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Wells Fargo & Co posted a 32 per cent jump in quarterly profit on Friday, as the bank gave out more personal and automobile loans, and made headway in its cost-cutting plan.

Wells has been striving to rebuild its reputation with customers over the last two years after a series of scandals, fines and regulatory probes, especially in its consumer banking business, dented its brand and reputation.

The company is making good on its promise to chop billions of costs over the next several years. Noninterest expenses in the third quarter fell 4.1 per cent to $13.8 billion.

Chief financial officer John Shrewsberry has vowed to reduce about $3 billion in expenses by 2020. The bank also plans to pare its network by roughly 800 branches and cut up to 10 per cent of its work force over the next three years.

Total revenue in the quarter beat analyst estimates, rising 0.4 per cent to $22 billion, with community banking – an area most closely tied to a sales scandal – the only unit recording an increase in revenue.

Analysts expected revenue of $21.9 billion, according to I/B/E/S data from Refinitiv.

The bank’s shares rose 1.2 per cent to $52.10 in early trading.

“While these results were less noisy than previous quarters, more fallout from prior misdeeds cannot be ruled out,” Allen Tischler, senior vice president with Moody’s Investors Service said.

Net income applicable to common stockholders rose to $5.45 billion, or $1.13 per share, in the quarter ended Sept. 30, from $4.13 billion or 83 cents per share a year ago.

On an adjusted basis, the company narrowly missed analysts’ estimates, earning $1.16 per share, compared to estimates of $1.17, according to I/B/E/S data from Refinitiv.

Rising interest rates have brought much-needed relief for banks that were scrambling to boost their profits. But they also have weighed on borrowers’ ability to take out loans, hurting loan growth. Mortgage rates are at a multi-year high.

Total loans at the fourth largest U.S. bank by assets fell 1 per cent to $942.3 billion, with new mortgage borrowing down $13 billion. Total mortgage origination at JPMorgan Chase & Co fell about 16 per cent in the quarter.

However, higher interest rates helped prop up net interest margin – a measure of how much a bank earns on its investments – which rose to 2.94 per cent from 2.86 per cent in the year-ago quarter.

The Federal Reserve has raised rates four times since the third quarter of last year.

Industry experts think the increase in interest rates, albeit gradual, will likely present headwinds to loan growth in the coming quarters as customers become less willing to borrow at higher interest rates.

Wells Fargo ended the quarter with $1.88 trillion in assets. Its average total deposits declined 3 per cent to $1.27 trillion, well under the Federal Reserve’s $1.95 trillion asset cap it had imposed on the bank.

The regulator had said it would lift the cap only after Wells showed sufficient improvement in governance and controls. The bank’s executives expect the cap to be lifted in the first half of next year.

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