BANK of New York Mellon Corp, the world's largest custodian of financial assets, said fourth-quarter earnings tumbled 68 percent from a year earlier, when results included a gain from the sale of its retail branches.
Net income fell to US$520 million, or 45 cents a share, from US$1.63 billion, or US$2.27, a year earlier, the New York-based company said yesterday in a statement. Results included a writedown of the value of collateralized debt obligations of US$118 million, or 10 cents a share.
Bank of New York swapped its 338 retail branches for JPMorgan Chase & Co's corporate-trust unit in October 2006. The following July it completed the US$18.3 billion takeover of Pittsburgh-based Mellon to become the biggest custody bank, safeguarding and tracking returns on more than US$20 trillion of assets for institutions and wealthy investors.
"Their merger with Mellon was a grand slam home run and I think you'll start to see some of the benefits from that," Richard Bove, managing director at Punk Ziegel & Co in Lutz, Florida, said in an interview before the earnings were released.
The company was expected to earn 69 cents a share, based on the average estimate of 17 analysts surveyed by Bloomberg News. Profit from continuing operations, excluding merger costs and the CDO write-off, was 71 cents a share, Bank of New York Mellon said.
Custody banks usually earn more fees when markets are busy or volatile.
The VIX Index, a widely used measure of volatility, reached its highest point in more than four years in the fourth quarter.