Share This Page

BNY Mellon earnings leap

| Wednesday, Oct. 16, 2013, 7:54 a.m.

Bank of New York Mellon Corp. reported on Wednesday that quarterly earnings increased 34 percent because of a gain from a favorable tax court ruling and improved market conditions.

The world's largest custody bank earned $949 million, or 82 cents per share, in the July-September period compared with $709 million, or 61 cents per share in the same period a year ago. The earnings equaled 60 cents a share on an operating basis that excludes the tax ruling and beat Wall Street estimates of 58 cents a share.

A U.S. tax court judge decided in late September that while the bank could not claim tax credits from a loan transaction with London-based Barclays Bank plc in 2001 and 2002, BNY Mellon could deduct the undisclosed amount of interest it paid on that loan.

Earnings also benefited from cutting expenses by $170 million on an annualized basis, mainly from enhanced procurement practices and reducing its real estate costs in New York, where the bank is based.

Gerard Cassidy, an analyst at RBC Capital Markets, said he expects the bank will continue to look for expense reductions.

“The challenge for custody banks like them is that the interest rate environment puts pressure on revenue,” he said.

Namely, low rates cut into income from investments and securities lending, and require institutions to waive money market fees for clients.

Still, BNY Mellon received higher revenue from servicing and managing investments for institutions and individuals. Total revenue increased 2.8 percent to $2.96 billion from $2.88 billion.

The bank's assets under management reached a record $1.53 trillion as of Sept. 30 with both market appreciation and a strong inflow of new investments placed with the bank.

In a conference call with analysts, CEO Gerald Hassell said results reflected “solid fee growth.”

Thomas Olson is a Trib Total Media staff writer. He can be reached at 412-320-7854 or tolson@tribweb.com.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.