On Wednesday, Bank of New York
Second-quarter results were released against the backdrop of Bank of New York's recently announced asset swap with JPMorgan Chase
Non-traditional bank activities did indeed post impressive results. Securities servicing fees increased by 17% year over year. Foreign exchange and trading income grew by 29%. Net interest income, which is the difference between the bank's cost of funds and the interest earned from making loans, increased by 9% on strong deposit growth in the bank's corporate trust business. Overall, Bank of New York's income from continuing operations increased by 16% from last year's second quarter, generating $0.52 diluted earnings per share. The bank delivered a robust 18% return on equity.
Custody and securities servicing activities generate fee-based income, which tends to be more stable and have less credit risk than interest income. Bank of New York, State Street
Bank of New York shares are selling at low multiples compared with the bank's rivals, and that may make the stock appealing to investors concerned about risk. But there's reason to believe that Bank of New York shares may finally be ready to realize some upside potential. The globalization of investment activity and the development of foreign capital markets promise to continue to drive business to Bank of New York, already the market leader in services such as global custody, clearing, institutional trust, foreign exchange, and transfer agency. With its focused business model and strong operating leverage, Bank of New York seems poised to show investors impressive earnings growth.
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