Bank Of New York (BK) Tops Q1 EPS by 3c

Bank Of New York (NYSE: BK) reported Q1 EPS of $0.57, $0.03 better than the analyst estimate of $0.54. Revenue for the quarter came in at $3.63 billion versus the consensus estimate of $3.73 billion.

Q1 highlights:

• Assets under custody and/or administration ("AUC/A") amounted to $27.9 trillion at March 31, 2014, an increase of 6% compared with the prior year and 1% sequentially. Both increases were primarily driven by higher market values. The sequential increase also reflects net new business. Assets under management ("AUM") amounted to a record $1.62 trillion at March 31, 2014, an increase of 14% compared with the prior year and 2% sequentially. Both increases resulted from higher market values and net new business. Long-term inflows totaled $21 billion driven by the continued strong flows of liability-driven investments. Short-term outflows totaled $7 billion for the first quarter of 2014.

• Investment services fees totaled $1.7 billion, an increase of 3% year-over-year and 1% sequentially. The year-over-year increase primarily reflects higher asset servicing fees driven by higher market values, net new business and organic growth, as well as higher clearing services and Depositary Receipts revenue. The sequential increase reflects higher asset servicing fees primarily driven by organic growth, higher securities lending revenue and net new business. Both increases were partially offset by the impact of the continued net run-off of high margin securitizations in Corporate Trust and higher money market fee waivers.

• Investment management and performance fees were $843 million, an increase of 3% year-over-year and a decrease of 7% sequentially. The year-over-year increase primarily reflects higher equity market values, net new business and higher performance fees, partially offset by higher money market fee waivers. The sequential decrease primarily reflects seasonally lower performance fees and fewer days in the first quarter of 2014.

• Foreign exchange and other trading revenue totaled $136 million compared with $161 million in the first quarter of 2013 and $146 million in the fourth quarter of 2013. In the first quarter of 2014, foreign exchange revenue totaled $130 million, a decrease of 13% year-over-year and an increase of 3% sequentially. Comparisons with both prior periods were impacted by lower volatility, and higher volumes driven by enhancements to our electronic foreign exchange platform. Other trading revenue was $6 million in the first quarter of 2014 compared with $12 million in the first quarter of 2013 and $20 million in the fourth quarter of 2013. The decrease from both prior periods reflects lower fixed income trading revenue.

• Investment and other income was $102 million in the first quarter of 2014 compared with income of $88 million in the first quarter of 2013 and a loss of $43 million in the fourth quarter of 2013. The year-over-year increase primarily reflects higher leasing gains, partially offset by lower equity investment revenue. The sequential increase primarily reflects a loss related to an equity investment recorded in the fourth quarter of 2013.

• Net interest revenue and the net interest margin (FTE) were $728 million and 1.05% in the first quarter of 2014 compared with $719 million and 1.11% in the first quarter of 2013 and $761 million and 1.09% in the fourth quarter of 2013. The year-over-year increase in net interest revenue resulted from a change in the asset mix and higher average deposits, partially offset by lower yields on investment securities. The sequential decrease primarily reflects lower yields on investment securities and fewer days in the first quarter of 2014, partially offset by the change in the mix of assets.

• The net unrealized pre-tax gain on our total investment securities portfolio was $676 million at March 31, 2014 compared with $309 million at Dec. 31, 2013. The increase was primarily driven by the reduction in market interest rates.

For earnings history and earnings-related data on Bank Of New York (BK) click here.

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