Wells Fargo may have beat rival JPMorgan Chase in the banking arena, but its mortgage business is less than stellar.
The nation’s biggest mortgage originator rang up record third-quarter profit of $5.6 billion, an increase of 13 percent over the year ago quarter. That also beat the Street’s expectations for $5.3 billion.
Wells Fargo was buoyed by the release of nearly $1 billion in reserves set aside to cover potentially bad loans.
That helped offset a sharp decrease in mortgage refinancings as interest rates crept higher in spring and summer.
Mortgage banking income was off 42 percent, at $1.6 billion, down from $2.8 billion in the second quarter.
Residential mortgage originations saw a nearly 30 percent drop, to $80 billion, from the previous quarter.
Total revenue dipped to $20.5 billion, from $21.2 billion, a year ago, due to lower mortgage banking revenue and fees.
On the flip side, rising interest rates, which have taken some of the steam out of the refinancing boom, also bolstered the returns of assets banks hold on their balance sheets, giving a lift to results.
Wells Fargo officials have tried to underscore that the West Coast lender is more than just a massive mortgage lender, highlighting a string of businesses that also drove revenue.
“I wouldn’t think of Wells Fargo as a mortgage company. I would think about it as a diversified financial institution,” CFO Timothy Sloan told Bloomberg.