Bank of New York Mellon Misses on Fixed-Income Softness

By Michael Calia And Angela Chen 

Bank of New York Mellon Corp. said higher foreign exchange revenue and equity market values were unable to offset lower performance fees and losses in fixed-income, as the bank posted weaker-than-expected results in the fourth quarter.

The bank, which acts as an investment manager while safeguarding trillions of dollars for money managers and other clients, posted a profit of $807 million, up from $513 million in the prior-year period. On a per-share basis, earnings rose to 70 cents from 44 cents.

Excluding certain items such as tax benefits and restructuring stages, the bank posted earnings of 58 cents a share, up from 54 cents a share.

Revenue improved about 2% to $3.69 billion.

Analysts had recently projected 59 cents a share in earnings and $3.81 billion in revenue, according to Thomson Reuters.

BNY Mellon said its net interest margin, a key measure of lending profitability, declined to 0.91% from 1.09% in the same period a year ago. Accordingly, net interest income slid 6%.

Total fees and other revenue grew 4.3% to $2.94 billion.

Foreign exchange revenue totaled $151 million, up from $146 million a year ago. However, other trading saw a loss of $14 million, compared with revenue of $20 million the year earlier. This is primarily due to lower fixed-income revenue due to exiting the derivatives business.

The bank said last month that it would give a board seat to Nelson Peltz's Trian Fund Management LP. The firm has privately pushed BNY Mellon to cut costs, The Wall Street Journal previously reported.

Rivals Northern Trust Corp. and State Street Corp. have reported profits that beat expectations for the fourth quarter.

Shares of BNY, inactive premarket, are up about 17% in the past 12 months through Thursday's close.

Write to Michael Calia at [e-mail] and Angela Chen at [e-mail]

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