BNY Mellon unveils three years of earnings targets

Bank of New York Mellon CEO Gerald Hassell on Tuesday released earnings targets for the next three years, as he indicated that management would resist any pressure to spin off its asset management business.

Speaking at an investor conference in New York City, Mr. Hassell said the trust-and-custody behemoth expects earnings per share to grow annually by at least 7 percent to 9 percent on an operating basis between 2015 and 2017. If interest rates rise to more normal levels, per-share profits should grow between 12 percent and 15 percent, he said.

The projections came as Mr. Hassell emphasized that top executives believe BNY Mellon’s investment services and investment management arms are complementary.

“We like the fact that we have dual revenue streams,” he said. “We like our business model. The long-term trends continue to work in our favor.”

BNY Mellon has been under pressure from some investors, including activist investor Nelson Peltz, to improve profit margins. Mr. Peltz, known locally for battling his way onto the board at Pittsburgh’s H.J. Heinz Co., revealed in June that the hedge fund he runs had quietly built up a 2.5 percent stake in the bank worth over $1 billion.

Mr. Peltz has not made any demands public. Reportedly, he could call on BNY Mellon management to split up the bank by spinning off the asset management business.

At Tuesday’s conference, Mr. Hassell emphasized he’d continue to focus on controlling expenses.

“Every dollar we are watching very carefully,” he said.

Cost-cutting moves have included layoffs and consolidation of office space in New York City, which included the sale of the bank’s world headquarters building on Wall Street.

Mr. Hassell said Tuesday that BNY Mellon would be looking to reduce office space in Downtown Pittsburgh as well. The bank occupies about 3.1 million square feet of space in three buildings in the city.

“We see other opportunities to do the same exercise [undertaken in New York City] in Boston, Pittsburgh, London and other locations around the world,” he said. “We feel very confident we can get additional savings out of our real estate footprint.”

BNY Mellon shares lost 28 cents, or .75 percent, to close Tuesday at $37.12.