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BNY Mellon beats profit estimates on boost from higher interest rates

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LA Post: BNY Mellon beats profit estimates on boost from higher interest rates
Reuters
Reuters
October 17, 2023

(Reuters) - Bank of New York Mellon Corp beat Wall Street estimates for third-quarter profit on Tuesday, as rate hikes by the U.S. Federal Reserve bolstered the lender's income from loans.

Banks have been the biggest beneficiaries of the swiftest tightening of U.S. monetary policy in 40 years, aimed at reining in inflation. Last week, JPMorgan, Wells Fargo and Citigroup beat analysts' estimates for the latest quarter and raised FY23 interest income forecasts.

BNY Mellon's net interest revenue for the reported quarter jumped nearly 10% to $1.02 billion, compared with $926 million a year earlier.

While higher interest rates have benefited banks, they have also deepened fears of more loan defaults, prompting lenders to maintain reserves on the sidelines.

New York-based BNY Mellon kept aside $3 million in provision for credit losses for the quarter. Meanwhile last year, it had released some reserves and reported a $30 million benefit.

On an adjusted basis, the bank reported a profit of $1.27 per share in the third quarter, comfortably beating analysts' average estimate of $1.15 per share, according to LSEG data.

Its total revenue rose 2% to $4.4 billion from a year earlier, while assets under custody or administration (AUC/A) rose 8.3% to $45.7 trillion, primarily reflecting higher market values, client inflows.

Average deposits fell 5.4% to $262.1 billion on a sequential basis.

(Reporting by Jaiveer Singh Shekhawat in Bengaluru; Editing by Shinjini Ganguli)

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