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Bank of New York Soars on Fee Revenue Growth

  • Second-quarter earnings of $833 million, or 71 cents a share
  • Earnings include equity investment gain of $109 million, or 9 cents a share
  • Adjusted revenue of $3.786 billion
  • Consensus estimates were for EPS of 57 cents on revenue of $3.705 billion
  • Fee revenue rises 13% sequentially, 14% year-over-year

Updated from 7:23 a.m. ET with market reaction and detail on Bank of New York Mellon's capital ratios.

NEW YORK ( TheStreet) -- Bank of New York Mellon (BK - Get Report) on Wednesday reported strong second-quarter results, with record revenue and a very significant increase in fee income.

Bank of New York Mellon's shares were up over 4% in early trading to $31.69.

The custody bank reported second-quarter net income applicable to common stockholders of $833 million, or 71 cents a share, compared to a net loss of $266 million, or 23 cents a share, in the first quarter, and earnings of $567 million, or 39 cents a share, during the second quarter of 2012.

The first-quarter results included a charge of $854 million related to a U.S. court's disallowance of foreign tax credits. Excluding the charge, Bank of New York Mellon's first-quarter earnings to common shareholders would have come in at 50 cents a share.

The second-quarter results included an equity investment gain of $109 million, or 9 cents a share.

Bank of New York Mellon reported adjusted second-quarter total revenue of $3.786 billion, up 6% from the first quarter and up 5% from the second quarter of 2012.

Analysts polled by Thomson Reuters had estimated the firm would post second-quarter EPS of 57 cents, on revenue of $3.705 billion.

Bank of New York Mellon CEO Gerald Hassell said in the company's earnings release that "all of our businesses delivered year-over-year increases," adding "Investment Management recorded its 15th consecutive quarter of net positive long-term flows."

Total fee revenue was up 14% sequentially and 14% year over year to $3.155 billion in the second quarter. Second-quarter investment management and performance fees totaled $848 million, up 3% from the first quarter and up 6% from the second quarter of 2012.

Assets under custody or administration declined slightly from the first quarter but rose 4% year-over-year to $26.2 trillion as of June 30. Assets under management were up slightly from the previous quarter and up 10% year-over-year to $1.43 trillion as of June 30.

Bank of New York Mellon reported a very strong second-quarter return on tangible common equity of 25.2% on an adjusted basis, improving from 22.4% a year earlier.
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