Bank of New York Mellon Reports Lower Earnings in Q4

Bank of New York Mellon (BoNY) experienced a decrease in earnings during the fourth quarter of the year, despite a 10% increase in revenue, primarily due to higher interest rates. In Q4, the bank recorded a profit of $302 million, or 33 cents per share, compared to $509 million, or 62 cents per share, in the same quarter of the previous year.

After adjusting for one-time items, the bank's earnings per share reached $1.28, surpassing analysts' expectations of 85 cents per share. Revenue also performed well, rising to $4.31 billion, slightly exceeding analyst forecasts of $4.3 billion.

Fee revenue for the quarter amounted to $3.21 billion, just slightly lower than the total from the previous year's fourth quarter of $3.22 billion. This decline was primarily due to decreased foreign exchange volatility and volumes. However, it was partially offset by higher market values and a favorable impact from a weaker U.S. dollar.

Net interest revenue for the quarter increased to $1.1 billion from $1.06 billion in the same period last year – a 3.8% gain. This increase was primarily driven by higher interest rates. However, changes in balance sheet size and mix partially offset this growth.

The bank's investment business had a small negative impact of $4 million on the top line. This was an improvement compared to the previous year when a repositioning of its securities portfolio resulted in a $360 million headwind to revenue. The investment and other revenue figure for the quarter was still negatively affected by $150 million related to a fair-value adjustment of a contingent consideration receivable associated with a divestiture in the prior year.

BoNY's financial results also included a noninterest expense of $752 million, which was attributed to a Federal Deposit Insurance Corporation special assessment, severance, and litigation reserves.

Assets under management for the bank experienced an 8% increase to $1.97 billion, driven by higher market values and the weakening of the U.S. dollar. However, this growth was partially offset by cumulative net outflows.

During the quarter, BoNY increased its reserves related to commercial real estate exposure, causing the provision for credit losses to rise fourfold from the previous year to $80 million.