Jan 13 (Reuters) – BNY reported a rise in fourth-quarter profit on Tuesday and raised the target for a key profitability measure, helped by higher interest rates and a surge in the value of its client assets amid rallying equity markets.
The custodian bank now expects a return on tangible common equity of around 28% in the medium term, up from its previous forecast of 23%.
The metric is keenly monitored by investors to ascertain a bank’s profitability using only hard assets, without intangibles such as brand reputation or goodwill. For 2025, BNY reported an ROTCE of 26.1%.
With the Federal Reserve injecting liquidity in the market, analysts expect a boost to BNY, which holds and services assets for some of the biggest sovereign funds, pension funds, as well as insurers.
Its results are closely watched by investors as a gauge for capital levels in the financial systems.
For the full year 2025, the company hauled in record revenue and profit.
BNY’s assets under custody and administration rose 14% in the quarter ended December 30 to $59.3 trillion from a year earlier. The oldest U.S. bank said the rise reflected higher market levels, client inflows and gains from a weaker dollar.
U.S. bank portfolios are also expected to gain as AI-driven capex plans and soaring equity markets encourage corporations to add to their debt despite a high-interest-rate environment.
A stimulative fiscal policy and higher tax refunds are also expected to support loan demand across the U.S. this year.
BNY’s net interest income (NII) – the spread between earnings from assets and costs on liabilities – rose 13% in the reported quarter, beating analysts’ average expectation of 7.5% growth, according to estimates compiled by LSEG.
Profit applicable to BNY shareholders came in at $1.43 billion, or $2.02 per share, compared with $1.13 billion, or $1.54 per share, a year earlier.
(Reporting by Ateev Bhandari in Bengaluru; Editing by Shinjini Ganguli)
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