Fannie's Profits Rose 16% in Third Quarter, In Line with Forecasts

Fannie Mae earned $991 million, or 94 cents a share, in the third quarter, up 16% from the year-earlier period, the secondary-market giant reported Wednesday.

The government-sponsored enterprise's results were in line with Wall Street's expectations, and at midmorning its stock price was little changed at $66.1875, up 0.76%.

In a statement, Fannie's chairman and chief executive, Franklin D. Raines, attributed the rise in profits to growth of the company's mortgage portfolio and a decline in losses from defaults and delinquencies.

The portfolio grew 34%, to $504 billion. Net interest income increased 16%, to $1.241 billion, despite a narrowing of Fannie's net interest margin by 5 basis points, to 100 basis points.

Credit-related expenses, which include property foreclosure costs and loss provisions, fell 68%, to $20.8 million. Lehman Brothers analyst Bruce W. Harting said this sharp decline was due to a strong economy; a hot housing market, which lets Fannie sell foreclosed properties at a gain; and Fannie's improved monitoring of its loans' performance.