July 21 (Reuters) - Under pressure from activist hedge funds to cut costs and boost profit, BNY Mellon Corp Chief Executive Gerald Hassell did just that in the second quarter, beating Wall Street expectations, but on Tuesday he declined to raise the bank’s outlook for the rest of the year. “We do feel good about the progress we’re making ... and pulling it through ... to the bottom line,” Hassell said during a conference call with investors and analysts. Hassell said, however, he expected higher regulatory costs and more expenses from bringing new clients on board during the second half of the year. “I think we’re going to stick with our guidance of having expenses essentially flat versus last year,” Hassell said, tempering expectations of analysts. He was responding to a question from Sanford Bernstein analyst Luke Montgomery, who asked if the company felt comfortable raising its profit margin outlook after reporting a 21 percent increase in second-quarter earnings. One of the world’s largest custody banks, BNY Mellon reported adjusted earnings of $868 million, or 77 cents a share, during the second quarter. That compared with $715 million, or 62 cents a share, in the year-ago quarter. Analysts, on average, had expected earnings of 66 cents per share, according to Thomson Reuters I/B/E/S. Shares of BNY Mellon rose $1.08, or 2.6 percent, to $44.08 in late Tuesday morning trade on the New York Stock Exchange. The stock is up 14.6 percent over the past 12 months, beating the 7.8 percent advance on the benchmark S&P 500 index. One of Hassell’s chief critics has been Richard McGuire, who runs hedge fund Marcato Capital Management. Earlier this year, Marcato released a report that said BNY Mellon had 10,000 excess employees. During the second quarter, BNY Mellon’s total non-interest expense, which includes staff-related costs, dropped 1 percent from year-earlier levels, on an adjusted basis. The decline partly reflected lower headcount, the impact of curtailing the bank’s U.S. pension plan and a stronger dollar. Reporting By Tim McLaughlin; Editing by Andrea Ricci
BNY Mellon - 2Q net income of $830mn, up 50% YoY, beating estimates due to the bank reacting to pressure from activist hedge funds to cut costs and boost profit. However, the bank's CEO, Gerald Hassell, said that he expects higher regulatory costs and more expenses from bringing new clients on board during the second half of the year.