By - Reuters
(Reuters) - Wells Fargo & Co's profit rose in the first quarter as it earned more from interest rate payments, helped by the U.S. Federal Reserve's tighter monetary policy, the lender reported Friday.
The bank set aside $1.21 billion in the quarter to cover for potential loan losses, compared to a release of $787 million a year earlier.
The provision included a $643 million increase in the allowance for credit losses reflecting an increase for commercial real estate loans, primarily office loans, as well as an increase for credit card and auto loans, the bank said.
Banks are building up rainy day funds as fears of an economic slowdown mount from the U.S. Federal Reserve's aggressive interest rates hikes to tame inflation, as well as the recent turmoil in the banking sector.
Wells Fargo is also still working to contain the fallout from a scandal over its sales practices that led to hefty fines and an asset cap imposed by the Fed.
The fourth-largest U.S. lender reported a profit of $4.99 billion, or $1.23 per share, for the quarter ended March 31, compared with $3.79 billion, or 91 cents per share, a year ago.
(Reporting by Noor Zainab Hussain and Manya Saini in Bengaluru and Saeed Azhar in New York; Editing by Sriraj Kalluvila)