The world's largest custodian bank, Bank of New York Mellon (BK.N), opened new tab, surpassed Wall Street expectations on Tuesday with a 5% profit increase as higher asset values increased investment services fees and offset reduced interest income.
As markets rallied on prospects of a soft landing, the oldest U.S. bank saw its assets under custody rise. However, interest on its securities, loans, and deposits plummeted. Lower forex market volatility hurts profitability.
"What we see is really strong underlying underpinnings for the U.S. economy," CEO Robin Vince said, echoing other financial executives. Geopolitical concerns, interest rate uncertainty, and the US fiscal deficit might destabilize, he warned.
Last week, rival State Street (STT.N), opens new tab, reported assets under management driving fees and net interest income declining.
In the first quarter, BNY reported net income applicable to common shareholders of $953 million, or $1.25 per share, up from $911 million, or $1.13 per share last year.
Adjusted net income was $1.29 per share, while sales grew 3% to $4.53 billion, its best quarterly operating revenue ever. Per LSEG statistics, Wall Street projected the company to produce $1.19 adjusted EPS on $4.39 billion in revenues.
The board approved a $6 billion stock buyback program and the bank repurchased $988 million in shares. Under custody or administration assets rose 5% to $48.8 trillion. Noninterest costs rose 2% to $3.18 billion.
Before the bell, BNY shares climbed about 2%. They've gained 5.8% this year, compared to 2.4% for the KBW Bank Index (.BKX), Analysts say the bank is less vulnerable to market shocks and more diversified than competitors.
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