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Bank Of New York Mellon (BK) Posts In-Line Q4 Earnings, NIM Falls

 January 16, 2013 06:52 AM

(By Balachander) Bank of New York Mellon Corp. (NYSE: BK) posted an increase in quarterly earnings and revenue, matching market expectations, while net interest margin (NIM) fell due to higher interest-earning assets.

Earnings applicable to common shareholders increased to $622 million or $0.53 per share for the fourth quarter from $505 million or $0.42 per share in the comparable period of last year. In the third quarter, BK earned $720 million or $0.61 per share.

Non-GAAP revenue rose 5 percent to $3.61 billion. On a sequential basis, revenue declined 1 percent.

Wall Street analysts, on average, expected EPS of 53 cents on revenue of $3.60 billion for the three months ended December.

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"We are pleased to report strong year-over-year growth in fees in our Investment Management, Asset Servicing, Clearing and Treasury Services businesses.  We benefited from the improvement in market values and.... focus on generating organic growth with our broad client base," commented CEO Gerald Hassell.

NIM fell to 1.09 percent from 1.27 percent in the year-ago quarter and $1.20 in the prior quarter reflecting rise in deposits levels, fall in reinvestment yields, the elimination of interest on European Central Bank deposits and lower accretion.

The provision for credit losses was a credit of $61 million in the fourth quarter. The provision for credit losses was $23 million in the comparable period of 2011 and a credit of $5 million in the previous quarter.

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BK said estimated Basel III Tier 1 common equity ratio was 9.8 percent at Dec. 31, 2012, compared with 9.3 percent at Sept. 30, 2012.  The increase was mainly due to lower risk-weighted assets, the bank noted.

The stock, which has been trading in the 52-week range of $19.30 to $27.32, ended at $26.78 on Tuesday.

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