(Reuters) -Wells Fargo & Co’s first-quarter profit dropped 21% but beat Wall Street expectations on Thursday as top boss Charlie Scharf plans to keep a tight rein on costs cushioned a drop in mortgage lending.

The quarter saw an average increase of 3% in loans, thanks to credit cards and auto lending. However, mortgage loans fell 33% compared to last year due to lower originations, as the Federal Reserve increased interest rates in an effort to control inflation.

Chief Executive Charlie Scharf stated that “our internal indicators continue to point to the strength of customers’ financial situation, but the Federal Reserve made it clear it would take steps necessary to lower inflation and this will definitely reduce economic growth.”

“In addition, there is the risk of war in Ukraine.”

Wells Fargo The NYSE: relies heavily on the revenue it receives from corporate and consumer banking, since there is not a significant capital markets unit like Wall Street counterparts. Goldman Sachs Group Inc (NYSE: Morgan Stanley (NYSE:).

Scharf’s plans to transform the bank and make it more sustainable over the long-term, which included lower salaries and divestitures led to a 1% decrease in noninterest expense.

The quarter saw a 5% increase in net interest income, mainly due to higher loan balances and lower long-term debt. The average loan amount grew by $898 billion to $898 billion during the last quarter, compared with $873.4 billion one year ago.

As the United States recovers from its COVID-19 pandemic, consumer spending is on the rise. Many people are now spending more money shopping, dining out, and traveling.

Some of the top executives from the major U.S. banks stated that consumers have strong cash balances and they are keen to borrow and spend.

Fourth-largest U.S. lender reported a profit in the third quarter of 2013, or 88cs per share. That compares to $4.64billion or $1.02 per shares a year prior.

According to data from Refinitiv, analysts expected the bank’s profit to average 80 cents per share.

Comparable to an estimate of $17.8 trillion, total revenue declined 5% and fell to $17.59 million.