Thanks to a favorable tax decision by the U.S. Tax Court, BNY Mellon reported net income applicable to common shareholders of $967 million for the third quarter of 2013, up from $833 million in Q2 2013 and $720 million from the previous year’s third quarter. Without the tax benefit, however, BNY Mellon would have seen a decline with net income at $706 million.
BNY Mellon added to its lead as the largest custodian with assets under custody/administration of $27.4 trillion, a 4% gain year over year, while assets under management rose 13% above last year to reach $1.53 trillion. Plus, the bank increased its Basel III Tier 1 common equity ratio from 9.3% last quarter to 10.1%, by adding $1.1 billion in Basel III Tier 1 common equity, but this ratio “is expressed as a percentage of the actual book value of assets, as opposed to a percentage of a risk-based reduced value established in accordance with regulatory requirements,” BNY Mellon said in its earnings report.
Overall, the bank’s investment management fees rose 5%, due to a combination of equity market gains and bringing in more net business.
In addition to its management fee gains, BNY Mellon’s investment services fees rose 4% year over year. The bank saw some of its strongest gains from issuer services fees, which largely went up due to depositary receipts revenue. As a whole, issuer services fees increased 4% year over year and 10% from last quarter. Asset servicing fees also went up 2% year over year but dropped 2% from last quarter, as securities lending revenue fell sharply. In Q3 2012, securities lending generated $49 million, and in Q2 2013, the activity brought in $50 million. This quarter, however, securities lending revenue totaled $35 million.
The bank’s clearing fees also rose 10% year over year but fell 2% from last quarter. These fees fell due to a decrease in daily average revenue trades (DARTs) and higher money market fee waivers, while higher mutual fund and asset-based fees and volumes offset the higher money market fees and led to the year-over-year gain.
$261 Million Tax Benefit Pushes Up Net Income at BNY Mellon in Q3
Thanks to a favorable tax decision by the U.S. Tax Court, BNY Mellon reported net income applicable to common shareholders of $967 million for the third quarter of 2013, up from $833 million in Q2 2013 and $720 million from the previous year’s third quarter. Without the tax benefit, however, BNY Mellon would have seen a decline with net income at $706 million.