TEXT - Fitch comments on Bank of Mellon New York Q4 results

Jan 23 - The Bank of New York Mellon (BK) reported fourth quarter 2012
(4Q'12) earnings of $622 million, which showed solid growth on a year-over-year
(YOY) basis, although down on an adjusted sequential basis, according to Fitch
Ratings. Despite ongoing cost efficiency initiatives, the quarter also
highlighted the changing revenue mix towards products/services with higher
variable costs, which caused expenses to increase 4% on a sequential
basis.

Overall fee revenues were down modestly during the quarter and represented a
mixed picture. Foreign exchange fees continued their downward trend, while
issuer service fees were down both sequentially and versus prior period. Fitch
expects these fee items will remain pressured into 2013 as volatility and
activity levels remain subdued. These declines were mitigated by growth in
investment management and performance fees during the quarter, which logged a
solid 9% gain during the quarter.

Assets under Custody and Administration (AUC/A) were flat during the quarter and
came in at $26.7 trillion, adjusted for merger related accounting issues. Assets
under management (AUM) were up 10% during the quarter on a combination of net
inflows and market valuations and totaled $1.4 trillion. AUC/A and AUM continue
to reflect new business wins and net inflows for BK. Fitch anticipates that AUM
and AUC/A will fluctuate quarterly based on market movements and BK's ability to
attract new business. Fitch expects that longer-term growth trends will remain
favorable for BK.

As with most banks, BK continues to contend with shrinking net interest income
(NII) and margin (NIM), owing to the low rate environment which has depressed
reinvestment yields on securities. BK's NIM fell by 11 basis points (bps) during
the quarter to 1.09%. NII and NIM pressures were further affected by the
elimination of interest on European Central Bank deposits. Fitch anticipates
that BK will continue to contend with margin pressures, although the pace and
degree should moderate.

BK's estimated Basel III Tier 1 Common ratio came in at 9.8%, which puts the
institution comfortably ahead of minimum requirements, including its 1.5% buffer
as a global systemically important bank (G-SIB). The improvement in BK's Tier 1
Common ratio is largely attributed to a reduction in risk-weighted assets. As
such, Fitch anticipates that BK should fare well under the Federal Reserve's
CCAR allowing the company flexibility in determining the mix of capital
distributions or investment.