(Reuters) -Wells Fargo’s profit jumped in the third quarter as the U.S. lender benefited from customers paying higher interest on loans.
Net interest income (NII) – the difference between what the bank earns on loans and pays out on deposits – climbed 8% to $13.1 billion in the third quarter.
In July, the fourth largest U.S. lender said its NII would rise by 14% this year. It had earlier forecast a 10% increase.
The swiftest tightening of U.S. monetary policy in 40 years aimed at reining in sticky inflation has buoyed banks’ interest income. Federal Reserve officials have said monetary policy will need to stay restrictive for a longer period to bring inflation back down to its 2% target but are debating whether another hike is needed this year.
“While the economy has continued to be resilient, we are seeing the impact of the slowing economy with loan balances declining and charge-offs continuing to deteriorate modestly,” CEO Charlie Scharf said in a statement.
Shares of Wells Fargo rose 2% in premarket trading after the results.
The bank is working to fix a six-year-old scandal over sales practices that led to hefty fines and an asset cap imposed by the Fed.
Net income climbed to $5.77 billion, or $1.48 per share, in the three months ended Sept. 30, from $3.59 billion, or 86 cents per share, a year earlier, the bank reported on Friday.
Wells Fargo said provision for credit losses in the quarter included a $333 million increase in the allowance for credit losses primarily for commercial real estate office loans.
(Reporting by Noor Zainab Hussain and Manya Saini in Bengaluru and Saeed Azhar in New York; Editing by Lananh Nguyen and Sriraj Kalluvila)
