Bank of New York Mellon Earnings Rise on Lower Expenses

Bank of New York Mellon Corp. said profit and revenue increased in its latest quarter because of lower expenses and higher assets under management.

As a custody bank, BNY Mellon derives much of its business from serving trillions in assets for money managers and other clients, in addition to managing clients' investments.

The bank saw assets under management increase during the period. Assets under management stood at $1.72 trillion at the end of the quarter, up 5.5% from a year earlier and 3.1% from the second quarter.

The increase in assets under management from a year earlier was due to a positive net market impact that was partially offset by currency rates, the bank said.

The company reported $1 billion in net long-term inflows during the quarter, hurt by index investments which were offset by strength in actively-managed strategies.

Expenses fell 1.4% as the stronger U.S. dollar helped decrease expenses across the board and lower software, equipment, legal, occupancy and business development costs.

Fee revenue, which makes up about 80% of the bank's total revenue, grew 3.2% from a year prior. Investment services fees increased on higher money market fees, depositary receipts and increased securities lending revenue as investment management and performance fees increased due to higher market values and money market fees. Foreign exchange revenue decreased due to lower volumes and volatility, partially offset by currency hedging.

Net interest revenue grew 2% from a year earlier because of what the company said are actions to reduce the levels of our lower yielding interest-earning assets and higher yielding interest-bearing deposits. The move also reflects higher market interest rates.

The bank's net interest margin, a key measure of lending profitability, grew to 1.06% from 0.98% in the second quarter.

For the quarter, BNY Mellon reported a profit of $987 million, up from $833 million a year prior. Per-share earnings rose to 90 cents from 74 cents.

Total revenue increased 4% to $3.94 billion. Analysts polled by Thomson Reuters predicted 81 cents in adjusted earnings per share on $3.86 billion in revenue.

In September, BNY Mellon said that President Karen Peetz would retire at the end of the year.

Shares in the company, up 1.1% in the past three months, were inactive premarket.

Write to Austen Hufford at [e-mail]

(END) Dow Jones Newswires

October 20, 2016 07:55 ET (11:55 GMT)

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