Tuesday, February 7, 2012

Bank of New York Reports Earnings Drop: Revenues Decrease, Expenses Increase

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Bank of New York Reports Earnings Drop: Revenues Decrease, Expenses Increase

Bank of New York Mellon Summary Q4 2011 Q4 financial performance dropped from a decrease in revenues and increase in expenses. Financial position continues strong. CEO Gerald L. Hassell explained, "It was a challenging revenue quarter, as general uncertainty in the financial markets resulted in lower-than-normal levels of client activity. Our results were also impacted by seasonality in our Depositary Receipts business. We remained focused on driving our operational excellence initiatives and managing our expense base lower to offset weak market conditions."

Bank of New York Mellon Income Statement Q4 2011 Net revenues were a 5-quarter low $3.54 billion, net income the lowest since September 2009 at $478 million, and earnings per share a 9-quarter low $0.42. From the prior quarter Q3 2011, net revenues were -4.17%, net income -28.01%, and earnings per share -20.75%. From the prior year Q4 2010, these were -5.63%, -31.12%, and -22.22%, respectively. Both the operating margin of 19.46% and the net margin of 13.50% are multi-quarter lows. The operating expense ratio, traditionally high, soared to 79.89%.

Bank of New York Mellon Balance Sheet Q4 2011 Total assets were +1% QoQ and an incredible +32% YoY to $325.27 billion. The capital to assets ratio dipped QoQ to 10.51%, but continues strong. Return on assets decreased QoQ to a still respectable +0.88%. Gross Loans dipped QoQ, strongly increased YoY, and Net Loans are only 13% of the asset mix. The Allowance for Loan Losses to Loans ratio of 0.90% continues historically low.

Bank of New York Mellon (BK) Rating Q4 2011 At December 31, 2011, we have rated Bank of New York Mellon a "B+", down from "A-" at September 30, 2011. Financial position continues strong. Financial performance was sub-par for the current quarter. Our rating weights financial position more than financial performance and emphasizes safety and soundness, not future earnings potential. Ratings range from A+ down through G-.

Bank of New York Mellon Performance by the Quarters

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