Bank of New York Mellon Corp. shares hit a new high on Friday after the trust bank reported better-than-expected earnings for the second quarter and approved a 12% increase in its dividend.
The BK, 5.27% rise in the stock price led the S&P 500’s financial sector. This is in contrast to the selloffs in the shares of its bigger competitors that reported quarterly results.
A year ago, the bank’s net income for the quarter ending June 30 was $1.04 billion, or $1.31 a share. This year, it was $1.14 billion, or $1.52 a share. That was better than the $1.42 per share estimate from FactSet. The beat was the biggest since the 13% beat in the second quarter of 2021, with a difference of 7%.
Total sales went up 2.1% to $4.597 billion, which was more than the $4.527 billion that FactSet predicted. Net interest income went down 6.4% to $1.030 billion, which was more than the $1.014 billion that was expected.
During the middle of the trading day, the stock went up 4.9%, which was enough to lead the gainers in the Financial Select Sector SPDR ETF XLF and be the second-best performer in the S&P 500 index (SPX). It was also trading for a lot more than its all-time high of $63.66 on February 9, 2022.
Shares of JPMorgan Chase & Co. JPM, -0.70% fell 0.5%, Wells Fargo & Co. stock WFC, -5.78% fell 5.8%, and Citigroup Inc. shares C, -1.85% fell 1.7%. All three of these banks sent out their second-quarter reports on Friday.
During the second quarter, Bank of NY’s provisions for credit losses stayed the same. This was because its investment and wealth management business grew while its securities services and market and wealth services businesses shrank.
Because market values went up, assets under custody and/or administration went up 5.5% to $49.5 trillion, and assets under management went up 7.3% to $2.05 trillion.
According to an AlphaSense transcript, Chief Financial Officer Dermot McDonogh told analysts on the call after the company reported its earnings that the bank saw $2 flow into long-term active strategies because fixed income and liability-driven investments did well. This was partially offset by net outflows in active equity and multi-asset strategies.
In other news, the bank said that its board of directors increased the quarterly dividend from 42 cents per share to 47 cents per share. People who owned shares on July 22 will get the new dividend on August 2.
The bank had said in late-June that it intended to raise its dividend by 12%, subject to board approval.
Based on current share prices, the new annual dividend rate would imply a dividend yield of 2.92%. That compares with the current yield on the SPDR financial ETF of 1.54% and the implied yield on the S&P 500 index of 1.31%.
