Bank of New York Mellon Corp.'s (BK) first-quarter earnings fell 1% from a prior-year period that didn't have a credit loss provision as the trust bank's fee revenue also dipped.
Trust banks act as custodians and servicers for corporations and Wall Street, leaving results heavily tied to market actions. Bank of New York Mellon was already pinched by historically low interest rates and the largest U.S custody bank saw its foreign-exchange volumes drop during the fourth quarter, amid scrutiny over the treatment of trading clients.
Ohio's attorney general last month sued Bank of New York Mellon for allegedly overcharging two state pension funds for currency trades, joining a growing group of regulators that have accused the custodial bank of profiting at its clients' expense. The latest suit comes after the custodial bank in January reached a partial settlement with the U.S. Department of Justice, in which it agreed to change some disclosures about its foreign exchange services. The bank has said it is confident it's on the right side of the facts and the law.
Bank of New York Mellon reported a profit of $619 million, down from $625 million a year earlier. Per-share earnings rose to 52 cents from 50 cents, reflecting a change in the excess of redeemable value over the fair value of noncontrolling interests. Revenue was flat at $3.65 billion.
Analysts polled by Thomson Reuters had most recently forecast earnings of 52 cents on revenue of $3.59 billion.
Total fee revenue fell 1.2% to $2.8 billion.
The provision for credit losses was $5 million, compared with $23 million in the prior quarter. There was no provision a year ago.
Assets under management, excluding securities lending assets, were up 6% to $1.3 trillion as of the end of the quarter, while assets under custody and administration grew 4% to $26.6 trillion.
On Tuesday, rival State Street Corp. (STT) similarly reported its first-quarter earnings fell 9.3% on lower fees and revenue from trading services, but Northern Trust Corp. (NTRS) saw its first-quarter earnings rise 6.8% as strong new business and higher equity markets helped boost its fee revenue.