BNY Mellon exceeds second-quarter profit forecasts due to higher interest rates

Bank of New York Mellon (NYSE:BK) Corp surpassed Wall Street’s profit expectations for the second quarter on Tuesday, as the U.S. Federal Reserve’s aggressive policy tightening boosted interest income.
Several large U.S. banks have posted strong quarterly profits thanks to higher interest rates, indicating a robust economy. However, a decline in consumer spending and tightening credit conditions are clouding the sector’s outlook.

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Quarterly net interest income for BNY increased 33% to $1.1 billion, up from $824 million a year earlier.

According to Refinitiv IBES data, the company reported an adjusted profit of $1.38 per share, comfortably surpassing analysts’ average estimate of $1.22 per share.

The optimistic results follow a turbulent first quarter in which consumers withdrew billions in deposits due to a global banking crisis precipitated by the failure of three mid-sized U.S. banks.

Since then, sentiment has improved and deposit outflows have slowed, resulting in an almost 16.4% increase in the S&P 500 Banks index from its March lows.

The average deposits at BNY increased by 1% sequentially to $277.2 billion, but decreased by 10.8% year-over-year.

The New York-based bank set aside $5 million for loss provisions, compared to $47 million a year earlier.

Assets under custody or administration (AUC/A) at BNY increased by 9% year-over-year to $49.9 trillion in the reported quarter, due to higher quarter-end equity market levels and client inflows.

Total revenue rose 5% to $4.45 billion.