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BNY Mellon profit falls short on lower interest rates

The Bank of New York Mellon on Go bust enclose Street, New York.

Scott Mlyn | CNBC

Bank of New York Mellon missed analysts’ estimates for quarterly profit on Thursday, as the age’s largest custodian bank earned less from its interest-earning assets due to rate cuts by the Federal Reserve.

Big U.S. banks that reported conclusions earlier this week also highlighted the hit from lower interest rates after the U.S. Federal Reserve cut obtaining costs three times last year against the backdrop of the prolonged U.S.-China trade war.

“Although we continue to be negatively smashing by lower rates, a flat yield curve, and low foreign exchange volatility, we remain intensely focused on carefully direct costs,” interim Chief Executive Officer Todd Gibbons said in a statement.

Interest revenue at BNY Mellon cut 8% to $815 million in the fourth quarter, while non-interest expenses declined 1%.

BNY Mellon has been investing in technology to automate most of its course of actions and cut costs, a strategy put in place by former Chief Executive Charles Scharf before he left to take up the top job at Wells Fargo (WFC.N) modern last year.

The bank, which manages the money of clients such as big banks and hedge funds, said fee gate rose 26% due to a gain from the sale of an unspecified investment. Fee revenue was flat excluding the one-time benefit.

Assets below custody and administration rose 4% to $37.1 trillion in the reported quarter, from the prior quarter.

The bank said net gains applicable to common shareholders rose to $1.39 billion, or $1.52 per share, in the last three months of 2019, from $832 million, or 84 cents per interest, a year earlier.

Excluding items, the company earned $1.01 per share, missing expectations of $1.04, according to IBES materials from Refinitiv.

Total revenue rose 19.2% to $4.8 billion.

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