HomeMost PopularInvestingBNY Mellon Q3 Earnings Beat Estimates, Revenues and AUM Increase

BNY Mellon Q3 Earnings Beat Estimates, Revenues and AUM Increase

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The Bank of New York Mellon Corporation (BK) reported stronger-than-expected third-quarter earnings, with adjusted earnings per share of $1.27, beating the Zacks Consensus Estimate of $1.14. This marks a 5% increase from the same period last year.

The positive results were driven by higher net interest revenues, slightly higher fee revenues, and reduced expenses. Additionally, the company saw an increase in assets under management (AUM). However, credit quality was relatively weak during the quarter.

Revenue Growth and Expense Reduction

BNY Mellon’s total revenues increased by 2% year-over-year to $4.37 billion, surpassing the Zacks Consensus Estimate of $4.30 billion. Net interest revenues, on a fully taxable-equivalent (FTE) basis, were $1.02 billion, up 9% year-over-year. The net interest margin (FTE basis) also expanded by 13 basis points to 1.18%. Total fee and other revenues reached $3.36 billion, a marginal increase from the previous year.

Total non-interest expenses declined by 16% to $3.09 billion. The company managed to reduce costs across various components, with the exception of sub-custodian and clearing charges, distribution and servicing costs, and amortization of intangible assets.

Asset Balances and Credit Quality

Assets under management (AUM) rose by 3% to $1.82 trillion year-over-year. This increase was driven by a weaker U.S. dollar, higher market values, partially offset by the divestiture of Alcentra. Assets under custody and/or administration also grew by 8% to $45.7 trillion, reflecting higher market values, client inflows, and net new business.

While the allowance for loan losses increased by 9 basis points to 0.32% year-over-year, non-performing assets decreased by 55% to $48 million.

Capital Position Improvement

BNY Mellon’s common equity Tier 1 ratio improved to 11.4% from 10% as of September 30, 2022. The Tier 1 leverage ratio also increased to 6.1% from 5.4% during the same period.

Our Take

Although BNY Mellon exceeded earnings expectations, the company may face challenges in the near future due to high non-interest expenses resulting from inflation and technology upgrades. Additionally, the company’s reliance on fee-based revenues poses concentration risk.

Overall, the financial results indicate positive momentum for BNY Mellon, but investors should closely monitor future developments and evaluate the impact of various factors on the company’s performance.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.

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