Wells Fargo & Co., the world’s most valuable bank, said profit increased 3.8 percent on lower credit costs even as the lender’s per-share earnings failed to top the preceding quarter’s for the first time since 2009.

Net income for the second quarter advanced to $5.73 billion, or $1.01 a share, from $5.52 billion, or 98 cents, a year earlier, the San Francisco-based lender said Friday in a statement. The average estimate of 31 analysts surveyed by Bloomberg was $1.01 a share excluding special items. Earnings per share fell from $1.05 in the three months ended March 31.

Chief executive officer John Stumpf, 60, has sought to counter a drop in mortgage revenue as higher interest rates crimp new home loans. He’s expanded in businesses including credit-card and auto lending, investment banking and retail wealth management to help cover the shortfall.

“Our strong results in the second quarter reflected the benefit of our diversified business model,” Stumpf said in the statement. “Our results also reflected strong credit quality driven by an improved economy, especially the housing market.”

The lender set aside $217 million to cover bad loans, or 67 percent less than a year earlier, according to the statement. Wells Fargo released $500 million in loan-loss reserves, matching the estimate of Sanford C. Bernstein & Co.’s John McDonald.

Revenue Drops

Revenue fell 1.5 percent to $21.1 billion from a year earlier, the bank said. The average estimate of analysts surveyed by Bloomberg was $20.8 billion. Mortgage revenue declined 39 percent to $1.72 billion. Net interest margin slipped more than some analysts estimated to 3.15 percent from 3.20 in the first quarter.

Wells Fargo accounted for about 28 percent of U.S. home loans in the first quarter of 2012, before a 1 percentage point increase in conventional mortgage rates slowed refinancings and drove that share to 16 percent two years later. Lenders probably refinanced $109 billion of housing debt in the second quarter, less than 25 percent of the amount in the final period of 2012, according to the Mortgage Bankers Association.

The quarter was the first for new chief financial officer John Shrewsberry, 49, who succeeded Tim Sloan, 54, in May when the latter moved to run Wells Fargo’s wholesale-banking division. Shrewsberry had been in charge of the securities unit.

Competitors Report

Wells Fargo is the first of the largest U.S. banks to report second-quarter results. JPMorgan Chase & Co. is scheduled to announce earnings on Tuesday. The biggest U.S. bank by assets is expected to say adjusted profit fell 19 percent to $5.1 billion from a year earlier, according to the average estimate of analysts surveyed by Bloomberg.

Bank of America Corp., the second-largest lender, probably will say adjusted profit slid 15 percent to $3.02 billion, while New York-based Citigroup Inc., the third-biggest, is estimated to report a 15 percent slide to $3.26 billion, according to analysts.

Wells Fargo’s market capitalization of about $268 billion makes it more valuable than JPMorgan and Industrial & Commercial Bank of China Ltd., according to data compiled by Bloomberg.