BNY Mellon profit rises 23 percent as stock market boosts assets

, Bloomberg

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Bank of New York Mellon Corp., the world's largest custody bank, said fourth-quarter earnings rose 23 percent as higher client assets boosted revenue.

Net income climbed to $622 million, or 53 cents per share, from $505 million, or 42 cents, a year earlier, the New York- based bank said Wednesday in a statement. Earnings a year earlier were reduced by expenses tied to job reductions. Analysts had expected BNY Mellon to report a profit of 54 cents a share, the average of 17 estimates in a Bloomberg survey.

BNY Mellon is focusing on increasing the assets it oversees and manages for customers as sustained low interest rates worldwide erode yields, Chief executive officer Gerald L. Hassell said at a December investment conference. The company attracted $190 billion in custody assets in the quarter and $1.5 trillion during 2012, according to Wednesday's statement.

"The day-to-day business is still difficult, but the bank has been winning new accounts and has been aggressively reducing costs," Gerard Cassidy, an analyst with RBC Capital Markets in Portland, Maine, said in a telephone interview before results were released.

BNY Mellon and custody banks State Street Corp. and Northern Trust Corp. have responded to near-zero interest rates by reducing staff and expenses to protect profit margins. In 2011, BNY Mellon trimmed jobs and set a target to save as much as $700 million by 2015 through operational improvements.

Northern Trust

Northern Trust, the third-biggest independent custody bank, said Wednesday fourth-quarter net income rose 29 percent to $167.7 million, or 69 cents a share, from $130.2 million, or 53 cents, a year earlier. The results missed the 75-cent average estimate of 14 analysts surveyed by Bloomberg.

Rising equity markets helped boost custody assets 13 percent to $4.8 trillion and the amount of money Northern Trust invests for clients by 14 percent to $758.9 billion. Revenue climbed 1.5 percent to $969.7 million. Net income a year earlier was reduced by $39.8 million when the firm booked costs related to 700 planned job cuts.

At BNY Mellon, assets under custody rose 0.4 percent in the quarter and 8.5 percent from a year ago, to $26.7 trillion, helped by higher market values. Assets under management increased 2 percent and 10 percent, respectively, to $1.4 trillion.

The banks announced earnings before the start of trading in New York. BNY Mellon has advanced 25 percent in the 12 months ended Jan. 15, the same as Northern Trust and just below the 26 percent increase for the Standard & Poor's index of 20 asset managers and custody banks.

Declining Volumes

BNY Mellon's foreign exchange revenue fell 42 percent from a year earlier to $106 million, a decline the bank said reflected a "sharp decline" in volatility and a decrease in volumes.

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