PROFITS slumped in the second quarter as BNY Mellon settled a pricey lawsuit and struggled with falling client activity thanks to the heightened Eurozone crisis.
Rock bottom interest rates also hit earnings as the custodian was forced to waive money market fund fees, because returns were too low to levy a charge.
Earnings came in at $466m (£298m) in the three-month period, down 37 per cent on the $735m in the same quarter of 2011.
Much of the drop came from a $212m charge settling an investor lawsuit.
But total revenues also fell, dropping six per cent from $3.85bn to $3.62bn.
Meanwhile total non-interest expense rose eight per cent to $3.05bn, in part because of the costs of holding deposits – cautious clients are increasingly reluctant to invest in shares and bonds thanks to the Eurozone crisis, leading the bank to consider charging for deposit facilities.
However some costs did drop – the bank cut headcount by 700 over the year to 48,200, helping to reduce staff costs from $1.463bn to $1.415bn.
Meanwhile the bank reported its Basel III core tier one capital ratio jumped from 6.5 per cent a year ago to 8.7 per cent now.
BNY Mellon’s stocks held steady, rising 0.07 per cent on the day.