Profits surge at Mellon Financial

Mellon Financial Corp. of Pittsburgh, which has major operations in Boston, today posted a sharp increase in second-quarter profit on growth in its asset management business, compared with a year-ago period that included losses from now-discontinued operations.

The financial services company said net income surged to $231 million, or 56 cents per share, from $125 million, or 30 cents per share, in the year-ago period. Income from continuing operations totaled 55 cents per share compared with 49 cents per share a year ago.

Total revenue climbed 15 percent to $1.3 billion from $1.1 billion last year.

The results beat analysts' consensus estimates of 52 cents per share on revenue of $1.3 billion, according to a poll by Thomson Financial.

Noninterest revenue grew 18 percent to $1.2 billion from $998 million. Mellon attributed the growth to improved sales and margins at its asset management and asset servicing business. The segments represent about 93 percent of the company's pretax income.

Net interest revenue slipped 7 percent to $118 million from $127 million at the same time.

The Federal Reserve has increased short-term interest rates 17 consecutive times to 5.25 percent, the highest level since April 2001, while long-term rates have remained fairly stagnant. This narrow gap between short- and long-term interest rates, also known as a flat yield curve, is putting the squeeze on lenders even as new loan development continues to surge.

Mellon shares closed yesterday at $33.33 on the New York Stock Exchange, up 10 cents, or 0.3 percent. (AP)