Bank of New York Mellon 4Q profit falls 26 pct

AP News
Posted: Jan 18, 2012 12:52 PM
Bank of New York Mellon 4Q profit falls 26 pct

Bank of New York Mellon Corp.'s fourth-quarter net income fell 26 percent, hurt by restructuring charges and a decline revenue stemming from less client activity and a seasonal slowdown in one of its businesses.

The results missed Wall Street expectations, and its shares fell almost 4 percent in midday trading.

The nation's sixth-largest bank reported on Wednesday that its net income fell to $505 million, or 42 cents per share, for the period ended Dec. 31. That's down from $679 million, or 54 cents per share, a year earlier.

Restructuring charges totaled 6 cents per share in the quarter. Taking out those charges, earnings were 48 cents per share.

Analysts expected earnings of 54 cents per share, according to a FactSet survey.

Revenue fell 6 percent to $3.54 billion from $3.75 billion, missing Wall Street's estimate of $3.75 billion.

Bank of New York Mellon's stock dropped 83 cents, or 3.9 percent, to $20.44 in midday trading.

Chairman, President and CEO Gerald Hassell said in a statement that the revenue decline was due to lower-than-normal levels of client activity caused by uncertain market conditions and the seasonality of its depositary receipts business.

Bank of New York Mellon earns fees from services such as banking, stock lending and investment record-keeping for institutions such as pension funds, as well as corporations and wealthy individuals.

Fee revenue fell to $2.77 billion from $2.97 billion, while investment services fees dropped 8 percent to $1.6 billion because of lower volumes, higher money market fee waivers and seasonally lower depositary receipts revenue.

Foreign exchange and trading revenue slipped in the quarter, as did investment management and performance fees.

Net interest revenue rose to $780 million from $775 million in the third quarter due to growth in client deposits placed with central banks.

Provision for credit losses was $23 million mostly because of a broker-dealer customer that filed for bankruptcy.

Assets under custody and administration rose 3 percent to $25.8 trillion thanks to new business. Assets that the Bank of New York Mellon manages, excluding securities lending assets, climbed 8 percent to $1.26 trillion.

For the full year, the New York trust bank's net income was basically flat at $2.52 billion. Per share earnings were down slightly to $2.03 per share from $2.05 per share in the previous year.

Annual revenue increased 6.1 percent to $14.73 billion from $13.88 billion.

Bank of New York Mellon also declared a quarterly dividend of 13 cents per share. The dividend will be paid on Feb. 7 to shareholders of record on Jan. 30.