Acquisitions lift profits at US custody banks with 3,000 staff
Two institutions with Irish bases report higher-than-expected quarterly results
TWO US custody banks that together employ more than 3,000 people in Ireland, reported higher-than-expected quarterly profit.
State Street and Bank of New York Mellon, which earn fees for offering services like record-keeping to mutual and hedge funds, said they were helped by acquisitions that boosted the customer assets they service.
That helped offset lower trading revenue and the impact of low interest rates, which are depressing the fees the companies can charge.
State Street's results prompted chief executive Joseph Hooley to sound a cautiously optimistic note for the full year.
"With the support of the two acquisitions, as well as strong year-to-date wins in servicing and growth in passive strategies and ETFs (exchange-traded funds) in asset management, we continue to expect that our operating-basis earnings per share, which exclude discount accretion, will be slightly above the adjusted operating-basis $3.32 per share recorded last year," he said in a statement.
State Street employs around 2,000 people in Dublin, Drogheda, Naas, and Kilkenny and recently opened a new headquarters in Dublin's docklands area. It is reported to be in talks to buy the Bank of Ireland Asset Management (BIAM) business, which controls €25bn of assets. The company gave no information about the talks yesterday.
Scott Powers, chief executive officer of the Boston-based company's money-management unit State Street Global Advisors, said in an interview published on August 3 that the indexing specialist was looking for acquisitions to expand actively managed investments and cut reliance on passive funds.
BIAM is primarily an active manager, while State Street is the second biggest US provider of index funds after BlackRock.
BNY Mellon reported an operating profit of $670m (€486m), or 55 cents a share, up slightly from $642m, or 54c a share a year earlier. Analysts on average expected 54c a share, according to Thomson Reuters.
BNY Mellon, which employs around 1,200 people in Dublin, Cork and Limerick, recently opened a bank in Dublin's financial services centre and has been operating in Ireland since 1994.
During the quarter, BNY Mellon bought two companies that provide back-office servicing for customers' money, helping increase the bank's assets under custody and administration by 10pc from a year earlier to $24.4tn.
State Street's acquisitions were Intesa Sanpaolo's securities servicing business and Mourant International Finance Administration.
It said that assets under custody and administration rose 13pc from a year earlier to $20.23tn.