The San Francisco-based banking major reported a 5.9% drop in its net income to $5.5bn in the March quarter compared to $5.8bn in the corresponding quarter a year earlier.
Wells Fargo chief risk officer Mike Loughlin said: "While substantially all of the loan portfolio continues to perform well, the oil and gas portfolio remains under significant stress due to low prices and excess leverage in this industry.
"The increases in losses and nonperforming loans in the first quarter were primarily due to continued challenges in this portfolio."
The firm increased its provisions for bad loans in oil and gas industry by $1.09bn, up 79% against the same quarter last year. The outstanding loans from the oil sector for the lender stood at $17.8bn at the end of first quarter.
However, Wells Fargo, the third largest bank in the US in terms of assets, posted a 4% increase in its revenue to $22.2bn in the quarter. Net interest income was up $79m to $11.7bn compared to the previous quarter.
Wells Fargo chairman and CEO John Stumpf said: "We again generated solid growth in the fundamental drivers of long-term value creation: loans, deposits and capital. We also completed two important acquisitions from GE Capital, which are great additions to our company and demonstrate the benefit of our strong financial position."
Profit from community and wholesale banking divisions fell by 7.1% and 2.7%, respectively.
Wells Fargo chief financial officer John Shrewsberry said: "While challenges in the energy industry and persistent low rates impacted our bottom line, our diversified business model was again beneficial to our results."
Image: Wells Fargo’s corporate headquarters in San Francisco. Photo courtesy of Laimerpramer/Wikipedia.
