Profits were aided by investment gains in its venture-capital and private-equity businesses. The bank also released $875 million it had set aside to cover pandemic loan losses that didn’t materialize.

The year-ago results were hurt by a restructuring charge and charges tied to customer remediation for its fake-accounts scandal.

Wells Fargo’s year-ago results were hurt by a restructuring charge and a charge tied to customer remediation for its fake-accounts scandal.

The bank released $875 million it had set aside to cover pandemic loan losses that didn’t materialize.

Wells Fargo’s results hint at a brightening business landscape coming into view for banks, especially those more reliant on lending. After years of near-zero interest rates and tepid loan demand, both measures are set to rise, setting up rate-sensitive banks such as Wells Fargo for higher profits.

“We’re beginning to see loan growth and expect this to continue,” Chief Executive

Charles Scharf

said on a call with analysts.

The bank posted revenue of $20.86 billion, up 13% from a year ago. That beat expectations of $18.79 billion.

Wells Fargo’s net interest income, a measure of lending profit, fell 1% to $9.26 billion. Outstanding loans rose 1% from a year ago and 4% from the third quarter. The bank said it expects loan growth in the mid-to-low single digits in 2022.

Investors are betting the Federal Reserve’s expected rate increases will power bank profits by allowing them to charge more on loans.

Shares of Wells Fargo have risen 21% since the beginning of the year, more than any other big bank. The KBW Nasdaq Bank Index, which tracks shares of the largest lenders, is up 11% so far in 2022.

Like other banks, Wells Fargo can charge customers more to borrow money when interest rates rise. Banks are already awash in deposits, which means they are in no rush to start boosting returns on deposits.

The bank has more deposits relative to assets than many of its peers, largely because regulators have limited the bank’s lending capacity through an asset cap levied in 2018. If rates rise, Wells Fargo could deploy those deposits into securities and other investments that will deliver more meaningful returns.

Wells Fargo’s lending profits would rise by about $2.7 billion if short-term interest rates rise by 0.5 percentage point, it estimated last year.

Still, rising rates are beginning to weigh on Wells Fargo’s mortgage originations, the largest of any bank in the country. The average rate on the 30-year fixed mortgage rose to its highest level since March 2020 this week. Higher rates shrink the pool of borrowers who could save on their monthly mortgage payments by refinancing. They can also reduce demand from potential home buyers, who are already facing record price increases.

The lender reported $48.1 billion in mortgage originations in the fourth quarter, down from $53.9 billion the same time a year ago.

Noninterest income rose 27%. The bank made $943 million on the sale of its corporate trust and asset management businesses.

Wells Fargo entered the pandemic on shakier footing than its counterparts, trying to recover from its long-running sales-practice scandal. In the second quarter of 2020, it recorded its first quarterly loss in more than a decade. But the bank bounced back alongside the economy. Wells Fargo was the only big consumer bank to boost revenue between April and June 2021.

Banks are welcoming signs that loan growth is beginning to awaken from its pandemic stupor. Outstanding loans are nearing levels last seen in early 2020, as consumers and businesses alike recover their appetite for borrowing.

Reserve releases helped pad banks’ bottom lines in late 2020 and early 2021, when the economy showed signs of improvement and banks began to believe that much of their loan portfolios would endure the initial downturn.

Noninterest expenses in the fourth quarter totaled $13.2 billion, down 11% from a year earlier.

Wells Fargo is trying to slash some $10 billion from its budget. Inflation could make some of those expense reductions more difficult to realize, analysts said, as banks join other businesses in paying more for labor and materials like printer paper.

Earlier this week, the bank said it would stop charging customers nonsufficient-funds fees, which are incurred when a transaction is declined. The bank said Friday that it didn’t plan to eliminate overdraft fees.

“I continue to believe that there are a substantial number of customers out there that want us to pay an overdraft on their behalf…and they’re willing to pay for that,” Mr. Scharf said.

Mr. Scharf said the bank would raise its minimum wage to between $18 and $22, effective by the end of the month. The bank informed workers of the raise in the fourth quarter.

Shares rose 3.7% Friday.

Write to Orla McCaffrey at orla.mccaffrey@wsj.com