Don't expect the stock market to boost Bank of New York Mellon’s earnings this year.
Stock market volatility was the key culprit behind subpar results at the $363 billion-asset company. BNY Mellon was plagued by asset outflows in certain business lines, client losses in its Pershing clearing-services unit and the impact of depressed stock prices.
“To state the obvious, at these levels the markets will not be a significant contributor to our results in 2019,” CEO Charlie Scharf said during a Wednesday conference call to discuss quarterly results.
The $363 billion-asset company reported that its fourth-quarter profit fell 26% from a year earlier, to $832 million. Earnings per share of 84 cents were 8 cents shy of the mean estimate of analysts compiled by FactSet Research Systems.
The 2018 results also included several one-time items, such as costs tied to severance, litigation and moving the company’s headquarters. Those items reduce earnings by 16 cents a share.
Expense cuts and technology investments should lay the groundwork for higher profit in 2020, Scharf said. Technology spending increased by about $100 million in the quarter from a year earlier, the company said.
“We remain focused on building the underlying franchise,” Scharf said. “Even if the market constrains our short-term growth, our goal is to ensure" an increase in earnings per share.
Assets under custody and administration fell 1%, to $33.1 trillion. Assets under management dropped by 9%, to $1.7 trillion. In its investment management business, a component of assets under management, BNY Mellon reported net asset outflows in its equity, fixed income and multiasset and alternative investment funds.
