Bank of New York Mellon missed analysts’ forecasts for quarterly profit on Thursday, as the world’s largest custodian bank earned much less from its interest-earning assets due to price cuts by the Federal Reserve.
Big U.S. banks that reported outcomes earlier this week further highlighted the hit from lower rates of interest after the U.S. Federal Reserve cut borrowing prices thrice last year against the backdrop of the extended U.S.-China trade row.
Interest revenue at BNY Mellon plunged 8% to $815 million in Q4 2019, while non-interest bills dipped 1%.
BNY Mellon has been putting money in technology to automate most of its processes and reduce costs, a strategy put in place by former CEO Charles Scharf before he departed to take up the top job at Wells Fargo late in 2019.
The bank, which oversees money of clients such as large banks and hedge funds, stated commission income surged 26% due to a gain from the sale of an unspecified investment. Commission revenue was flat, excluding the one-time benefit.
Assets under custody and administration surged 4% to $37.1 trillion in the reported quarter from the previous quarter.
The financial institution stated net earnings applicable to common shareholders soared to $1.39 billion, i.e.,$1.52 a share, in the last three months of 2019, from $832 million, i.e., 84 cents per share, a year earlier.
Excluding items, the firm earned $1.01 per share, missing expectations of $1.04, following IBES data from Refinitiv.