BNY Mellon Profits Drop, but Pershing Clearing Helps Offset Losses

Clearing fees at Pershing unit rose to $304 million in Q1 2013 vs. year-ago $294 million

Bank of New York Melon headquarters in New York.  (Photo :AP) Bank of New York Melon headquarters in New York. (Photo :AP)

The Bank of New York Mellon (BK) reported a first-quarter loss on Wednesday due to a foreign tax credit battle, with revenues down 1% to $3.61 billion versus a year ago, but clearing services revenue and other investment services fees helped offset the loss.

BNY Mellon reported a Q1 loss of $0.23 per share, or $266 million, which included a previously announced charge of $0.73 per share, or $854 million, related to the U.S. Tax Court’s disallowance of foreign tax credits. Without the charge, profits would have been $0.50 per share, or $588 million, versus last year’s $0.52, or $619 million, and last quarter’s $0.53, or $622 million.

Assets under management totaled an estimated $1.43 trillion, up from $1.39 trillion in Q4 and $1.31 trillion a year ago. Assets under custody or administration totaled an estimated $26.3 trillion, flat with last quarter and up from $25.7 trillion a year ago. BNY Mellon is the world’s largest custody bank.

The clearing unit, Pershing, which offers business solutions to registered investment advisors and other financial organizations, reported fees and other revenue totaling $304 million compared with $294 million last quarter, and up 0.3% compared with $303 million last year at this time. Pershing reported approximately $1.06 trillion in global client assets as of Dec. 31.

Total investment services fees, which include asset and issuer services along with clearing and treasury, were reported at $1.66 billion versus $1.60 last quarter and $1.63 billion last year.

“We remain focused on our key priorities: investing in our businesses to drive organic growth and sustainable shareholder value; controlling discretionary expenses; maintaining a strong balance sheet and returning capital to shareholders,” said Gerald L. Hassell, chairman and chief executive officer of BNY Mellon, in a statement.

This quarter’s results represented BNY Mellon’s 14th consecutive quarter of net long-term asset management flows and continued growth in investment services fees, Hassell said.

Also on Wednesday, BNY Mellon announced a capital plan that includes share repurchases of up to $1.35 billion, a 16% increase from last year's board authorization, and a 15% increase in the quarterly dividend to 15 cents per share beginning in the second quarter.

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