Wells Fargo's profit rises, but mortgage banking income falls

Pedestrians walk past a Wells Fargo & Co. bank branch in New York.
Scott Eelis | Bloomberg | Getty Images

Wells Fargo the biggest U.S. mortgage lender, reported a 13 percent rise in third-quarter profit, but its mortgage banking income fell sharply as the refinancing boom began to fade.

Net income applicable to common shareholders rose to $5.32 billion, or 99 cents per share, from $4.72 billion, or 88 cents per share, a year earlier.

Analysts on average had estimated that Wells Fargo would earn 97 cents per share, according to Thomson Reuters I/B/E/S.

Wells Fargo made $80 billion in home loans, down from $139 billion a year earlier.

Mortgage banking income fell 43 percent to $1.61 billion due to fewer loans as well as diminished gains on selling mortgages to investors.

After the earnings announcement, the company's shares initially rose by about a percent in pre-market trading, but then retreated. (Click here to track the company's shares following the report.)

WFC earnings: The good, the bad
WFC earnings: The good, the bad

Higher revenues from some of Wells Fargo's other businesses were able to offset some of the decline in mortgage banking. Trust and investment fees rose to $3.28 billion from $2.95 billion a year earlier.

The bank released $900 million from its loan loss reserves, the largest release since the second quarter of 2011.

Earlier on Friday, JPMorgan Chase, the biggest U.S. bank by assets, reported a rare quarterly loss after incurring $9.2 billion in legal expenses.

Wells Fargo shares were down 1.5 percent at $40.81 in trading before the bell on Friday. They closed at $41.11 on Thursday on the New York Stock Exchange.

By Reuters