Bank of New York Mellon took a first-quarter earnings hit from its Russia withdrawal, and the custody banking giant predicted that the negative financial impacts will continue.
The New York-based company reported fee revenue of $3.1 billion, down 3% from a year ago, due to $88 million in losses largely from sanctions against Russia and lost depository receipt services for Russian companies.
The firm’s exit from Russia is expected to result in $15 million to $20 million in lost revenue each quarter going forward, BNY Mellon executives said during an earnings call Monday. That estimated range was slightly lower than what the company predicted last month.
Russia’s invasion of Ukraine is one of several factors posing challenges to BNY Mellon, which is in the process of
“Now we're in an increasingly uncertain environment, including the war in Ukraine, volatile markets and persistently higher inflation, which will require more meaningful monetary policy adjustments,” outgoing CEO Todd Gibbons said during the call.
In March, BNY Mellon
At the time, the company said it would likely lose approximately $100 million in first-quarter revenue, plus another $80 million to $100 million in annual revenue going forward.
During the first quarter, net income at BNY Mellon declined 18% year over year to $765 million. The company reported earnings per share of 86 cents, which was compressed by 8 cents as a result of the fallout from the company’s Russia exit, but still narrowly beat an 85-cent consensus estimate.
Securities issuer services fees fell 43% from the same period last year. The bank also added $17 million to its provision for credit losses in connection with risks stemming from interest-bearing deposits at Russian banks. Russia’s banking industry
Vince, who is currently BNY Mellon’s president and takes over as CEO at the end of August, isn’t new to the firm. He has most recently led its global market infrastructure division.
On the call Monday with analysts, he said the company’s market and wealth services business, which includes the recently launched Pershing X digital advisory offering, has been a particular focus during the CEO transition.
Vince also described a focus on real-time payments for the company’s treasury services business. He said that improving operating leverage — or the rate of increasing revenue after expenses — will be a high priority.
BNY Mellon reported a 353-basis-point decline in operating leverage from the end of last year, but it is expecting to deliver positive operating leverage by the end of the year, even with the impact of its exit from Russia.
