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.