BNY Mellon’s earnings plunge as its fees slide

Marion Dakers
BANK of New York Mellon yesterday posted a 26 per cent fall in fourth quarter earnings, blaming a drop in fees and a restructuring charge for the slump.

BNY Mellon reported net income of $505m (£327m), compared with $679m a year earlier. The results, which fell short of analyst forecasts, included a $107m restructuring charge.

Chief executive Gerald Hassell said the financial turmoil in Europe and around the globe made clients reluctant to take risks, which pressured the firm’s revenues.

A seasonal drop in its depositary receipts business also hit takings.

Investment management and performance fees were $730m in the three months to the end of December, a decrease of nine per cent from a year earlier.

BNY Mellon, America’s biggest custodian bank, laid some of the blame on money market funds, whose tiny yields have forced the company to waive fees to keep investors, and a drop in performance fees since last year.

Investment service fees, a large part of BNY’s business that includes revenues from clearing, payment processing and hedge fund administration, fell 8.4 per cent on a year ago to $1.58bn.

In the fourth quarter, foreign exchange revenue totaled $183m. This was a decline of 11 per cent from a year ago because of lower volumes. However, the figure has picked up slightly since the third quarter, suggesting investors are returning to the currency markets as volatility starts to recede.

Hassell said the bank had made “meaningful progress” in shoring up its capital position and cutting costs.

The bank’s employee headcount fell by 900 to 48,700 in the quarter, while its quarterly staffing costs fell by five per cent to $1.38bn.

BNY Mellon’s Tier 1 common equity ratio, under the new Basel III rules, was 7.1 per cent at the end of the quarter, up from 6.5 per cent in the previous quarter due to the firm holding on to earnings.

The firm’s shares closed down 4.5 per cent.