Bank of New York Mellon's 2Q Profit Dives 37%

Features Reuters

Bank of New York Mellon Corp (BNY) said on Wednesday that second-quarter net income dropped 37 percent on lower foreign exchange revenue and after it paid $212 million to settle an investor lawsuit.

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The world's largest custody bank reported net income of $466 million, or 39 cents a share, compared with $735 million, or 59 cents a share, a year earlier.

Excluding certain items, BNY Mellon Chief Financial Officer Todd Gibbons said the bank's core earnings in the quarter were about 53 cents a share, matching the estimates of analysts.

As announced earlier this month, the results included an after-tax charge of $212 million to settle an investor lawsuit accusing the bank of imprudently investing their cash in a risky debt vehicle that collapsed in 2008.

Quarterly revenue fell to $3.62 billion from $3.85 billion.

Assets under custody and administration amounted to $27.1 trillion, an increase of 3 percent from a year earlier.

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Investment management fees declined 3 percent to $749 million on lower mutual fund revenue. But performance fees in the quarter tripled to $54 million from year-ago levels.

Foreign exchange revenue fell 15 percent to $157 million. BNY Mellon faces several lawsuits that accuse the bank of overcharging on forex trades, but denies any wrongdoing.

The bank's wealth management unit reported average loans totaled $7.76 billion, an increase of 13 percent over year-ago levels. Wealth management's average deposits climbed 25 percent to $11.3 billion.

The bank continued to book net inflows into its investment funds. Long-term flows were $26 billion in the quarter as clients pumped money into bond funds. Meanwhile, money market funds experienced net outflows of $14 billion as investors looked for higher interest rates in other products.

BNY Mellon shares are off 13 percent over the past year, underperforming the 3.6 percent rise on the S&P 500 index .