(Reuters) -Wells Fargo & Co on Friday reported a decline in profit for the third quarter as the bank set aside more money in preparation for a hit from a potential economic slowdown.
Provision for credit losses were bolstered to $784 million in the quarter, compared with a $1.4 billion release a year earlier, when extraordinary government stimulus helped the economy to rebound from the pandemic hit.
Banks are building up rainy day funds again amid worries that aggressive interest-rate increases by the Federal Reserve to tame stubbornly high inflation will tip the U.S. economy into a recession.
The outlook has been further clouded by the Russia-Ukraine war and fading stimulus measures. Higher borrowing costs have also shackled demand for mortgages and car loans, crimping banks’ revenues.
Wells Fargo is still working to contain the fallout from a now six-year-old scandal over its sales practices that led to a cap imposed by the Fed on the lender’s ability to expand its balance sheet and hefty fines.
The fourth-largest U.S. lender reported a profit of $3.53 billion, or 85 cents per share, for the quarter ended Sept. 30, compared with $5.12 billion, or $1.17 per share, a year earlier.
(Reporting by Noor Zainab Hussain and Niket Nishant in Bengaluru; Editing by Sriraj Kalluvila)
