2011 Q1 Earnings: BNY Mellon Misses Estimates Despite Pershing's Strong Results

Clearing services conducted by Pershing resulted in sales of $292 million, up 27% from last year

Bank of New York Mellon reported its first-quarter 2011 results on Tuesday, including a 4% jump in net income to $625 million, or $0.50 per share, compared to $601 million, or $0.49 per share, a year ago. These EPS results fell short of analysts’ estimates by $0.07.

On a sequential basis, net income dropped 9% from $690 million, or $0.55 per share, in the fourth quarter of 2010.

Revenue for the first quarter also missed analysts’ estimates, coming in at $3.60 billion on a non-GAAP basis and $3.65 billion on a GAAP basis. Analysts had expected total revenues of $3.67 billion. Total sales were up about 9% vs. last year, but were down 3% from the fourth quarter of 2010.

“Over the past year, unlike many, we continued to grow revenue and earnings despite the challenging environment, and did so with a clean balance sheet. Sequentially, revenue was lower due to seasonality, as were expenses despite higher litigation costs,” said Chairman and CEO Robert P. Kelly in a press release.

 “A fundamental strength of our business model is the ability to rapidly grow capital and generate a high return on it,” he explained. “Specifically, in the first quarter of 2011, our capital grew at an annualized rate of 28 percent, and we generated a 21% return on it.”

Assets under custody and administration were $25.5 trillion at March 31, 2011, an increase of 14% compared with the prior year and 2% sequentially, according to the company.

Assets under management, excluding securities lending assets, amounted to $1.2 trillion, a jump of 11% vs. the prior year and 5% over the prior quarter.

Pershing Results

Investment-services fees totaled $1.7 billion, an increase of 27% year-over-year and a decrease of 2% sequentially. The year-over-year results reflect acquisitions, new business and higher market values.

“The sequential decrease resulted from seasonally lower depositary receipts revenue, partially offset by new business and higher market values,” the company said in a statement.

Clearing services conducted by Pershing resulted in sales of $292 million, up 27% from last year and 5% from last quarter.  

Investment management and performance fees were $764 million, an increase of 11% year-over-year and a decrease of 5% sequentially. Excluding performance fees, these fees totaled $747 million, an increase of 11% compared with the prior year period and 3% sequentially.

Both increases reflect higher market values and net new business, according to the company.

Foreign exchange and other trading revenue totaled $198 million compared vs. $262 million in the first quarter of 2010 and $258 million in the fourth quarter of 2010.

Decreases in both foreign exchange and other trading revenue were driven by lower fixed income and derivatives trading revenue.

For more information on earnings in the finance sector read AdvisorOne’s 2011 Q1 Earnings Calendar.

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