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Record high profit for Wells Fargo

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Record high profit for Wells Fargo

Record high profit for Wells Fargo

The fourth largest bank by assets in the U.S. beat the expectations, showing an increase in earnings for the 15th quarter straight. The bank beat the third-quarter earnings expectations. Experts had believed that the lender could experience a slight drop in earnings for the first time since the worst of the financial crisis.

The opinion was gathered from a dying mortgage refinancing boom ending and surging mortgage rates. The repetitive forecasts of lower earnings for the bank have been proven wrong throughout the year.

While Wells Fargo reported an increase in earnings, JPMorgan, the largest U.S. bank by assets, reported a net loss. Wells Fargo, which is based in San Francisco, reported earnings of $5.6 billion with revenue of $20.5 billion. The bottom line earnings came out ahead of the estimate of $5.26 billion, but revenue fell short of estimates by $500 million, data from Bloomberg indicated.

The third-quarter earnings of 99 cents per share surpassed the consensus estimate of 97 cents, according to the forecasts of analysts that had been compiled by Bloomberg. Net charge-offs connected to loans continued to fall, actually dropping to their lowest levels since 2006. Loan charge-offs came in at $975 million, which was down significantly from year-ago when levels sat at $1.4 billion.

Wells Fargo reported that it saw a 30 percent drop off in residential mortgages. The bank originated $80 billion in residential mortgages, which was a significant drop from second quarter origination levels that sat at $112 billion. The bank also reported a $900 million reserve release for the quarter.

“Wells Fargo continued to demonstrate strong and consistent financial performance in the third quarter,” CEO John Stumpf said in a statement.

“As our economy continues to transition to higher interest rates, our diversified business model and strong risk discipline contributed to record earnings per share along with continued strength in return on assets, return on equity and capital,” he added.

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