July 18, 2013

BNY Mellon Posts Strong Q2 Earnings, Record Revenue, 10% Rise in AUM

Pershing parent reverses Q1 loss, helped by one-time gain; repurchased $330M of its stock in quarter, increased dividend

BNY Mellon headquarters in New York. (Photo: AP) BNY Mellon headquarters in New York. (Photo: AP)

Bank of New York Mellon (BK) announced Wednesday net income to shareholders of $833 million, or $0.71 per common share, on record revenue (GAAP) of $4.009 billion in its second quarter, ended June 30.

Net income, which was up from a loss of $237 million in Q1 of this year and net income $465 million in 2012’s second quarter, was aided by an after-tax gain of $109 million related to the firm’s equity investment in Convergex (CVGX), a global brokerage and trading service, during the quarter.

GAAP revenue rose 11% compared to 2012’s second quarter, and 11% over Q1 of 2013.

In BNY Mellon’s quarterly earnings call on Wednesday, Hassell noted the bank’s “strong revenue growth across all our businesses, without exception,” along with highlighting increased collaboration among different divisions of the company. Specifically, he mentioned a new separately managed account product coming out of Hong Kong, led by John Brett, and noted “we’ve started making private banking loans to Pershing customers,” to which “we’re already seeing a nice level of receptivity.” (Pershing Advisor Solutions’ CEO Mark Tibergien spoke of the private banking loan initiative and other internal collaborations benefiting Pershing customers in a June interview with ThinkAdvisor at the annual Pershing Insite conference.)

Chairman and CEO Gerald Hassell said in a prepared statement that during the second quarter, BNY Mellon “generated nearly $900 million of capital, approximately $500 million of which we used to step up share buybacks by more than 50% and increase our quarterly dividend by 15%.”

During the quarter, BNY repurchased 11.9 million shares of its stock for $330 million, and on July 17 it announced a dividend of $0.15 per common share payable Aug. 6. Assets under management increased 6% over 2012’s second quarter, to $1.43 trillion, and were up slightly from 2013’s first quarter. Assets under custody or administration (ACUA) increased 4% to $26.2 trillion compared to the prior year, but were down slightly from 2013’s first quarter.

Clearing services revenue increased 4% to $321 million in the quarter, which the company attributed to “higher mutual fund fees” and a 21% year-over-year increase in daily average revenue trades (DARTs) to 227,500.

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Check out ThinkAdvisor's 2013 Q2 Earnings Calendar for the Finance Sector.

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