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Mixed Bag of Bank Earnings as Credit Quality Improves
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Financial company fourth-quarter earnings reports were a mixed bag, though banks continued to show improvements in credit quality.
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Bank of New York Mellon said on Wednesday that fourth-quarter earnings fell 26 percent after the world's No. 1 custody bank reported lower forex volume and took a restructuring charge as part of a large-scale plan to make its operations more efficient.
BNY Mellon [BK
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] reported net income of $505 million, or 42 cents a share, compared with $679 million, or 54 cents a share, a year earlier.
The results included a $107 million restructuring charge that reduced net income by 6 cents a share.
Chief Executive Officer Gerald Hassell said in a press release that general financial uncertainty in Europe and other parts of the globe depressed client activity, pressuring revenue.
Investment management and performance fees, for example, were $730 million, a decrease of 9 percent from a year earlier.
BNY Mellon laid some of the blame on money-market funds
![[cnbc explains]](http://media.cnbc.com/i/CNBC/Sections/News_And_Analysis/_News/_CNBC_EXPLAINS/_IMAGES/CNBC_explains_icon1.gif)
, whose miniscule yields have forced the company to waive fees to keep investors.
In the fourth quarter, foreign exchange revenue totaled $183 million.
That was a decline of 11 percent from the year-ago period because of lower volume.
BNY Mellon shares [BK
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] closed at $21.27 on Tuesday on the New York Stock Exchange.
US Bancorp Net Up Nearly 40%
US Bancorp's
Net income was $1.35 billion, or 69 cents per share, up from $974 million, or 49 cents per share, a year ago.
Net interest income — the difference between what the bank earned on loans and paid out on deposits — rose 7 percent to $2.67 billion.
Credit quality was another bright spot for the bank, which has emerged as one of the strongest regional lenders in the United States in the wake of the 2008 financial crisis. Provisions for credit losses nearly halved to $497 million.
Shares of the bank [USB
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] closed at $28.77 on Tuesday on the NYSE.
PNC Financial Earnings Slump
PNC Financial Services Group
The Pittsburgh-based regional bank's net income fell to $493 million, or 85 cents per share, from $820 million, or $1.50 per share, a year earlier. Revenue fell to $3.5 billion from $3.9 billion.
Provisions to cover credit losses declined 27 percent sequentially to $190 million.
In December, the U.S. Federal Reserve
approved the bank's application to buy the U.S. retail and credit card operations of Royal Bank of Canada ] for $3.62 billion.
PNC shares [PNC
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], which have gained more than 20 percent of their value since the bank's last quarter results, closed at $61.24 on Tuesday on the NYSE.
State Street Profit Jumps
State Street said Wednesday that fourth-quarter earnings rose sharply from year-ago levels, but clients took less risk, hurting key fees for the Boston-based custody bank.
Net income available to common shareholders was $371 million, or 76 cents a share, compared with $81 million, or 16 cents a share, in the year-ago period. Year-ago results included charges for restructuring and repositioning an asset portfolio.
Fourth-quarter results included a pre-tax charge of $120 million, or 15 cents a share, mostly related to State Street's withdrawal from its fixed-income trading initiative.
State Street said fourth-quarter revenue rose 13 percent to $2.32 billion from the year-ago period. But it dropped 5 percent from the third quarter as shaky global markets sidelined some clients adverse to risk.
Servicing fees, for example, dropped 1 percent to $1.06 billion from the year-ago period, reflecting less risk-taking by clients, State Street said in a press release.
Investment management fees and trading service revenue, declined 9 percent and 12 percent, respectively. Combined, those two categories generated $475 million in revenue in the fourth quarter.
Overall, total operating revenue in the fourth quarter rose 0.2 percent to $2.29 billion from the year-earlier period.
Meanwhile, the company said it expects to record an aggregate, pretax conduit-related gain of about $1.1 billion in interest revenue beginning this year through the remaining terms of the securities. The expectation is based on numerous assumptions, including holding the securities to maturity, the company said.
On the expense front, State Street said compensation and employee benefit costs were $872 million in the fourth quarter, down 10 percent from the previous three months.
State Street shares [STT
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] closed at $42.75 on Tuesday on the NYSE.
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