Bank of New York Mellon added new business in its two key divisions, and the effects of the Fed’s recent rate hikes also helped boost the custody bank’s second-quarter profit.

Net income at the $355 billion-asset company rose 12% to $926 million from the same period last year. Earnings per share of 88 cents was 4 cents better than the estimates of analysts compiled by FactSet Research Systems. Total revenue rose 5% to about $4 billion.

BNY Mellon’s recent investments in technology contributed to the earnings growth, Chairman Gerald Hassell said in a news release. Hassell this week stepped down as CEO and was replaced by former Visa CEO Charlie Scharf.

Strong quarter
“Healthy revenue growth in both our investment management and investment services businesses and the more favorable rate environment helped us maintain double-digit earnings per share growth,” Chairman Gerald Hassell said.

“Healthy revenue growth in both our investment management and investment services businesses and the more favorable rate environment helped us maintain double-digit earnings per share growth,” Hassell said in the release.

Noninterest revenue rose 4% to $3.1 billion. The figure included an additional $51 million of lease-related gains. BNY Mellon did not elaborate in its earnings release or its Thursday morning conference call on the lease-related gains.

Fee revenue also benefited from a 13% rise in revenue from clearing services, to $394 million, from higher money market fees and growth in long-term mutual fund assets.

Assets under custody and administration rose 5% to $31.1 trillion, as BNY Mellon secured $152 billion of new asset servicing contracts during the quarter. Assets under management rose 6% to $1.8 trillion.

Net interest revenue rose 8% to $826 million on higher interest rates and lower premium amortization.

Noninterest expense rose 1% to $2.6 billion, including $12 million for litigation and restructuring charges.

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Andy Peters

Andy Peters

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