The San Francisco bank earned $4.99 billion, up 32% from $3.79 billion a year earlier. That amounts to $1.23 per share, above the $1.13 analysts polled by FactSet had expected.
Revenue rose 17% to $20.73 billion. That beat the $20.09 billion expected by analysts.
The bank added $643 million to its reserves to cover potential loan losses. Wells Fargo said it reflected an increase in reserves for commercial real estate loans, particularly office loans. It also increased reserves for credit card and auto loans.
The bank’s revenue told two stories. Net interest income jumped 45% from a year ago. It was helped by the Fed’s aggressive rate-hiking campaign, which allowed banks to charge more on loans. Noninterest income, on the other hand, fell 13%. Wells Fargo said earlier this year it would dramatically scale back its mortgage business, which was once the largest in the U.S.
Total deposits at Wells Fargo fell to $1.36 trillion, an 8% decline from a year earlier and a 2% decline from the fourth quarter.
The bank, which has been working to control costs, said noninterest expenses fell 1% from a year earlier.
Last year, profits were dragged down by a historic settlement with the Consumer Financial Protection Bureau over allegations that Wells Fargo’s loan and deposit products harmed millions of customers.
The bank took a $3.5 billion charge in the fourth quarter of last year and a $2 billion charge in the third quarter.
Source: wsj.com
