July 20, 2017 / 10:58 AM / 2 years ago

BNY Mellon profit beats on higher fees and interest rates

(Reuters) - Bank of New York Mellon Corp (BK.N), the world’s largest custodian bank, reported a higher-than-expected quarterly profit, helped by an increase in clearing services fees and a rise in interest rates.

A woman walks past a logo at the office of the Bank of New York Mellon in Brussels, February 25, 2010. REUTERS/Sebastien Pirlet

Revenue increased at both its main businesses — investment management and investment services — boosting total adjusted revenue by 5 percent.

The second-quarter results come on the heels of the appointment of a new chief executive. Charles Scharf, former CEO of Visa Inc (V.N), took over the top job at the lender earlier this week.

The bank’s massive platform is a key part of the plumbing that keeps global financial markets flowing.

Besides safeguarding the stocks and bonds of large institutions, the bank calculates mutual fund prices, trades foreign currencies and facilitates securities lending to enable short selling by hedge funds.

The bank’s net income attributable to common shareholders rose to $926 million for the quarter ended June 30 from $825 million from a year earlier.

Earnings per share was 88 cents per share for the quarter ended June 30, beating analysts’ average estimate of 84 cents per share, according to Thomson Reuters I/B/E/S.

Adjusted revenue rose about 5 percent to $3.95 billion and topped expectations of $3.89 billion. Clearing services fees rose 12.6 percent.

Net interest revenue rose 7.7 percent, helped by higher interest rates.

The U.S. Federal Reserve has raised rates three times since the second quarter of last year, with the latest increase coming in June.

The company expects full-year net interest revenue to come at the high end of its 4 percent to 6 percent forecast range.

BNY Mellon had $31.1 trillion in assets under custody and administration at the end of June.

The company’s shares were marginally up at $53.50 in premarket trading. Up to Wednesday’s close, the stock had gained 12 percent in value, outperforming the broader S&P 500 Financial .SPSY that has risen 6.6 percent.

Reporting by Sweta Singh in Bengaluru; Editing by Shounak Dasgupta

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