Wells Fargo, the biggest U.S. mortgage lender, reported a 14 percent rise in first-quarter net profit as the company set aside less money to cover bad loans and costs fell.
Net income applicable to common shareholders rose to $5.60 billion, or $1.05 per share, in the quarter ended March 31 from $4.93 billion, or 92 cents per share, a year earlier, the fourth-biggest U.S. bank said on Friday.
Analysts on average had expected Wells Fargo to earn 97 cents per share, according to Thomson Reuters I/B/E/S.
Wells Fargo's shares, which had risen about 8 percent since the start of the year to Thursday's close, were up 1 percent at $48.25 in trading before the bell.
Wells Fargo's mortgage business, which provides nearly one in five U.S. home loans, continued to suffer from a drop in refinancing. Income from mortgage banking fell to $1.5 billion from $2.8 billion in the first quarter of 2013.
For the week ending April 4, applications for refinancing fell to their lowest share of total mortgage applications since July 2009, according to the Mortgage Bankers Association.
Wells Fargo's new home loans fell to $36 billion in the quarter from $109 billion a year earlier and $50 billion in the fourth quarter.
February was the worst month for new home loans since at least 2000, according to Black Knight Financial Services.
Wells Fargo had $27 billion of mortgage applications in the pipeline at the end of the quarter, down from $65 billion at the end of the fourth quarter.
JPMorgan Chase, the biggest U.S. bank by assets, reported earlier on Friday that income from its mortgage business fell to $114 million in the quarter, a drop of $559 million from the year-earlier period.
Wells Fargo's net income got a lift from a drop in the amount it set aside to cover bad loans as the housing market and the overall economy stabilized.
The bank released $500 million from its loan loss reserves, higher than the $200 million released a year ago but less than the $600 million released in the fourth quarter.
Wells Fargo is experiencing historically low loan losses. Its net charge-off rate was 0.41 percent in the latest quarter, down from 0.47 percent in the fourth quarter and 0.72 percent in the first quarter of 2013.
Total lending rose 4 percent to $826.4 billion, while total revenue fell slightly to $20.6 billion from $21.3 billion a year earlier.