BNY fourth-quarter profit beats estimates, raises profitability targets

By Ateev Bhandari

Jan 13 (Reuters) - BNY beat Wall Street estimates for 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.

It 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 assess 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%.

As the Federal Reserve injects liquidity in the market, analysts expect a boost to BNY that holds and services assets for some of the biggest sovereign funds, pension funds, as well as insurers.

But BNY CEO Robin Vince warned that compromising the Fed's independence could push rates higher after the Trump administration threatened Fed Chair Jerome Powell with a criminal indictment over the weekend. Powell called the move a "pretext" to win presidential influence over interest rates.

U.S. bank portfolios are also expected to gain as AI-driven capex plans, soaring equity markets, and deregulation encourage corporations to add to their debt despite a high-interest-rate environment.

For the full year 2025, BNY reported record revenue and profit.

Adjusted profit applicable to BNY shareholders came in at $2.08 per share, compared with analysts' average estimate of $1.98, according to data compiled by LSEG.

Shares of the oldest U.S. bank rose 1.1% in early trading.

BNY's net interest income (NII) - the spread between earnings from assets and costs on liabilities - rose 13% to $1.35 billion in the quarter, helped by reinvestment of maturing securities at higher yields.

Its assets under custody and administration rose 14% in the quarter ended December 30 to $59.3 trillion from a year earlier, also boosting the corresponding fees.