The world’s biggest custody bank, The Bank of New York Mellon Corporation (NYSE:BK), reported its third quarter earnings today. The New York-based bank’s profits soared 11 percent, as the rising share prices increased customer assets. The bank earned $720 million, or 61 cents per share, compared to $651 million, or 53 cents a share in the same quarter last year. Wall Street analysts were expecting a net profit of 54 cents a share.
Most of the custody banks are affected when gains in share prices boost fees for managing client money, and the low interest rates compel them to waive fees on money funds. But, The Bank of New York Mellon Corporation (NYSE:BK) performed better than expected, even in the adverse times. It shows that they can generate revenue growth even while holding down the expenses. We expect further improvement next year, as the bank adds some more customers and implements cost cutting measures.
Quant ESG With PanAgora Asset Management’s George Mussalli
ValueWalk's Raul Panganiban interviews George Mussalli, Chief Investment Officer and Head of Equity Research at PanAgora Asset Management. In this epispode, they discuss quant ESG as well as PanAgora’s unique approach to it. The following is a computer generated transcript and may contain some errors. Q3 2020 hedge fund letters, conferences and more Interview . Read More
In the same period, its total assets under management jumped 7.7 percent to $27.9 billion, riding on the new business wins worth $522 billion and higher market values. Assets under management also jumped 13 percent during the third quarter to $1.4 trillion, which increased management fees by 6.9 percent to $779 million.
The Bank of New York Mellon Corporation (NYSE:BK) shares are currently trading at $23.56. Morgan Stanley has an Underweight (sell) rating on the bank.
Mortgage-banking Revenue Helps U.S. Bancorp Profits Jump 16 Percent
U.S. Bancorp (NYSE:USB) also announced its third quarter results today. The profits have climbed 16 percent and revenues from mortgage banking have more than doubled. The Minneapolis-based lender earned $1.47 billion, or 74 cents per share in the third quarter, compared to $1.27 billion in the same quarter last year.
U.S. Bancorp (NYSE:USB) is now focusing more on the mortgage banking, as the government incentive programs and record low interest rates are fueling the demand for home loans. Though it offers an opportunity, a low interest rate means the bank will earn less on the money it lends. Mortgage banking revenue of U.S. Bancorp was $519 million, compared to $245 million in the same period a year ago.
In the third quarter, the non-interest income increased 10 percent to $2.4 billion; interest income jumped 6.1 percent to $2.78 billion. The company’s total revenue was up 8 percent to $5.18 billion.
U.S. Bancorp (NYSE:USB) shares have gained 24 percent this year to date, and are currently trading at $33.61. Interestingly, U.S. Bancorp has never posted a loss since Richard Davis took over as CEO in 2006.