BNY Mellon and Northern Trust sees bumper third quarter in custody revenues

Assets under custody and administration (AuC/A) also jumped 7% for BNY Mellon to $34.5 trillion and 12% for Northern Trust to $10.8 trillion.

By Joe Parsons

Both BNY Mellon and Northern Trust recorded an increase in servicing revenues and custody assets in the third quarter, but failed to improve on the previous quarter.

The two global custodians saw revenues in custody and fund administration fees increase by 3% and 11% respectively compared to the third quarter last year, with BNY Mellon at nearly $1.5 billion and Northern Trust at $374.7 million.

Assets under custody and administration (AuC/A) also jumped 7% for BNY Mellon to $34.5 trillion and 12% for Northern Trust to $10.8 trillion.

The primary driver behind Northern Trust’s asset servicing revenues was the integration of the UBS Asset Management’s fund administration units in Luxembourg and Switzerland, as well as new business and favourable markets.

However, quarter-on-quarter, both Northern Trust and BNY Mellon saw declines in revenues for asset servicing of 2% and 4% respectively.

BNY Mellon attributed the decrease to “reflect lower net interest revenue, primary driven by lower deposit balances and lower foreign exchange volumes”, while Northern Trust said “fees decreased primary due to the unfavourable impact of movements in foreign exchange rates and lower transaction volumes.”

BNY Mellon focused most of its efforts in the quarter on bolstering its senior leadership for a number of core business lines, including a new head of asset servicing for the Americas, a new head of digital, a chief technology officer, and CEO of treasury services.

“We are moving with a sense of urgency to improve our growth trajectory. Bringing in new talent to complement the great expertise we already have is critical. Since the end of the second quarter, we have added a number of experienced senior leaders to our executive team,” stated Charles Scharf, chairman and CEO, BNY Mellon.

Last week, JP Morgan and Citi both reported an improved performance in the quarter for their securities services business, with revenues up 5% to $1.1 billion and 11% to $672 million respectively.

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