Bank of New York Mellon, which we own in our Global Opportunities portfolio, reported earnings on 1/16/13 that were in line with estimates:

INVESTMENT MANAGEMENT AND PERFORMANCE FEES UP 17% YEAR-OVER-YEAR

ASSETS UNDER MANAGEMENT UP 10% YEAR-OVER-YEAR

  • Net long-term inflows of $56 billion over last 12 months, $14 billion in 4Q12

ASSETS UNDER CUSTODY/ADMINISTRATION UP 9% YEAR-OVER-YEAR

  • New wins of $1.5 trillion over last 12 months, $190 billion in 4Q12

ESTIMATED BASEL III TIER 1 COMMON EQUITY RATIO 9.8% (a)

RETURN ON TANGIBLE COMMON EQUITY 19% (a)

REPURCHASED 49.8 MILLION COMMON SHARES FOR $1.1 BILLION IN 2012

The Bank of New York Mellon Corporation (“BNY Mellon”) (BK) today reported fourth quarter net income applicable to common shareholders of $622 million, or $0.53 per diluted common share, compared with $505 million, or $0.42 per diluted common share, in the fourth quarter of 2011 and $720 million, or $0.61 per diluted common share, in the third quarter of 2012.

“We are pleased to report strong year-over-year growth in fees in our Investment Management, Asset Servicing, Clearing and Treasury Services businesses.  We benefited from the improvement in market values and, more importantly, from our relentless focus on generating organic growth with our broad client base.  We are also driving our operational excellence initiatives to improve our efficiency and help mitigate the impact on our high margin revenues due to the low interest rate environment and tepid capital markets activity.  Our balance sheet and capital ratios strengthened in 2012 even after giving effect to the repurchase of approximately $1.1 billion of our common shares in 2012,” said Gerald L. Hassell, chairman and chief executive officer of BNY Mellon.

“I wish to thank all of my colleagues across the company for their tremendous dedication and ongoing focus on improving our performance, delivering excellence to our clients and creating shareholder value,” added Mr. Hassell.

Net income applicable to common shareholders totaled $2.427 billion, or $2.03 per diluted common share, for the full-year 2012 compared with $2.516 billion, or $2.03 per diluted common share, for the full-year 2011.

Net interest margins were down to just 1.09% in the quarter from 1.27% a year ago. There isn’t much BK can do about this as they saw a rise in deposits of $20 billion in the quarter. At least some of that was due to fears over the fiscal cliff and it is hard for any bank to make a profit on deposits that are only expected to remain for a short period of time.

The asset management and custody business performed very well with fees up 17% and 9% respectively. Forex trading was down 42% but that isn’t surprising since the bank was sued for allegedly overcharging some clients in that business. BK denies the allegations and the suits are pending.

Overall, we were pleased with the quarter.

For information on Alhambra Investment Partners’ money management services and global portfolio approach to capital preservation, Joe Calhoun can be reached at: jyc3@4kb.d43.myftpupload.com or   786-249-3773.

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