NEW YORK (Reuters) - Wells Fargo & Co. , the fifth-largest U.S. bank, on Tuesday said first-quarter profit rose 11 percent, helped by growth in lending and a higher net interest margin.Net income for the San Francisco-based company rose to $2.24 billion, or 66 cents per share, from $2.02 billion, or 60 cents, a year earlier.Analysts on average forecast profit of 65 cents per share, according to Reuters Estimates.Revenue rose 10 percent to $9.44 billion, topping forecasts for $9.31 billion, while operating expenses rose 9 percent to $5.53 billion. Average loans grew 3 percent from a year earlier.Wells Fargo, the No. 2 U.S. mortgage lender, has so far not been hit as hard as many rivals by the slowing housing market.Although it makes riskier "subprime" loans, it does not make some loans that have proved troublesome, and passes off the credit risks on some loans to investment banking partners.Fee income from mortgage banking rose 90 percent to $790 million, Wells Fargo said. Applications rose 19 percent to $113 billion, and new mortgages rose 3 percent to $68 billion.Net credit losses rose 65 percent to $715 million from a "historically low" $433 million a year earlier, but fell from the fourth quarter's $726 million.Chief Credit Officer Mike Loughlin said the bank is experiencing higher home equity losses, and expects "higher-but-manageable losses" throughout 2007 in that portfolio.Net interest margin, meanwhile, rose to 4.95 percent from 4.93 percent in the fourth quarter and 4.85 percent a year earlier.Wells Fargo shares closed Monday at $35.51 on the New York Stock Exchange. The shares are little changed this year, compared with a 2 percent decline in the Philadelphia KBW Bank Index <.BKX>.
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