Third-quarter profit for Wells Fargo & Co., the biggest U.S. mortgage lender, jumped 13 percent as a decline in revenue from mortgage lending was offset by reduced expenses and fewer soured loans.
THE RESULTS: Net income increased to $5.6 billion in the July-September period from $4.9 billion a year earlier. On a per-share basis, earnings were 99 cents, beating the 97 cents forecast by Wall Street.
Third-quarter revenue dipped to $20.5 billion from $21.2 billion, coming in below the analysts' forecast of $21.1 billion. The bank's stock edged down 1 cent to close at $41.40.
HOW IT HAPPENED: Interest rates on U.S. mortgages rose sharply in the spring and summer. That had a negative impact on Wells Fargo's mortgage business.
The San Francisco-based bank controls nearly a third of the U.S. mortgage market. Much of its lending business has been coming from mortgage refinancing, which was reduced by the spike in interest rates.
Wells Fargo funded $80 billion worth of mortgages in the third quarter, down from $139 billion a year earlier.
Fewer bad loans in an improving housing market cut Wells Fargo's lending losses to $975 million from $2.4 billion in the third quarter of 2012.
The bank reduced expenses to $12.1 billion, down $153 million from the second quarter. The savings were mainly due to reduced employee bonuses and legal costs.