Bank of New York Meets Profit Forecast

  • Bank of New York Mellon reports first-quarter earnings per share of 52 cents, matching the consensus estimate.
  • Net interest revenue grew 10% year-over-year.
  • Fee revenue increased 3% sequentially, but was unchanged from a year earlier.

NEW YORK ( TheStreet) -- Bank of New York Mellon ( BK) on Wednesday reported first-quarter earnings that matched analysts' consensus estimates, but topped revenue forecasts.

The custody bank reported first-quarter net income applicable to common stockholders of $619 million, or 52 cents a share, compared to $505 million, or 42 cents a share, during the fourth quarter, and $625 million, or 50 cents a share, during the first quarter of 2011.
Bank of New York CEO Gerald L. Hassell

The first-quarter earnings matched the consensus estimate among analysts polled by Thomson Reuters.

Total revenue -- excluding net securities gains or losses -- was $3.65 billion during the first quarter, coming in ahead of the consensus estimate of $3.59 billion, and comparing to total revenue of $3.57 billion the previous quarter, and $3.60 billion a year earlier.

Total fee and other revenue was $2.84 billion during the first quarter, increasing from $2.77 billion the previous quarter but unchanged from a year earlier.

The company saw a $43 million first-quarter profit from its operations of consolidated investment funds, improving from a $5 million loss during the fourth quarter, but declining from income of $110 million during the first quarter of 2011.

Foreign exchange and other trading revenue declined to $191 million during the first quarter, from $228 million the previous quarter, and $198 million a year earlier, with the year-over-year decline reflecting "lower volumes and volatility, while sequentially, volumes were unchanged and volatility decreased 20%."

Net interest revenue during the first quarter totaled $765 million, declining slightly from the fourth quarter, but increasing 10% year-over-year.

CEO Gerald Hassell said that Bank of New York "enjoyed solid sequential growth in investment management and services fees, as we benefited from new business wins and improved equity values," and was "seeing the early results of our operational excellence initiatives as we generated significant positive operating leverage relative to the fourth quarter."

Assets under management grew 6% year over year to $1.3 trillion as of March 31, while assets under custody or administration grew 4% to $26.6 trillion.

Total noninterest expense during the first quarter was $2.8 billion, declining 3% from the previous quarter but increasing 2% from a year earlier.

Bank of New York Mellon's shares closed at $23.80 Tuesday, returning 20% year to date, following a 33% drop during 2011.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

The shares trade for 11 times the consensus 2013 EPS estimate of $2.52. The consensus 2012 EPS estimate is $2.25.

Bank of New York repurchased $371 million in common shares during the first quarter. Based on a 13-cent quarterly payout, the shares have a dividend yield of 2.18%.

Interested in more on Bank of New York Mellon? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

To follow the writer on Twitter, go to
Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.