Bank of New York Mellon Earnings Hurt by Low Interest Rates
As the big banks report fourth-quarter earnings, the biggest questions have been revolving around their stress tests and credit losses. In early 2020, most banks instituted the current expected credit losses (CECL) format, which tries to estimate losses over an entire economic cycle. This coincided with the beginning of the COVID-19 pandemic, and banks generally took large precautionary writedowns in anticipation of losses down the line. While those credit losses have remained well-contained -- so far -- banks have felt the effects of lower benchmark interest rates as the Federal Reserve has dropped the fed funds rate to near zero.
But this has hurt some more than others: Trust banks like Bank of New York Mellon (NYSE: BK) have particularly noticeable issues when rates are close to the zero bound. These effects were evident in the fourth-quarter earnings report it delivered Wednesday.
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Source Fool.com
