Writedowns hit BNY Mellon
BANK of New York Mellon (BNY Mellon) saw its second-quarter profit fall by 43 per cent, due to charges on the state aid it received from the US government, coupled with losses in securities and writedowns relating to the housing market.
The New York-based custody bank said net income sank to $176m (£107m), or $0.15 per share, compared to $309m, or $0.28 per share, in the second quarter of 2008.
Charges of $236m on the $3bn in Trouble Asset Relief Programme (Tarp) funding it took last year, combined with the payment of fees levied on banks to restock the Federal Deposit Insurance Corporation’s insurance fund, dented profits by $0.23 per share.
Excluding one-off items, earnings fell to $0.57 a share from $0.82 last year, outperforming an analysts’ estimate of $0.52.
Credit loss provisions soared more than fourfold to $61m as the bank grappled with a 68 per cent increase in securities writedowns which reached $256m, from $152m a year earlier.
“As long as the housing market continues to decline, there will be some level of losses relating to residential mortgage portfolios,” said chief executive officer Robert Kelly.
Fee revenues from securities loans, trade management and record-keeping fell 20 per cent to $2.5bn from last year, but was up 3.4 per cent from the quarter to the end of March.
Assets under custody fell 10 per cent from last year to $20.7 trillion, while assets under management, not including securities lending assets, fell 17 per cent from last year to $926bn.
Shares in BNY Mellon were off 6.15 per cent per cent by close of trading, at $27.32.