The release of a wave of reserves set aside to deal with a rise in souring loans boosted third quarter profits at US bank Wells Fargo.
The American consumer banking giant notched $5.1bn in profits in the last three months, up nearly $2bn from the same period last year.
The banking giant’s bottom line received a bump from the release of nearly $1.4bn in reserves set aside to cope with an expected wave of pandemic-induced defaults.
Net interest income, a key source of revenue for banks, edged back five per cent over the last year to $8.9bn. Total revenue hit $18.8bn for the third quarter, down on the year and on the last three months.
Wells’ common equity tier one ratio, a measure of the strength of a bank’s balance sheet, inched up to 11.6 per cent from 11.4 per cent. Earnings per share, an indication of a company’s profitability, climbed to $1.17, up from 70 cents.
Charlie Scharf, chief executive of Wells Fargo, said: “The actions we’re taking to improve operating effectiveness and financial returns are coming through in our results, in addition to the benefits we’re experiencing from the economic recovery.”