“Bank of New York Mellon Corp., the world’s largest custody bank, said first-quarter earnings fell 1 percent as interest rates near record lows eroded income from lending and investing.
Net income fell to $619 million, or 52 cents a share, from $625 million or 50 cents, a year earlier, BNY Mellon said today in a statement. Analysts (BK) had expected the New York-based company to report a profit of 51 cents a share, according to the average of 15 estimates in a Bloomberg survey.
“It is a challenging environment for all the custody banks because low interest rates limit what they can make on their short term assets,” Gerard Cassidy, an analyst with RBC Capital Markets in Portland, Maine, said in a telephone interview before earnings were announced.
BNY Mellon follows Boston’s State Street Corp., the third- largest custody bank, in reporting lower earnings as the Federal Reserve’s decision to keep interest rates near zero since 2008 hurt custody banks. BNY Mellon, which earns fees on assets it manages and oversees for clients, was helped by a 12 percent gain in the Standard & Poor’s 500 Index in the first quarter and cost-cutting measures.
“We are seeing the early results of our operational excellence initiatives as we generated significant positive operating leverage relative to the fourth quarter,” Chief Executive OfficerGerald Hassell said in the statement. Hassell in November outlined expense cuts designed to save as much $700 million before taxes by 2015. The bank said at that time it expected fee revenue to grow 3 percent to 5 percent a year from 2012 to 2014….”
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