Wells Fargo, tapping into a refinancing market invigorated by low interest rates, announced Friday that its fourth-quarter profits totaled $5.1 billion — a 24 percent increase over last quarter, the New York Times reported.
Wells Fargo reported earnings of $0.91 a share, exceeding the expectations of analysts, who had thought the San Francisco, Calif.-based bank would earn $0.89 a share. Revenues were also up seven percent from last quarter to $21.95 billion.
The growth was spurred in large part by the bank’s consumer lending business, as borrowers took advantage of record low interest rates to refinance their mortgages. Refinancing applications accounted for just under 75 percent of the $125 billion in mortgage originations. The bank also reported a $926 million profit — a six percent increase — from its servicing business, in which the bank collects payments from homeowners.
“The company’s underlying results were driven by solid loan growth, improved credit quality, and continued success in improving efficiency,” Wells Fargo’s Chief Financial Officer Tim Sloan said in a statement.
Wells Fargo is overwhelmingly the market leader in the mortgage industry, generating roughly a third of all the mortgages in the United States. But the bank is still dealing with effects of the financial crisis, and was one of 10 banks that signed an $8.5 billion settlement with government regulators over wrongful eviction claims. In July, the bank was slammed with a $175 million discrimination charge, and in October, it sent refund checks to 10,000 mortgage borrowers in anticipation of future lawsuits. [NYT] – Hiten Samtani