(Reuters) – Wells Fargo’s profit jumped 32% in the first quarter as interest rates rose as the U.S. Federal Reserve (Fed) tightened monetary policy, the lender said on Friday.
The fourth-largest US bank reported earnings of $4.99 billion (4.51 billion euros), or $1.23 per share, for the quarter ended March 31, from $3.79 billion. dollars a year ago, or 91 cents per share.
In New York, the Wells Fargo title fell 1% in pre-market trading.
The bank provisioned $1.21 billion in the quarter to cover potential loan losses.
Banks are now building up relief funds as fears of an economic slowdown grow on the back of aggressive interest rate hikes by the US Federal Reserve to tame inflation, as well as recent turmoil in the banking sector .
The collapse of Silicon Valley Bank and Signature Bank last month caused a rout in banking stocks as investors worried about broader weaknesses in the sector.
Wells Fargo brought in March 5 of the $30 billion in deposits injected by major US banks into troubled regional lender First Republic Bank.
“We are pleased to have been in a strong position to help support the U.S. financial system during recent events that have affected the banking industry. Regional and convenience banks are an important part of our financial system,” said Chief Executive Charlie Scharf in a statement Friday.
Overall, noninterest expenses fell to $13.68 billion in the first quarter from $13.85 billion a year earlier, mainly due to lower operating losses.
Wells Fargo’s total revenue rose 17% to $20.73 billion in the first quarter.
Wells Fargo is still struggling to contain the fallout from a scandal over its sales practices, which resulted in steep fines and a Fed-imposed asset cap.
As of the fourth quarter of 2022, the bank had incurred $3.3 billion in operating losses related to lawsuits, customer remedies and regulatory issues related to the scandal.
(Reporting Noor Zainab Hussain and Manya Saini in Bangalore and Saeed Azhar in New York; Gaëlle Sheehan, editing by Kate Entringer)
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