Bank of New York Mellon Corp., under pressure from activist investors to improve results, forecast that operating earnings per share will climb 7 percent to 9 percent over the next two years if interest rates stay flat, and 12 percent to 15 percent if they climb in line with economists’ estimates.
The bank made the predictions in a slide presentation created for its annual meeting Tuesday. BNY Mellon also said revenue would increase 3.5 percent to 4.5 percent in the low interest scenario and 6 percent to 8 percent if rates climb in line with the current market consensus. Low rates cut the returns on the bank’s deposits and force it to waive fees on money-market funds.
Activist investor Marcato Capital Management has called for replacing Gerald Hassell, BNY Mellon’s chief executive officer. Trian Fund Management, founded in 2005 by Nelson Peltz, Peter May and Ed Garden, also owns a stake in BNY Mellon and has said it will work with management to boost performance.
“The board supports Gerald and the management team,” Trian’s Garden said at the annual meeting. Garden, who has been on the bank’s board for four months, said he found executives at BNY Mellon receptive to new ideas.
BNY Mellon shares fell 0.2 percent to $40.87 at 10:21 a.m. in New York. The shares have advanced 0.8 percent this year.
The Federal Open Market Committee was split at its meeting last month on when to begin raising rates from near zero. Several participants wanted to normalize policy starting in June, while others favored later in the year, according to minutes of the March 17-18 gathering.