April 14 (Reuters) – Wells Fargo’s profit rose in the first quarter, aided by higher income from interest payments and as its traders reaped benefits from volatile markets. The lifting of a seven-year, $1.95 trillion asset cap on Wells Fargo last year has allowed the bank to expand its balance sheet and pursue stronger growth […]
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Wells Fargo profit rises on interest income, trading boost
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April 14 (Reuters) – Wells Fargo’s profit rose in the first quarter, aided by higher income from interest payments and as its traders reaped benefits from volatile markets.
The lifting of a seven-year, $1.95 trillion asset cap on Wells Fargo last year has allowed the bank to expand its balance sheet and pursue stronger growth in all of its core businesses.
Wells Fargo is betting on growth in its credit card and autos businesses to lift loan growth this year. A string of rate cuts by the U.S. Federal Reserve in recent months has also encouraged customers to take on more debt.
“While markets have been volatile, we still see continued resiliency in the underlying economy, and the financial health of the consumers and businesses we serve remains strong, though the impact of higher oil prices will likely take some time to materialize,” CEO Charlie Scharf said in a statement.
Wells Fargo’s net interest income — the difference between what a bank earns on loans and pays out on deposits — rose 5% to $12.1 billion in the quarter from a year earlier.
Shares of the San Francisco, California-based company fell 1.7% in premarket trading. The stock had slipped 7% so far this year as of last close.
Trading was a bright spot. Stock markets navigated a tough landscape in the first quarter, as fears around artificial intelligence disrupting software companies and private credit worries unnerved investors.
Market jitters intensified in March with the outbreak of the U.S.–Israeli war with Iran, as concerns over oil supply disruptions due to the blockage of the Strait of Hormuz that carries one-fifth of the global oil stoked stagflation fears.
But volatility tends to be a boon for bank trading desks as investors increasingly rejig their portfolios to hedge against risks.
Wells Fargo’s markets revenue surged 19% to $2.17 billion in the quarter ended March 31 from a year earlier.
Net profit came in at $5.25 billion, or $1.60 per share, the fourth-largest U.S. lender said on Tuesday.
That compares with $4.89 billion, or $1.39 per share, the company reported a year earlier.
(Reporting by Arasu Kannagi Basil in Bengaluru and Nivedita Balu in Toronto; Editing by Shinjini Ganguli)