Wells Fargo profits rise despite revenue drop

US 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 $5.4 billion on revenues of $20.7 billion, up from $4.9 billion on revenues of $21.9 billion. That translated into per-share earnings of $1.00, two cents above analyst expectations. Overall loans rose $26.2 billion to $825.8 billion, with growth in most categories. Total average deposits for the fourth quarter were $1.1 trillion, up nine 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 $963 million, compared with $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 $25 billion from $35 billion at the end of the previous quarter. For the full year 2013, Wells Fargo reported net income of $21.9 billion, up 16 percent from 2012. Wells Fargo shares fell 0.6 percent in premarket trade.