Fee income boosts BNY Mellon net income in 3rd-qtr

NEW YORK -- The Bank of New York Mellon's net income rose 11 percent in the third quarter, as the company slashed expenses and collected more fees for managing investments.

The bank said Wednesday that strengthening financial markets boosted its investment income. Its stock rose more than 2 percent in morning trading.

BNY Mellon's net income in the quarter ended Sept. 30 rose to $720 million, or 61 cents per share, from $651 million, or 53 cents per share in the same period a year earlier.

The results were higher by 4 cents per share because the bank paid a lower-than-expected effective tax rate. Per-share results also were helped by the bank's spending $288 million during the quarter to buy back 13 million shares. When there are fewer shares outstanding, each of them represents a bigger slice of the company's profits.

The bank's revenue edged down to $3.68 billion from $3.69 billion in the same period a year earlier. Excluding revenue related to a shareholder services business that was sold in December 2011, BNY Mellon's revenue rose to $3.65 billion from $3.64 billion.

The results were stronger than Wall Street analysts anticipated. On average, analysts polled by FactSet expected earnings of 54 cents per share on $3.60 billion in revenue.

BNY Mellon is a trust bank, acting as a custodian and providing financial services like investment management for institutions, corporations and wealthy individuals.

Total fee revenue fell to $2.86 billion from $2.89 billion. However, investment management fees rose 7 percent, to $779 million from $729 million, driven by higher market values and net new business, the bank said.

Investment and other income more than doubled, to $124 million from $48 million in the third quarter of 2011. The increase came as financial markets rose, boosting the value of BNY Mellon's seed capital, it said.

Lower expenses also helped make up the revenue gap. BNY Mellon's noninterest expense fell to $2.71 billion from $2.77 billion last year.

The bank's net interest revenue fell to $749 million from $775 million in the same period a year earlier. Net interest revenue combines interest paid to the bank by borrowers and interest paid to depositors by the bank.

Many banks have seen their interest income squeezed in the third quarter by ultra-low interest rates and competition for depositors.

BNY Mellon also declared a quarterly dividend of 13 cents, payable on Nov. 6 to shareholders of record at the close of business on Oct. 29.

The stock rose 55 cents, or 2.3 percent, to $24.11 in morning trading. BNY Mellon shares are up more than 20 percent since the start of the year.