By Peter Rudegeair and Amrutha Gayathri
(Reuters) - Wells Fargo & Co (N:WFC), the fourth largest U.S. bank by assets, reported a slight increase in quarterly profit on Wednesday as it earned more from credit cards and corporate loans.
Credit cards, one of Wells Fargo's major areas of expansion, were a bright spot as fees rose 12 percent to $925 million. Outstanding balances increased 16 percent to $31.1 billion (20.43 billion pounds), after its purchase of the loan portfolio of Dillard's Inc (N:DDS).
Commercial and industrial loans jumped 15 percent to $271.8 billion, much of it coming from an increase in lending to other financial companies, including $6.5 billion in loans to finance the sale of a Wells Fargo student loan portfolio to Navient Corp (O:NAVI). That sale resulted in a $217 million gain for the bank in the quarter.
Net interest income, a measure of overall profit from lending, was up 3.5 percent to $11.2 billion from the same period a year earlier due to growth in loans as well as more income from investments and trading assets. Core loans were up 8 percent from the fourth quarter of 2013.
Total net income for common shareholders was $5.38 billion, or $1.02 per share, for the quarter, up incrementally from a year earlier and in line with estimates from analysts polled by Thomson Reuters I/B/E/S.
Wells Fargo, the largest U.S. mortgage lender, reported a 4 percent fall in income from that unit. The bank made $44 billion in home loans in the quarter, 12 percent less than a year ago and a bigger drop than the one reported by rival JP Morgan Chase & Co (N:JPM).
Net interest margin, a profit measure tied to a bank's lending, fell to 3.04 percent from 3.27 percent a year earlier.
Wells Fargo's shares were down 1.1 percent to $51.30. The bank's stock jumped by 21 percent in 2014, triple the rise of the KBW index of bank stocks (BKX).