Wells Fargo fourth-quarter profit rises; watching energy exposure

By Peter Rudegeair and Amrutha Gayathri

(Reuters) - Wells Fargo & Co (WFC.N), 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 in the fourth quarter. Outstanding balances increased 16 percent to $31.1 billion (20.41 billion pounds), after its purchase of the loan portfolio of Dillard's Inc (DDS.N).

One of the fastest-growing industries in its loan book in recent quarters has been energy. On a conference call with analysts, finance chief John Shrewsberry downplayed the effects that the sharp fall in oil prices would have on the bank's energy customers.

"Nothing obviously has revealed itself yet," said Shrewsberry. He added that the bank did not set aside any money in the quarter for possible energy loan defaults, but was reviewing customers' creditworthiness on a loan-by-loan basis.

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 (NAVI.O). 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. 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, 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 (JPM.N).

Shrewsberry said he expected mortgage volumes in the first quarter to be relatively constant, though they could get a boost if mortgage rates stay low.

Wells Fargo's shares were down 1.7 percent to $50.97, as the broader market tumbled. The bank's stock jumped by 21 percent in 2014, triple the rise of the KBW index of bank stocks (.BKX).

(Reporting by Peter Rudegeair in New York and Amrutha Gayathri in Bengaluru; Editing by Kirti Pandey and Jeffrey Benkoe)