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Money Management

BNY Mellon assets rise 4% in quarter on $16 billion in net long-term inflows

Bank of New York Mellon (BK) reported $1.893 trillion in assets under management as of Dec. 31 for its BNY Mellon Investment Management and wealth management businesses, up 4% from three months earlier and up 15% from the year before.

The company said in its earnings statement Thursday that long-term net inflows totaled $16 billion in the fourth quarter, vs. no net flows in the third quarter and net outflows of $11 billion in the fourth quarter of 2016.

The inflows were driven by net inflows of $23 billion into liability-driven investments and $2 billion into multiasset and alternative investments. Inflows were partially offset by net outflows of $6 billion from equities, $2 billion from fixed income and $1 billion from index investments.

Broken down by asset class, 35% of AUM was in LDI as of Dec. 31, 18% in index investments, 16% in cash, 11% each in fixed income and in alternatives, and 9% in equities.

Short-term net outflows for the quarter totaled $4 billion, vs. net outflows of $10 billion for the previous quarter and net outflows of $3 billion for the fourth quarter of 2016.

Investment management and performance fees were $948 million for the quarter ended Dec. 31, up 7% from the quarter ended Sept. 30 and up 14% for the year-earlier quarter.

Parent Bank of New York Mellon reported $33.3 trillion in assets under custody and administration as of Dec. 31, up 3% from three months earlier and up 11% from a year earlier.

Regarding the new tax legislation, BNY Mellon CEO Charles W. Scharf said in the company's earnings call that the firm expects "to reinvest the vast majority of the tax benefit in to our employees and our businesses in 2018."

"This includes increasing minimum wages for all employees to $15 per hour in the U.S. and other actions we're currently contemplating," Mr. Scharf added. "In addition, we intend to meaningfully increase the amount we spend on technology."

Mr. Scharf also noted that the company experienced several severance charges as part of "senior management leadership changes and the changes in our U.S. asset management business."

He added that he expects to see more severance charges in 2018.

Parent company revenue totaled $3.73 billion for the fourth quarter, down 7% from the previous quarter and down 2% from the fourth quarter of 2016.

Net income for the parent company was $1.13 billion for the quarter, vs. net income of $983 million for the third quarter and net income of $822 million for the quarter ended Dec. 31, 2016.