Wells Fargo & Co on Friday reported a 22 percent increase in third-quarter profit on a surge in mortgage lending.
The fourth biggest U.S. bank said net income totaled $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.
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Wells Fargo, the largest U.S. home lender, posted mortgage banking revenue of $2.8 billion, up more than 50 percent 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 percent from 3.91 percent 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.
(Reporting By Rick Rothacker in Charlotte, N.C.; Editing by Jeffrey Benkoe)