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Wells Fargo reports 10.5% rise in profits despite drop in mortgages

NEW YORK, -- U.S. banking giant Wells Fargo Tuesday reported a 10.5 percent rise in earnings as improving credit quality and growth in overall loans offset lower mortgage revenues.

Wells Fargo, known as the nation's largest mortgage lender, said net income for the fourth quarter came in at US$5.4 billion on revenues of US$20.7 billion, up from US$4.9 billion on revenues of US$21.9 billion.

That translated into per-share earnings of US$1.00, 2 cents above analyst expectations.

Overall loans rose US$26.2 billion to US$825.8 billion, with growth in most categories. Total average deposits for the fourth quarter were US$1.1 trillion, up 9 percent from a year ago, the nation's fourth-largest bank said.

“Strong earnings power and capital levels, and an improving economic outlook are major reasons why we look ahead to 2014 with optimism,” said chief executive John Stumpf.

Wells Fargo said credit quality continues to improve, resulting in credit losses of just US$963 million, compared with US$2.1 billion a year ago.

On the downside, Wells Fargo reported an 11-percent drop in revenues from its community banking segment, due to lower mortgage banking revenues.

Wells Fargo said home lending originations and applications fell from the previous quarter, while the home lending application pipeline declined to US$25 billion from US$35 billion at the end of the previous quarter.

For the full year 2013, Wells Fargo reported net income of US$21.9 billion, up 16 percent from 2012.

Wells Fargo shares fell 0.6 percent in premarket trade.

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