Wells Fargo & Co. on Friday reported a 22-per-cent increase in third-quarter profit on a surge in mortgage lending.
The fourth biggest U.S. bank said net income totalled $4.9-billion, or 88 cents a share, in the quarter, up from $4.1-billion, or 72 cents a share, in the same period a year earlier. The bank’s latest EPS topped the analysts’ consensus estimate of 87 cents, according to Thomson Reuters I/B/E/S.
Wells Fargo, the largest U.S. home lender, posted mortgage banking revenue of $2.8-billion, up more than 50 per cent from a year ago. The bank made $139-billion in mortgages versus $89-billion a year ago, but up only slightly from the second quarter.
Wells Fargo and other banks are experiencing a jump in home lending as borrowers refinance their homes at low interest rates.
The bank’s net interest margin – the spread it makes on what it pays on deposits and makes on loans – fell to 3.66 per cent from 3.91 per cent in the second quarter, a bigger drop than it had warned of last month. Banks are seeing the margin shrink as older loans with higher interest rates are paid down.