Wells Fargo earnings rise 11 percent

Fourth-quarter profit for Wells Fargo & Co. (WFC), the biggest U.S. mortgage lender, jumped 11 percent as a steep drop in mortgage lending was offset by increased interest income.

Net income after dividend payments on preferred stock rose to $5.4 billion in the October-December period from $4.9 billion a year earlier. On a per-share basis, earnings were $1.00, beating the 99 cents forecast by Wall Street.

Fourth-quarter revenue fell to $20.7 billion from $21.9 billion.

The rise in rates on U.S. mortgages in the latter part of last year continued to have a negative impact on Wells Fargo's mortgage business.

The San Francisco-based bank, which is the fourth-largest U.S. bank by assets, controls about a third of the U.S. mortgage market. Much of its lending business has been coming from mortgage refinancing, which was reduced by the spike in interest rates.

Wells Fargo funded $50 billion worth of mortgages in the fourth quarter, down from $125 billion a year earlier.

At the same time, net interest income increased $55 million to $10.8 billion as the bank earned more on the securities it held and from trading.

Wells Fargo CEO John Stumpf says the improving prospects for the U.S. economy will help the bank perform strongly this year.