(Reuters) - Bank of New York Mellon Corp (BK.N) reported a better-than-expected quarterly profit on Wednesday, as the world’s largest custodian bank cut costs to counter weakness in its investment management business and lower interest rates.
Fee revenue fell 1%, hurt by outflows since the third quarter of last year, lower performance earnings and a stronger dollar.
Investment management clients have turned cautious in the wake on the trade wars between Beijing and Washington that have rattled financial markets and throttled global economic growth.
“Interest rate headwinds and deposit mix continue to challenge net interest revenue and asset management continues to be negatively impacted by prior-year outflows,” Interim Chief Executive Officer Todd Gibbons said in a statement.
Gibbons took the helm after Charles Scharf left to take up the top job at Wells Fargo (WFC.N).
The bank, which gets bulk of its revenue from managing money of clients such as big banks and hedge funds, said net interest revenue fell 18% to $730 million, hurt in part by a lease-related impairment of $70 million, higher interest-bearing deposit and funding costs.
The U.S. central bank cut rates twice in the third quarter, after having raised them nine times since 2015.
Net income applicable to common shareholders fell to $1 billion in the third quarter ended Sept.30, from $1.08 billion a year earlier.
On a per share basis, net income rose to $1.07 from $1.06, reflecting buybacks that have lowered the number of shares.
Total revenue fell 5% to $3.86 billion.
Analysts had expected a profit of 99 cents per share, according to IBES data from Refinitiv.
BNY Mellon is a custodian bank which acts like a warehouse and store other financial institutions’ and individuals’ assets.
Reporting by Noor Zainab Hussain in Bengaluru; Editing by Sriraj Kalluvila