Bank of New York - which agreed last month to acquire Mellon Financial in a $16.5 billion deal - said fourth-quarter operating profit rose 7%, beating forecasts, on growth in its main business of securities servicing.
Profit rose to $435 million, or 58 cents per share, excluding the impact of a swap of its 338-branch network for JPMorgan Chase's corporate trust business. That compared with $405 million, or 53 cents, a year earlier.
Analysts expected a profit of 55 cents per share, according to an estimate by Thomson Financial.
Including the effect of the swap, net income more than quadrupled to $1.79 billion, or $2.36 per share.
Revenue from continuing operations rose 22% to $1.89 billion.
Servicing fees rose 18% to $958 million, with a doubling of fees from issuer services and double-digit increases in investor and broker-dealer services. That offset a decline in
execution and clearing services.
Private banking and asset-management fees jumped 42% to $168 million. Revenue rose 1% from foreign exchange and trading and 2% from global payment services, while service
charges fell 9%.
On Wednesday, the other major trust and custody banks also posted profit increases. Earnings rose 14% at Mellon, topping analyst forecasts, helped by growing asset management fees. Northern Trust said profits jumped 16% while earnings increased 17% at State Street.
The merger of Bank of New York and Mellon, to create Bank of New York Mellon, would combine two storied names in American finance. It would create a power in custody services for institutional investors, overseeing about $16.6 trillion of assets, and one of the biggest asset managers.
Bank of New York hosted a webcast and conference call at 8:30 am New York time to review results.