Bank of New York Mellon Corp. on Wednesday, January 15, released information about its profit for the fourth quarter of last year, which exceeded preliminary estimates because this financial institution earned higher investment services fees from its clients.
Against the background of the mentioned result, the value of the shares of the specified bank showed growth in premarket trading. The corresponding indicator increased by 4.1%, to $79.06 per equity.
The financial institution’s fees, typically calculated as a percentage of assets under custody, benefited from the combined impact of factors such as the acquisition of new customers, the upward dynamic of the market amid interest rate cuts by the Federal Reserve, and the victory of Donald Trump in the November United States presidential election. In the context of a kind of environment shaped by the mentioned circumstances, the value of fees found itself on a growth trajectory.
The current order of things in the United States economic system has become a kind of stimulating factor for BNY clients, encouraging them to continue their investment activities. In the relevant context, the general resilience of the economy is primarily implied. Also, in this case, expectations of further easing of the monetary policy of the central bank of the United States became an impact factor. At the same time, it is worth mentioning that the vision of the US financial regulator regarding the scale and prospects of lowering borrowing costs in 2025 became more moderate in December. The activity of the central bank of the United States as part of the continued interest rates cutting is expected, but with less enthusiasm than in September. Fed officials predict two lowering borrowing costs in 2025.
At the same time, the mentioned circumstances, despite the nuances, still bolstered BNY’s bottom line. The financial institution’s total fee revenue for the fourth quarter of 2024 reached $3.51 billion. This indicator showed an increase of 9% year-on-year.
Chief executive officer of the financial institution Robin Vince during a call with reporters as the lender turns into the year, there is a little more uncertainty.
The bank’s net interest income in the fourth quarter of 2024 was recorded at the $1.19 billion mark. This figure showed an increase of 8% year-on-year. It is worth noting that estimates compiled by LSEG indicate that analysts expected the mentioned figure would fall by about 5%. Net interest income is the spread between earnings from assets and expenditure from liabilities.
On an adjusted basis, the financial institution reported a profit of $1.72 per share for the quarter ended December 31. According to LSEG data, analysts expected the mentioned figure would be $1.56 per equity.
BNY’s assets under custody and administration in the fourth quarter of 2024 were fixed at the $52.1 trillion mark. This indicator grew by 9% year-on-year.
The total revenue of the financial institution for the fourth quarter of 2024 was $4.85 billion. This indicator increased by 11% year-on-year. Analysts interviewed by the media predicted that the bank’s total revenue for the last quarter of 2024 would amount to $4.68 billion.
Robin Vince stated that building on the solid foundation laid in 2023, the financial institution he heads accelerated the pace of its ongoing transformation in 2024 through consistent execution against its strategic pillars.
It is worth noting that BNY, founded in 1784, is currently conducting an overhaul aimed at cutting costs and streamlining the bank’s activity process. In this case, the focus is on higher-margin businesses.
BNY, like many other lenders in the United States, has become a beneficiary of the scale and pace of lowering borrowing costs that the Fed has followed. The relevant actions of the US financial regulator formed conditions under which the financial institution was able to earn more from its deposits.
Excluding notable items such as last year’s Federal Deposit Insurance Corp. special assessment and severance payments, noninterest expenses would have increased by 2% in the last quarter of 2024.
The financial institution’s overhaul has brought investments in digital and artificial intelligence technologies.
BNY reported the upgrades had already driven down unit costs in custody trades by 5% and traditional fund services by 15% over the year. Currently, about 35% of the bank’s workforce is enabled for Eliza, an artificial intelligence platform.
BNY expects its net interest income to grow by a mid single digit percentage in 2025. An increase in fee income is also expected.
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