BNY Mellon Posts Lower Income From Fees -- WSJ
July 18 2019 - 3:02AM
Dow Jones News
By Chris Wack
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 18, 2019).
Earnings at Bank of New York Mellon Corp. decreased in the
company's second quarter as fee revenue slipped 3% from the same
period a year ago.
The company reported $1.02 billion in net income, down 8% from
the comparable quarter a year prior. Earnings were $1.01 a share,
down from $1.03 a share. Analysts polled by FactSet were expecting
95 cents a share.
Total revenue fell 5% to $3.9 billion. Analysts were expecting
$3.924 billion in revenue.
For the second consecutive quarter, bond markets and interest
rates played a big role in the company's results. Specifically, the
yields on various types of longer-term and shorter-term bonds --
often known as the yield curve -- can hurt financial firms'
earnings when they converge.
"The impact of the level and shape of the yield curve, as well
as continued low levels of volatility and muted market activity,
negatively impacted our results," BNY Mellon Chief Executive
Charles Scharf said in prepared remarks. "Our results this quarter
also reflect our ongoing increased level of technology and product
development investments, but these increases were more than offset
by improved efficiency across the company."
Mr. Scharf added that, "we are pleased that we will be able to
return capital to shareholders through up to $3.94 billion in
common share repurchases by mid-2020, an increase of roughly 20%,
and an increase in our common dividend by 11% to 31 cents per share
starting in the third quarter."
Net interest revenue for the quarter fell 12%, while the
company's total noninterest expenses were $2.65 billion, down 4%
from last year.
For banks and other financial firms that fund themselves with
deposits and other short-term loans and put that money to work
through loans and longer-term investments, a flattening yield curve
can squeeze their interest margins and leave a mark on
earnings.
BNY Mellon shares rose 2.3% in what was a down day broadly for
U.S. stocks.
Write to Chris Wack at chris.wack@wsj.com
(END) Dow Jones Newswires
July 18, 2019 02:47 ET (06:47 GMT)
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