BNY Mellon Corp. said fourth-quarter earnings rose 23 per cent, matching Wall Street estimates, boosted by higher investment management and performance fees at the world's largest custody bank.
Shares of the bank, though, fell 2.60 per cent to $26.08 in early trading Wednesday as some analysts were disappointed with BNY Mellon's trading revenue and expense management.
The bank has been hurt by declines in revenue in some business segments that have relatively high fixed costs, BNY Mellon Chief Financial Officer Todd Gibbons said in a telephone interview. But that has been offset by strong gains in revenue, for example, from the bank's investment management business.
Nomura analyst Glenn Schorr said strong investment management fees, good deposit growth and solid capital ratios were partially offset by higher expenses, weak trading revenue and flat servicing fees.
"All in, progress on some fronts and great asset management results, but the net earnings picture still hovers in a similar range," Schorr said in a research note. "Expect the stock to be a bit soft post the recent run."
Net income was $622-million (U.S.), or 53 cents a share, up from $505-million, or 42 cents a share, a year earlier.
Investment management and performance fees surged 17 per cent to $853-million on buoyant stock market returns. Assets under management were up 10 per cent at $1.39-billion. Fees from investment services rose 1 per cent to $1.6-billion.
Assets under custody and administration climbed 9 per cent to $26.7-trillion.
Revenue from trading foreign currencies continued to be a weak spot. Foreign exchange revenue totaled $106-million, down 42 per cent on declining volatility and volumes.
The bank is battling several lawsuits, defending itself against allegations of overcharging pension funds and other customers on forex fees, a charge it denies.