(Reuters) – Wells Fargo reported third-quarter profit above estimates on Tuesday and raised its profitability target after regulators removed the bank’s cap on its assets.

The U.S. Federal Reserve (Fed) in June lifted a $1.95 trillion asset cap that had weighed on the bank for seven years, marking an important step in the bank’s turnaround and allowing it to accelerate Chief Executive Charlie Scharf’s efforts to boost growth.

Wells Fargo shares were up 3% in pre-market trading.

The bank is now targeting a return on tangible equity (ROTCE) of 17% to 18%, up from a previous target of 15%.

Wall Street expected Wells Fargo to raise its target after removing the cap that limited the growth of its assets.

Net interest income – the difference between what the bank earns on loans and what it pays on deposits – rose 2% year-on-year to $11.95 billion (€10.34 billion) in the quarter.

“Even though some economic uncertainties persist, the U.S. economy has demonstrated resilience and the financial health of our customers remains strong,” Charlie Scharf said in a statement.

The cut in interest rates decided by the Fed in September should increase banks’ interest income from the fourth quarter.

American banks benefited from rate cuts by the Federal Reserve, which reduced deposit costs, that is to say the interest paid to customers for maintaining their savings.

Wells Fargo reported third-quarter profit of $5.59 billion, up from $5.11 billion a year earlier. Earnings per share reached $1.66.

According to estimates compiled by LSEG, analysts expected Wells Fargo to post earnings of $1.55 per share.

(Written by Arasu Kannagi Basil in Bangalore; Etienne Breban, edited by Kate Entringer)

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