San Francisco's Wells Fargo said its third-quarter profit rose 22%. (Wells Fargo & Co. )
Wells Fargo & Co. said its third-quarter profit rose 22%, with its volume of mortgage lending up more than 50% as homeowners refinanced their home loans.
The San Francisco-based bank said in its earnings report Friday that net income totaled $4.94 billion, or 88 cents per share, up from $4.06 billion, 72 cents a share, in the third quarter last year.
Revenue of $21.21 billion was up 8.1% from a year earlier but down slightly from the second quarter and less than the $21.47 billion that analysts had expected.
Wells Fargo shares fell $1.36 to $33.82 in early trading, a nearly 4% decline.
The low interest-rate environment reduced lending income, more than offsetting rising income from fees.
The difference between what Wells Fargo pays for deposits and earns on loans fell to 3.66%, from 3.91% in the second quarter and 3.84% a year earlier, a bigger drop than it had warned of last month. This net interest margin is squeezing banks as high-earning older loans are paid down and replaced with loans made at today's low rates.
Wells Fargo's chief risk officer, Mike Loughlin, said loan credit quality improved.
"The overall financial condition of businesses and consumers strengthened, the housing market in many areas of the nation improved, and we continued to work to reduce problem assets and make new, high-quality loans," he said.
WFC Net Income Quarterly data by YCharts
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