Growth in its core business of asset servicing drove third-quarter profits higher at Bank of New York Mellon.

The $354 billion-asset company’s net income rose 2% to $983 million from a year earlier. That equated to 94 cents per share, 2 cents higher than the average estimate of analysts compiled by FactSet Research Systems.

Total revenue climbed 2% to $4 billion. Asset servicing rose 4% to $1.1 billion on higher equity market values and new business wins, particularly in the collateral management business.

Total fee revenue rose 1% to $3.2 billion on higher investment management and performance fees, and clearing services revenue.

Other business areas struggled. The number of sponsored programs in BNY’s depositary receipts business fell 14% to 938. Partly due to lower depositary receipt activity, foreign exchange trading revenue declined 10% to $158 million.

Charles Scharf, then the chief executive officer of Visa, speaks during the Institute of International Finance G-20 Conference in Shanghai, China.
The third quarter was Charles Scharf's first as BNY Mellon's CEO. Bloomberg News

“Our third quarter performance was consistent with our expectation and some areas showed reasonable growth, such as asset servicing, clearing services and investment management,” BNY Mellons's new CEO, Charles Scharf, said in the release. “Other areas underperformed, such as depositary receipts.”

Scharf replaced Gerald Hassell as CEO in July.

Assets under custody and administration rose 6% to $32.2 trillion. Assets under management increased 6% to $1.8 trillion.

Despite lower loan volume, BNY’s net interest revenue rose 8% to $851 million due to higher interest rates. Average yields on loans climbed 79 basis points to 2.63% and they rose 24 basis points on securities to 1.8%.

Noninterest expense was little changed at $2.7 billion. Higher costs for software and professional services were offset by lower litigation and bank assessment charges.

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Andy Peters

Andy Peters

Andy Peters writes about regional banks, consumer finance and debt collections for American Banker.