BNY posts rare $269 million quarterly loss
The Bank of New York Mellon Corp. likely will bounce back from the unusual quarterly loss it posted on Wednesday.
The bank posted a loss of $269 million for the January-March quarter, its first quarterly loss in nearly four years.
Analysts said BNY Mellon, the world's largest custodian of investment assets, will tamp down expenses and realize higher profits when interest rates eventually rise.
“Low interest rates are the challenge for commercial banks and custody banks, but mostly for custody banks,” said Gerard Cassidy with RBC Capital Markets in Portland, Maine.
Custody banks derive profits from much shorter-term rates than commercial banks with their years-long loans. When interest rates rise, custody banks benefit sooner than do commercial banks, which must wait longer for loans to run off.
Cassidy said he expects BNY Mellon to concentrate on cost reductions to boost profits.
“We remain focused on our key priorities: investing in our businesses to drive organic growth and sustainable shareholder value, controlling discretionary expenses, maintaining a strong balance sheet and returning capital to shareholders,” CEO Gerald Hassell said in a statement.
BNY Mellon incurred an $854 million earnings charge after the Internal Revenue Service successfully challenged in tax court foreign tax credits the bank claimed.
The bank earned $617 million in the year earlier.
On a per share basis, the loss equaled 23 cents, compared with a profit of 52 cents.
“Everybody knew about it, but it doesn't reflect on ongoing earnings,” said Marty Mosby, an analyst at Guggenheim Partners in Memphis.
BNY Mellon reported higher revenue from investment services and asset management, which was offset by higher expenses and the charge from the U.S. Tax Court ruling in February. The bank said it would challenge the decision, which involved credits it claimed in 2001 and 2002.
BNY Mellon lost $2.46 billion in the July-September 2009 quarter, following major losses on securities during the height of the financial crisis.
The bank said assets under management reached a record $1.4 trillion as of March 31. Assets under custody or administration increased 2 percent to $26.3 trillion.
Thomas Olson is a Trib Total Media staff writer. Reach him at 412-320-7854.
Show commenting policy
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.
- Route 22 closed in Delmont after tractor-trailer crash at cloverleaf
- Downie, Ehrhoff lead list of likely Penguins leaving in free agency
- Starkey: Cervelli’s inspiration
- More witness intimidation charges are filed against Plum teacher
- Pirates hope 1st baseman Alvarez starts to regain power stroke
- Presque Isle Downs cancels thoroughbred races due to running deer
- Vandergrift man accused of sexual assault
- Supreme Court justices ream EPA for ignoring costs to meet air standards
- Murrysville native Bullock vying for health magazine’s ‘Next Fitness Star’
- 80 percent of drivers found exceeding speed limit in Mt. Lebanon, Bethel Park
- Penguins bringing back defenseman Cole with 3-year extension