State Street Corp and Bank of New York Mellon , two of the world's biggest custody banks, each reported stronger second-quarter earnings as new demand for their products boosted revenue.
New York-based Bank of New York Mellon said on Tuesday net income climbed to 12 percent to $735 million while Boston-based State Street's earnings rose 19 percent to $513 million.
Each company earned more in investment management fees for overseeing trillions in assets for pension funds and other large clients. Bank of New York Mellon saw a 14 percent gain while State Street reported a 24 percent gain.
Some of the increase in fees was fueled by acquisitions.
Bank of New York Mellon last year inked a deal to buy PNC Financial Services Group Inc.'s global-investment services business while State Street acquired the Bank of Ireland's asset management business in January.
State Street reported a 15 percent gain in assets under management to $2.1 trillion. Bank of New York reported a 22 percent gain to $1.3 trillion.
The results were hurt by a 21 percent increase in noninterest expenses, which rose to $2.69 billion from $2.22 billion. The bank attributed that increase primarily to costs from acquisitions and higher legal expenses. The company acquired Global Investment Servicing last July and BHF Asset Servicing GmbH in August. With the acquisitions, the bank's employee total rose to 48,900 from 42,700 a year ago.
Nonperforming assets fell to $351 million from $406 million in the same period last year. About two-thirds of the total involved residential mortgages. There was no provision for credit losses in the latest quarter, compared with a charge of $20 million in last year's quarter.
Bank of New York Mellon also said Tuesday that its board declared a quarterly stock dividend of 13 cents per share. The cash dividend is payable on Aug. 9 to shareholders of record as of July 29.
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