BNY beats quarterly profit estimates on investment service fee boost

(Reuters) -BNY beat Wall Street's expectations for second-quarter profit on Friday, as strong investment service fees more than offset lower interest income, sending the world's largest custodian bank's shares up more than 3% in premarket trading.

The bank's assets under management climbed 7% to $2.05 trillion from a year earlier, as more investors aimed to gain from a rally in the U.S. markets, while assets under custody or administration rose 6% to $49.5 trillion.

The benchmark S&P 500 index rose about 11% in the last three months on hopes of a soft landing for the economy.

BNY's investment services fees for the second-quarter rose 5% to $2.36 billion, while income from interest on its portfolio of securities, loans and deposits fell 6% to $1.03 billion.

"Following the release of the Federal Reserve's 2024 bank stress test in June, we increased our common dividend by 12% starting this quarter," CEO Robin Vince said in a statement.

The bank's shares have jumped about 18.1% this year, compared to a nearly 14% rise in the KBW Bank Index. According to analysts, the bank has a more diversified business model than rivals and is less exposed to seismic market shifts.

BNY's net income for the second quarter rose to $1.14 billion, or $1.52 per share, from $1.04 billion, or $1.31 per share, a year earlier, while revenue rose 2% to $4.6 billion.

The 240-year-old bank, which changed its name to BNY from BNY Mellon, posted an adjusted profit of $1.51 per share, compared with estimates of a profit of $1.43, according to LSEG data.

(Reporting by Pritam Biswas in Bengaluru; Editing by Shinjini Ganguli)