Wells Fargo & Co today reported a 7% fall in quarterly profit as it set aside more than $1 billion to cover bad loans, saying its energy portfolio remained under "significant stress."
Wells Fargo said that nearly 2% of its loans are to the energy industry.
"The increases in losses and non-performing loans in the first quarter were primarily due to continued challenges" in the oil and gas portfolio, the bank's chief risk officer Mike Loughlin said.
Oil prices have dropped by two-thirds since 2014, gutting the global energy markets and driving a string of bankruptcies as debt-laden drillers default on their loans.
About a third of publicly traded oil and gas-related companies, with more than $150 billion in debt, are at high risk of bankruptcy this year, according to a report by auditing and consulting firm Deloitte.
Wells Fargo said its mortgage banking revenue rose 3.3% to $1.6 billion. However, the bank was dethroned by JPMorgan Chase as the biggest US mortgage lender.
Its net income fell to $5.09 billion, or 99 cents per share, in the first quarter ended March 31 from $5.46 billion, or $1.04 per share, a year earlier.
Total revenue rose 4.3% to $22.2 billion.
Wells Fargo said it was setting aside $1.09 billion in the quarter to cover bad loans compared with $608m a year earlier.
