State Street Corp and Bank of New York Mellon , two of the world's biggest custody banks, each reported stronger second-quarter earnings as new demand for their products boosted revenue.

New York-based Bank of New York Mellon said on Tuesday net income climbed to 12 percent to $735 million while Boston-based State Street's earnings rose 19 percent to $513 million.

Each company earned more in investment management fees for overseeing trillions in assets for pension funds and other large clients. Bank of New York Mellon saw a 14 percent gain while State Street reported a 24 percent gain.

Some of the increase in fees was fueled by acquisitions.

Bank of New York Mellon last year inked a deal to buy PNC Financial Services Group Inc.'s global-investment services business while State Street acquired the Bank of Ireland's asset management business in January.

State Street reported a 15 percent gain in assets under management to $2.1 trillion. Bank of New York reported a 22 percent gain to $1.3 trillion.

Assets under custody climbed 19.6 percent to $22.8 trillion at State Street and climbed 21 percent to $26.3 trillion at Bank of New York Mellon.

Nomura analyst Glenn Schorr praised Bank of New York Mellon's strong new business trends and very significant deposit growth.

But the companies still face pressure from low interest rates, which have forced them to waive money market fees, and lower trading volatility, which cut foreign exchange revenue.

State Street's foreign exchange trading revenue dropped 9 percent while it fell 25 percent at Bank of New York Mellon.

Pension funds have accused both companies of cheating customers on currency trading by failing to execute trades at the lowest rates. Each bank has denied wrongdoing in the past and neither gave new details in their earnings releases on the matter. Both however mentioned that they will likely face rising legal and regulatory costs in the months ahead.

(Reporting by Svea Herbst-Bayliss and Ross Kerber; Editing by Derek Caney)