| BNY Mellon posts 3Q loss on hefty charge

BNY-Mellon-posts-3Q-loss-on-hefty-charge NEW YORK -Bank of New York Mellon Corp. said Tuesday that it took a hefty charge during the third quarter to restructure its investment portfolio, resulting in a loss of almost $2.5 billion for the period.
The New York-based trust bank said by selling and writing down the value of its most risky securities during the quarter, it has significantly reduced the risk of future losses in the portfolio.
Its shares rose 87 cents, or 3.2 percent, to $28.10 in premarket trading.
Because BNY Mellon is not a traditional retail bank, it has little direct exposure to risky consumer loans and mortgages that have plagued traditional banks over the last several quarters. But like other financial firms, BNY Mellon has taken hits on its investments in securities backed by residential mortgages and other real estate-related loans as the value of those assets have withered since the housing bubble burst.
BNY Mellon said it has sold $3.6 billion of the riskiest assets in its investment portfolio, and restructured an additional $8.5 billion of securities. The efforts resulted in a charge of about $3 billion, or $2.54 per share, the bank said.
Excluding the losses on its investment portfolio, total revenue declined 14 percent from the prior-year quarter to $3.33 billion as fee revenue fell. However, fee revenue has improved over the past three quarters as market conditions stabilize. Total fee revenue was $2.62 billion, down 15 percent from $3.09 billion a year earlier, but up 4 percent from the second quarter.
BNY Mellon primarily provides asset and wealth management services for institutional, corporate and high-net-worth individuals so the bulk of its revenue comes from fees related to those services.
Part of the fees BNY Mellon collects are based on the performance of the assets it manages for clients. So as the broader financial market improved, with the Standard & Poors 500 index rising 15 percent during the quarter, BNY Mellons results improved.
Revenue from foreign exchange and other trading activities fell 36 percent year-over-year to $246 million, but was up slightly from the prior quarter.
Total assets under management amounted to $966 billion at quarter end, down 9 percent from the third quarter of 2008 and up 4 percent from the second quarter.
For the period ended Sept. 30, the bank reported a net loss applicable to common shareholders of $2.46 billion, or $2.05 a share. A year ago, the bank reported earnings of $303 million, or 26 cents per share.
On an adjusted basis, excluding the restructuring and other one-time charges, the bank said it earned 54 cents per share. Analysts, who typically exclude unusual items from their estimates, were expecting a profit of 48 cents per share, according to a poll by Thomson Reuters. - | BNY Mellon posts 3Q loss on hefty charge |