* BNY's second-quarter revenue reaches record $5.7 billion

* Market rally boosts client activity and asset values

* Assets under custody and administration surge 12%

July 15 (Reuters) - BNY raised its 2026 revenue

forecast above Wall Street expectations on Wednesday after

posting record second-quarter revenue, driven by higher interest

income, fees and rising equity markets that boosted the value of

client assets.

U.S. stocks rallied in the second quarter, with the S&P 500

and the Nasdaq posting their biggest gains since 2020 as

investors looked past volatility sparked by renewed conflict in

the Middle East and AI-related swings in technology stocks.

"It's an active period for markets, a lot of things going

on," CEO Robin Vince told Reuters. "The fundamental drivers of

capital markets have been broadly constructive. Corporate

earnings have been resilient."

The custodian bank's net interest income (NII) - the spread

between earnings from assets and costs on liabilities - surged

20% in the second quarter. Its revenue jumped 13% to a record

$5.7 billion.

BNY now expects full-year revenue to grow between 10% and

11% versus its prior outlook of about 5%. Analysts on average

were expecting 7.8%, according to estimates compiled by LSEG.

MARKETS BOOST

The results reinforce a theme emerging across the financial

sector this earnings season: buoyant markets are lifting fee

income. For custodian banks, rising asset values expand the pool

of assets on which fees are charged, while increased client

trading boosts transaction revenue.

BNY's assets under custody and administration climbed 12% in

the quarter to $62.6 trillion. Its assets under management

increased 6% to $2.2 trillion.

"We'll see what happens with the rest of this quarter's

corporate earnings, because we're just at the beginning of that

cycle, but if they do come out strong and they are expected to,

then that supports valuations in a pretty significant way,"

Vince said.

"So there's plenty of room probably under that scenario for

the stock market."

Its total fee revenue jumped 11% to $4.04 billion in the

three months ended June 30. BNY said the increase reflected net

new business as well as higher market values and client

activity.

Wall Street banks kicked off the quarterly earnings season

this week, with investors looking to the results in the coming

weeks for clues about the health of corporate America and

whether earnings growth can continue to support the market's

advance.

SECURITIES SERVICES SHINES

The bank's asset servicing business, which handles the

safekeeping and settlement of trades, posted a 12% rise in

revenue. Meanwhile, its issuer services segment, which supports

clients issuing securities, reported a 23% increase.

Custodian banks are a cornerstone of global financial

markets, safeguarding and administering trillions of dollars in

client assets while processing trades and moving securities and

cash between financial institutions.

BNY posted net income applicable to common shareholders of

$1.7 billion, or $2.45 per share, for the second quarter. That

compares with $1.4 billion, or $1.93 per share, a year earlier.

Shares of the oldest U.S. bank have surged 33% so far this

year, handily outperforming the equities benchmark S&P 500.