NEW YORK, N.Y. - Wells Fargo & Co. on Monday said that its third-quarter profit jumped 21 per cent, as write offs of bad loans dropped while deposits grew.
But the bank posted lower-than-expected revenue for the period, and shares slipped in premarket trading.
The San Francisco-based bank said that its net income rose to $4.06 billion, or 72 cents per share, for the three months ended Sept. 30. That compared with $3.34 billion, or 60 cents per share, in the year-ago quarter.
That matched the average analyst expectation for earnings of 72 cents per share, according to data provided by FactSet.
Total revenue fell 4 per cent to $19.63 billion from $20.39 billion a year ago. Wall Street expected revenue of $20.24 billion.
Wells Fargo shares dropped $1.16, or 4.4 per cent, to $25.51 in premarket trading.
The revenue decrease reflects a concern throughout the banking industry as a host of new regulations have taken effect, limiting charges like overdraft fees and making it harder to raise interest rates on credit cards. Service charges on Wells Fargo's deposit accounts fell 3 per cent to $1.1 billion in the quarter.
Meanwhile, as the housing market continues to languish, mortgage banking fees plunged 27 per cent to $1.83 billion.
Total noninterest income, or revenue earned from fees and charges, dropped 7 per cent to $9.09 billion.
And with interest rates remaining at record lows, interest income from loans fell 6 per cent to $9.22 billion. Net interest income, or the money earned from across deposits and loans, fell 5 per cent to $10.54 billion.
Wells Fargo reduced the amount it set aside to cover uncollected loans by 47 per cent to $1.81 billion, down from $3.45 billion last year, as both consumer and commercial borrowers got better paying back debt.
Net loan charge-offs fell 8 per cent to $2.61 billion from $2.84 billion last year.
Of that total, $2.19 billion represented consumer loans, down 6 per cent from last year. The total includes $821 million written off for unpaid mortgages on one-to-four family homes. Uncollected commercial loans fell 16 per cent to $423 million.
Average loans slipped 1 per cent to $754.54 billion. Average deposits rose 8 per cent to $836.8 billion.