January 16, 2019 / 11:51 AM / 9 months ago

BNY Mellon profit beats estimates on higher fees, shares up

(Reuters) - Bank of New York Mellon Corp (BK.N) beat Wall Street estimates for fourth-quarter profit on Wednesday, as it earned more in fees from servicing assets that clients keep with the bank and kept a tight lid on expenses.

FILE PHOTO: A BNY Mellon sign is seen on their headquarters in New York's financial district, January 19, 2011. REUTERS/Brendan McDermid

Shares of the world’s largest custodian bank rose 3.2 percent to $51 in early trading.

A 10 percent rise in total fee revenue to $3.15 billion lifted overall revenue by 7.5 percent to $4 billion.

Net income applicable to common shareholders fell to $832 million, or 84 cents per share, in the quarter ended Dec.31, from $1.13 billion, or $1.08 per share, a year earlier, when it took a one-time gain of $181 million due to U.S. corporate tax cuts.

On an adjusted basis, the company earned $987 million or 99 cents per share. Analysts on average had expected earnings of 92 cents per share, according to IBES data from Refinitiv.

BNY Mellon expects first-quarter expenses to rise up to 2 percent, largely due to investments in improving technology, Chief Financial Officer Michael Santomassimo said in a call with analysts.

The bank also expects first-quarter investment management fees to be impacted by outflows in the fourth quarter of 2018.

BNY, as a custodian bank, gets most of its revenue from managing money of customers which include big banks and hedge funds, as well as managing investments for clients.

Non-interest expenses fell 1 percent to $2.99 billion in the three months ended Dec.31

“As we look forward, we are cautious regarding how the economic and market environment will impact our business in 2019,” said BNY Chief Executive Officer Charlie Scharf.

“We will remain keenly focused on managing our expense base,” he added.

Reporting by Bharath Manjesh in Bengaluru; Editing by Shailesh Kuber and Arun Koyyur

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