Wells Fargo Advisors earnings jump on lending

Wells Fargo Advisors has reported third-quarter earnings that jumped $100 million from last year's third quarter to reach $550 million as advisers continued to sell products and services outside clients' investment portfolios. Mortgages, securities-based lending and higher fee revenue helped drive up revenue to $3.6 billion, from $3.3 billion a year ago, despite a decrease in brokerage transaction revenue, the firm said. The firm reported its fifth consecutive quarter of double-digit loan growth as average amount held in loans by the wirehouse reached $52.6 billion, up 13% from the third quarter last year. Net-interest income, which measures in part how much revenue the firm generates from the money it lends, hit $790 million, up from $749 million last year. “Wealth, brokerage and retirement continued to benefit from strong loan growth,” the firm's chief financial officer, John Shrewsberry, said on a call with investors. That was driven by “high-quality, non-conforming mortgage loans and securities-based lending.” (More: Allianz joins Wells Fargo's new indexed annuity platform) The firm's advisers also sold 10.44 products per household, including items like a credit card or checking account, up from 10.41 a year ago. That compares with around 7.2 products per household in the wholesale banking segment. Overall assets were up 8% from last year to $1.6 trillion. Roughly a quarter, or $409 billion, of those assets were in managed accounts, which charge clients a fee for directing investments. That was a 17% year-over-year increase and primarily was due to market performance and inflows into fee-based accounts, the firm reported. An 18% year-over-year increase in asset-based fees also helped boost the noninterest income to $2.8 billion, an 8% increase from the third quarter of last year, despite lower transaction revenue. The firm's head count continued to trend down slightly with 15,163 advisers compared to 15,285 one year ago. (Related: Wells Fargo adds $830M Morgan Stanley duo) The net decline came despite the fact that Wells Fargo posted some of the largest recruiting gains in the third quarter, according to InvestmentNews' Advisers on the Move database. The firm brought in 17 teams with almost $4.6 billion in assets and lost $1 billion from 10 teams departing, according to the database, which tracks moves announced publicly by the firm. Expenses rose 3% from the year-earlier quarter to $2.7 billion, primary due to increased broker commissions, the firm reported. Wells Fargo is the first of the four large wirehouse firms, including Morgan Stanley Wealth Management, Bank of America Merrill Lynch and UBS Wealth Management Americas, to report earnings for the quarter.