April 16 (Reuters) - BNY reported a rise in first-quarter profit on Thursday, as the world's largest custodian bank was helped by strong fee income and higher values of client assets.
Global markets have swung sharply due to the Iran war and a broad selloff in AI-threatened software stocks, prompting investors and investment managers to rebalance portfolios and boosting client activity.
CEO Robin Vince said on a media call that risk appetite in markets was improving despite concerns of an economic fallout, but warned of an impact on the cost of goods and credit if energy prices remained elevated.
BNY, which makes a sizeable chunk of its income safeguarding and servicing client assets, saw assets under custody and administration climb 12% year-on-year to $59.4 trillion as of March 31, while assets under management stood at $2.1 trillion.
Fee revenue, the bank's largest source of income, jumped 11% in the quarter to $3.77 billion, supported by higher market levels and continued client engagement.
BNY's net interest income - the spread between earnings from assets and costs on liabilities - surged 18% to $1.37 billion, boosted by higher yields on the reinvestment of matured assets.
The NII expansion was not driven by changes in interest rates or yield curves, Vince said.
"It's actually been a story for us more of volumes."
Vince has been pushing to streamline operations and invest in technology to improve efficiency and drive growth. Return on tangible common equity - a metric that tracks profitability using only hard assets - rose to 29.3% in the quarter from 24.2% a year ago.
The company posted net income of $1.63 billion, or $2.24 per share, compared with $1.22 billion, or $1.58 per share, a year earlier. Revenue rose to a record $5.4 billion, up 13% from a year ago.
"BNY is firing on all cylinders thanks to both the environment and the ongoing benefits of investments in both efficiency and a business model more conducive to reliable growth," Truist analysts said in a note.
Shares of BNY were up 1% in morning trading.
Reporting by Utkarsh Shetti in Bengaluru and Saeed Azhar in New York; Editing by Leroy Leo
Source: Reuters