mortgage banking unit, which had been a big drag on results for much of the last year.

The fourth-largest U.S. bank's net income applicable to common shareholders rose to $5.41 billion, or $1.02 per share, in the quarter, it said on Tuesday, in line with analysts' expectations. A year ago, it posted profit of $5.32 billion, or 99 cents per share.

Income from mortgage banking rose 2 percent to $1.63 billion as Wells Fargo posted bigger profits from selling home loans to investors. Mortgage lending rose by $1 billion from the second quarter to $48 billion, though new home loans were 40 percent below the level in the third quarter of 2013.

A drop in refinancing activity beginning in the summer of 2013 caused mortgage banking income to plunge for four consecutive quarters.

Buoyant stock markets also boosted profits as it exited some venture capital investments.

Earnings tied to gains in equity investments rose 42 percent to $712 million.

The bank reported mixed progress on three major growth initiatives: credit cards, wealth management and investment banking. Credit card balances rose 11 percent to $28.3 billion from the third quarter of 2013, but the pace of new account growth slowed.

Profits at Wells Fargo's wealth, brokerage and retirement segment rose 22 percent from a year earlier to $550 million, but investment banking fees fell 7 percent to $371 million over the same period.

Overall revenue was up 3.6 percent to $21.21 billion on a 2 percent increase in net interest income and a 6 percent rise in fee income, most of which came from higher trust and investment fees.

Wells Fargo's loan portfolio grew by 3.7 percent to $838.9 billion in the quarter from the same period a year earlier, led by a 13 percent increase in commercial and industrial loans.

Excluding balances the bank is liquidating, loans grew 7 percent from a year earlier.

Expenses were up 1.2 percent to $12.2 billion as legal costs and foreclosure expenses increased.

Shares fell 1.7 percent to $49.33 in morning trading. Since the start of the year, Wells Fargo stock is up 10.6 percent, making it the best performer in the KBW index of bank stocks.

© 2018 Thomson/Reuters. All rights reserved.

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Wells Fargo, the fourth largest U.S. bank, reported a 1.7 percent rise in third-quarter profit on Tuesday as its mortgage business stabilized.
Wells Fargo, Earnings, Profit, Mortgage
Tuesday, 14 October 2014 08:25 AM
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