Wells Fargo & Co has today reported a decline in profit for the third quarter as the bank set aside more money in preparation for a hit from a potential economic slowdown.
Provision for credit losses were bolstered to $784m in the quarter, compared with a $1.4 billion release a year earlier, when extraordinary government stimulus helped the economy to rebound from the pandemic hit.
Banks are building up rainy day funds again amid worries that aggressive interest-rate increases by the Federal Reserve to tame stubbornly high inflation will tip the US economy into a recession.
The outlook has been further clouded by the Russia-Ukraine war and fading stimulus measures. Higher borrowing costs have also shackled demand for mortgages and car loans, crimping banks' revenues.
Wells Fargo is still working to contain the fallout from a six year old scandal over its sales practices that led to a cap imposed by the Fed on the lender's ability to expand its balance sheet and hefty fines.
The fourth-largest US lender reported a profit of $3.53 billion, or 85 cents per share, for the quarter ended September 30, compared with $5.12 billion, or $1.17 per share, last year.
