(Recasts to reflect rising stock price, adds CFO comments, earnings details, byline)
By Tim McLaughlin
BOSTON, July 17 (Reuters) - BNY Mellon Corp said second-quarter profit surged on strong foreign exchange trading and a one-time investment gain, beating Wall Street estimates and sending the bank's shares up 3 percent.
The world's largest custody bank - an institution responsible for safeguarding financial assets - said on Wednesday it earned $833 million, or 71 cents a share, up from $466 million, or 39 cents a share, a year earlier, when it took a litigation charge.
Excluding a $109 million after-tax gain from an equity investment, the bank earned 62 cents a share, beating analysts' average estimate by 5 cents.
"The market conditions in the second quarter were pretty good," Chief Financial Officer Todd Gibbons said.
BNY Mellon got a lift from increased volume and volatility in foreign exchange markets. Forex revenue totaled $179 million, up 14 percent from a year earlier and up 20 percent from the first quarter.
Gibbons downplayed a sharp decrease in net inflows into the bank's long-term investment funds. Clients deposited a net $21 billion into such funds during the quarter, down from $40 billion in the first quarter.
"Those things can be all over the place," Gibbons said. He said BNY Mellon funds did see some client activity caused by turmoil in the bond market in the second quarter, but nothing significant.
Custody banks do a number of back-office tasks for large institutional investors, such as tracking mutual fund prices and collecting and distributing dividend and interest payments.
BNY Mellon shares were up 3 percent to $31.25 in morning trading on the New York Stock Exchange. The shares are up 45 percent over the past 12 months, compared with a 23 percent gain in the S&P 500 index.
Reporting by Tim McLaughlin; Editing by Lisa Von Ahn and John Wallace