The Bank of New York Mellon(BK) - 2024 Q3 - Quarterly Results

Consolidated Results Consolidated Financial Highlights Q3 2024 saw The Bank of New York Mellon Corporation's net income rise 14% to $1.2 billion, diluted EPS grow 22% to $1.50, and total revenue increase 5% to $4.6 billion, with significant AUC/A and AUM growth Q3 2024 Key Financial Metrics (Amounts in Millions, AUC/A and AUM in Trillions) | Metric | Q3 2024 | Q2 2024 | Q3 2023 | YoY Change | QoQ Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $4,648 | $4,597 | $4,420 | 5% | 1% | | Net Income | $1,189 | $1,170 | $1,043 | 14% | 2% | | Diluted EPS | $1.50 | $1.52 | $1.23 | 22% | (1)% | | AUC/A | $52.1 | $49.5 | $45.7 | 14% | 5% | | AUM | $2.14 | $2.05 | $1.82 | 18% | 5% | | CET1 Ratio | 11.9% | 11.4% | 11.3% | +60 bps | +50 bps | Condensed Consolidated Income Statement Q3 2024 total revenue increased 5% to $4.65 billion, driven by a 6% rise in fee and other revenue, resulting in a 14% increase in net income to $1.19 billion Q3 2024 Income Statement Highlights (in millions) | Item | Q3 2024 | Q3 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Total Fee Revenue | $3,404 | $3,245 | 5% | | Investment and Other Revenue | $196 | $159 | 23% | | Total Fee and Other Revenue | $3,600 | $3,404 | 6% | | Net Interest Income | $1,048 | $1,016 | 3% | | Total Revenue | $4,648 | $4,420 | 5% | | Total Noninterest Expense | $3,100 | $3,089 | — | | Net Income | $1,189 | $1,043 | 14% | Condensed Consolidated Balance Sheet As of September 30, 2024, total assets were $427.5 billion, up 5.5% YoY, with total deposits at $296.4 billion and shareholders' equity increasing to $42.0 billion Balance Sheet Highlights (in millions) | Item | Sept 30, 2024 | June 30, 2024 | Sept 30, 2023 | | :--- | :--- | :--- | :--- | | Total Assets | $427,461 | $428,539 | $405,052 | | Net Loans | $69,155 | $70,356 | $66,079 | | Total Liabilities | $385,071 | $387,418 | $364,029 | | Deposits | $296,438 | $304,311 | $277,467 | | Total Shareholders' Equity | $41,992 | $40,843 | $40,858 | Fee and Other Revenue Q3 2024 total fee and other revenue increased 6% to $3.6 billion, driven by a 5% rise in investment services fees and 14% growth in foreign exchange revenue Fee and Other Revenue Breakdown (in millions) | Revenue Category | Q3 2024 | Q3 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Investment Services Fees | $2,344 | $2,230 | 5% | | Investment Management & Performance Fees | $794 | $777 | 2% | | Foreign Exchange Revenue | $175 | $154 | 14% | | Total Fee Revenue | $3,404 | $3,245 | 5% | | Investment and Other Revenue | $196 | $159 | 23% | | Total Fee and Other Revenue | $3,600 | $3,404 | 6% | Average Balances and Interest Rates In Q3 2024, average interest-earning assets increased to $356.9 billion, while net interest margin slightly decreased to 1.16% from 1.18% YoY Q3 2024 Average Balances and Net Interest Margin (in millions) | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :--- | :--- | :--- | :--- | | Average Interest-Earning Assets | $356,934 | $353,633 | $339,044 | | Average Interest-Bearing Liabilities | $302,935 | $300,155 | $280,335 | | Net Interest Margin | 1.16% | 1.15% | 1.18% | Capital and Liquidity As of September 30, 2024, the company maintained strong capital with a CET1 ratio of 11.9% and a healthy average Liquidity Coverage Ratio of 116% Key Capital and Liquidity Ratios (Period End) | Ratio | Sept 30, 2024 | June 30, 2024 | Sept 30, 2023 | | :--- | :--- | :--- | :--- | | CET1 Ratio (Standardized) | 11.9% | 11.4% | 11.9% | | Tier 1 Capital Ratio (Standardized) | 14.5% | 14.0% | 15.0% | | Total Capital Ratio (Standardized) | 15.6% | 15.0% | 16.0% | | Tier 1 Leverage Ratio | 6.0% | 5.8% | 6.1% | | Supplementary Leverage Ratio (SLR) | 7.0% | 6.8% | 7.2% | | Average Liquidity Coverage Ratio (LCR) | 116% | 115% | 121% | Business Segment Results Securities Services Business Segment The Securities Services segment reported Q3 2024 total revenue of $2.21 billion, up 6% YoY, with income before taxes surging 38% to $642 million and AUC/A growing 16% to $37.5 trillion Securities Services Financial Performance (in millions) | Item | Q3 2024 | Q3 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $2,214 | $2,081 | 6% | | Total Noninterest Expense | $1,557 | $1,598 | (3)% | | Income Before Income Taxes | $642 | $464 | 38% | - Asset Servicing revenue grew 9% YoY to $1.72 billion, while Issuer Services revenue remained flat at $494 million[10] - Assets under custody and/or administration (AUC/A) at period end increased to $37.5 trillion, up 16% from $32.3 trillion in Q3 2023[11] Market and Wealth Services Business Segment The Market and Wealth Services segment generated $1.55 billion in Q3 2024 revenue, up 7% YoY, with income before taxes rising 8% to $704 million and AUC/A increasing 9% to $14.3 trillion Market and Wealth Services Financial Performance (in millions) | Item | Q3 2024 | Q3 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $1,545 | $1,450 | 7% | | Total Noninterest Expense | $834 | $792 | 5% | | Income Before Income Taxes | $704 | $652 | 8% | - Revenue growth was driven by Clearance and Collateral Management (+19% YoY), Treasury Services (+7% YoY), while Pershing revenue decreased slightly (-1% YoY)[13] - Average tri-party collateral management balances were $5.51 trillion, a 3% decrease from Q3 2023[16] Investment and Wealth Management Business Segment The Investment and Wealth Management segment's Q3 2024 revenue grew 2% YoY to $849 million, with income before taxes up 7% to $176 million, despite a 26% decrease in average deposits Investment and Wealth Management Financial Performance (in millions) | Item | Q3 2024 | Q3 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | $849 | $830 | 2% | | Total Noninterest Expense | $672 | $675 | — | | Income Before Income Taxes | $176 | $164 | 7% | - Investment Management revenue was up 1% YoY to $569 million, and Wealth Management revenue grew 6% YoY to $280 million[18] - Average deposits decreased 26% YoY to $10.0 billion, while average loans remained stable at $13.6 billion[18] AUM and Wealth Management Client Assets AUM by Product Type, Changes in AUM and Wealth Management Client Assets Total Assets Under Management (AUM) reached $2.14 trillion in Q3 2024, an 18% YoY increase driven by broad product growth, with Wealth Management client assets also growing 14% to $333 billion AUM by Product Type (in billions) | Product Type | Q3 2024 | Q3 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Equity | $173 | $133 | 30% | | Fixed income | $235 | $190 | 24% | | Index | $498 | $425 | 17% | | Liability-driven investments | $637 | $534 | 19% | | Cash | $426 | $383 | 11% | | Total AUM | $2,144 | $1,821 | 18% | Q3 2024 Changes in AUM (in billions) | Item | Amount | | :--- | :--- | | Beginning balance of AUM | $2,045 | | Total net (outflows) inflows | $0 | | Net market impact | $58 | | Net currency impact | $41 | | Ending balance of AUM | $2,144 | Other Segment Other Segment The Other segment reported a Q3 2024 pre-tax loss of $4 million, a significant decline from $45 million pre-tax income in Q3 2023, due to lower revenue and higher expenses Other Segment Financials (in millions) | Item | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Total Revenue | $33 | $56 | | Noninterest Expense | $37 | $24 | | (Loss) Income Before Income Taxes | ($4) | $45 | Other Financial Information Securities Portfolio As of September 30, 2024, the securities portfolio had a fair value of $139.4 billion, maintaining high credit quality with 98% rated AAA/AA, despite a net unrealized loss of $4.7 billion Securities Portfolio Composition (Fair Value, in millions) | Security Type | Sept 30, 2024 | | :--- | :--- | | Agency RMBS | $42,779 | | U.S. Treasury | $29,653 | | Non-U.S. government | $29,337 | | Agency commercial MBS | $10,810 | | Other | $26,781 | | Total Securities | $139,360 | - The portfolio maintains high credit quality, with 98% of assets rated AAA/AA[23] Allowance for Credit Losses and Nonperforming Assets At Q3 2024, the allowance for credit losses increased to $401 million with a $23 million provision, while nonperforming assets decreased to $211 million Credit Loss and Nonperforming Asset Data (in millions) | Item | Sept 30, 2024 | June 30, 2024 | Sept 30, 2023 | | :--- | :--- | :--- | :--- | | Allowance for Credit Losses | $401 | $396 | $325 | | Provision for Credit Losses (for the quarter) | $23 | $0 | $3 | | Nonperforming Assets | $211 | $227 | $48 | - The allowance for loan losses as a percentage of total loans was 0.43% at the end of Q3 2024[25] Supplemental Information Explanation of GAAP and Non-GAAP Financial Measures This section defines and reconciles Non-GAAP financial measures, such as return on tangible common equity and tangible book value per common share, used to supplement GAAP information and enhance comparability for investors - The company uses Non-GAAP measures such as return on tangible common equity and tangible book value per common share to present a measure of assets that can generate income, excluding goodwill and intangible assets[26] Reconciliation of Tangible Book Value per Common Share | Item (in millions, except per share) | Sept 30, 2024 | | :--- | :--- | | BNY Common Shareholders' Equity (GAAP) | $37,649 | | Less: Goodwill & Intangible Assets | ($19,162) | | Add: Deferred Tax Liabilities | $1,876 | | BNY Tangible Common Shareholders' Equity (Non-GAAP) | $20,363 | | Period-end Common Shares Outstanding (thousands) | 727,078 | | Book Value per Common Share (GAAP) | $51.78 | | Tangible Book Value per Common Share (Non-GAAP) | $28.01 |