Bank of New York Mellon expects to book more severance charges in 2018, its chief executive said, as the custodian bank tries to cut costs and streamline its businesses.
Shares fell 4.2 percent to $55.43 in early trading on Thursday, after BNY Mellon recorded $246 million in severance and litigation charges in its fourth-quarter earnings report.
The severance charges in the quarter is mainly related to changes in senior management and in its U.S. asset management business, CEO Charles Scharf said on a post-earnings call.
The bank also recorded a benefit of $427 million related to the new federal tax laws. Excluding tax benefit of 41 cents and charges of 24 cents, the custodian bank reported a profit of 91 cents, in-line with analysts’ expectation, according to Thomson Reuters I/B/E/S.
“The impact of the lower tax rate would be almost entirely offset by actions that we will take to reinvest this benefit in our employees and our business,” Scharf said.
BNY Mellon said net income applicable to common shareholders rose 37 percent to $1.13 billion, or $1.08 per share.
On an adjusted basis, the bank’s total revenue fell 1.8 percent to $3.72 billion.
BNY Mellon’s non-interest expenses rose 14.25 percent to $3 billion.
The company’s assets under custody and administration rose 3.42 percent sequentially to $33.3 trillion as of Dec.31.