BNY Mellon’s fee revenue up 8% in third quarter

Bank of New York Mellon reported a higher third-quarter profit, as a robust stock market, busy clients and new business all helped lift revenue.

The custody bank’s results joined rival State Street in beating Wall Street’s expectations and extended gains for both companies’ shares. BNY Mellon and State Street have each rallied by more than 30% so far this year.

The custody banks, which track assets and perform other administrative and accounting services for money managers, have benefited from the financial world’s turnaround from the early days of the coronavirus pandemic. The market is up, and more investor money has flowed into the funds of BNY Mellon’s clients. Both BNY Mellon and State Street are also drawing in new business and adding more business for existing clients to its asset-servicing divisions.

Those same factors have helped lift the performance of their own investment-management businesses.

“Our financial performance this quarter reflects healthy and broad-based organic growth across our businesses,” Todd Gibbons, BNY Mellon’s chief executive, said during a call with analysts.

BNY Mellon said on 19 October that net income, attributable to common shareholders, rose to $943m, or $1.04 a share, in the third quarter from $876m, or 89 cents, in the year-earlier period. Analysts polled by FactSet were expecting a profit of $1.01 a share.

Total revenue rose 4.9% to $4.04bn, beating analysts’ average estimate of $3.95bn. Fee revenue climbed 8% to $3.39bn.

The bank’s asset-servicing arm boosted revenue by 3%, and is on pace to increase its new business wins by almost 40% this year, Gibbons said. “And we are winning larger, more complex deals that span our product offering,” he said.

BNY Mellon finished the quarter with $45.3tn in assets under custody, up 17% from a year earlier.

BNY Mellon’s investment-management business posted its sixth-straight quarter of net inflows, where new client money outpaced losses. Revenue rose by 12%, and assets under management jumped 13% to $2.3tn.

Net interest revenue, or what the custody bank pocketed on loans, fell 9% to $641m.

Provision for credit losses was a benefit of $45m, the company said. It posted a provision for credit losses of $9m in the prior-year quarter. The company said it saw an improvement in the macroeconomic forecast.

BNY Mellon also said it had repurchased about $2bn in company stock during the quarter.

Write to Justin Baer at [email protected] and Dave Sebastian at [email protected]

This article was published by Dow Jones

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