BNY Surpasses Q3 Profit Estimates as Assets Under Custody Exceed $50 Trillion Mark

BNY Mellon beat third-quarter profit estimates, driven by assets under custody and administration surpassing $50 trillion for the first time. The market rally and new client acquisitions boosted investment services fees, contributing to the bank’s strong performance in a volatile economic environment.

Market Rally and New Clients Boost BNY’s Q3 Profits as Assets Under Custody Hit $52.1 Trillion

On October 11, BNY surpassed third-quarter profit estimates, a feat facilitated by the first time that assets under its custody and administration surpassed the $50 trillion mark and higher investment services fees, per Reuters.

The bank's fees, typically computed as a percentage of the assets under custody, were bolstered by a market rally that increased their value and the acquisition of new clients.

BNY's bottom line was strengthened by clients' continuing investment activities and the anticipation of an interest rate reduction cycle, which commenced in the quarter's final month.

"We recognize that there have been a lot of shifts in the macroeconomic outlook since the beginning of the year," CEO Robin Vince said in a call with reporters.

"We see the market backdrop as pretty constructive but there are a lot of risks and uncertainties and so for us its always the business of preparing for what exists, helping our customers to be able to navigate."

In premarket trading, the shares of the world's largest custodian bank were last up 1.4%.

The spread between earnings from assets and costs on liabilities, known as net interest income (NII), increased by 3% as yields from BNY's bond investments counteracted the effects of higher deposit costs. According to estimates compiled by LSEG, analysts anticipated a 1.3% decrease in NII.

The bank exceeded Wall Street's projection of $1.42 per share by reporting an adjusted profit of $1.52.

The assets under custody and administration were $52.1 trillion, a 14% increase from the previous year.

BNY's Fee Revenue Climbs 5% as Shares Surge 43%, Outpacing State Street and Northern Trust

Total fee revenue increased by 5% from the previous year to $3.40 billion. The income generated by asset servicing, which is responsible for safeguarding and settling trades, also increased by 5%.

In contrast, issuer services, designed to assist clients in issuing securities, experienced a 1% increase.

The 240-year-old bank's results are significant because they frequently correspond with more general market trends, as it serves as a critical intermediary in the financial system.

BNY's shares have increased by 43% thus far this year, while State Street and Northern Trust have experienced 15% and 8% increases, respectively.