Rise in Fee Income, NII Likely to Aid BNY Mellon's Q4 Earnings

Core Insights - The Bank of New York Mellon Corporation (BK) is expected to report fourth-quarter and 2025 results on January 13, with anticipated year-over-year increases in revenues and earnings [1][9]. Financial Performance - In the last reported quarter, BK's earnings exceeded the Zacks Consensus Estimate, driven by increased fee revenues and net interest income (NII), along with a provision benefit [2]. - The consensus estimate for fourth-quarter earnings is $1.97 per share, reflecting a 14.5% increase from the previous year [3]. - The 2025 earnings estimate is $7.40 per share, indicating a year-over-year growth of 22.7% [4]. Revenue Estimates - The consensus estimate for total investment services fees is $2.61 billion, suggesting a 7.1% increase from the previous year [5]. - Financing-related fees are estimated at $56 million, indicating a 5.7% year-over-year rise [5]. - Total fees and other revenues are projected at $3.85 billion, reflecting a 5.3% increase from the prior year [7]. Net Interest Income (NII) - The consensus estimate for NII is $1.27 billion, indicating a 6.5% year-over-year rise, supported by robust loan growth and stable funding costs despite recent interest rate cuts [10]. - Management expects fourth-quarter 2025 NII to remain flat sequentially, with full-year NII projected to rise 12% year-over-year [10]. Expense Outlook - Overall expenses are expected to increase due to inflationary pressures and technology upgrades, with fourth-quarter non-interest expenses estimated at $3.34 billion, suggesting a marginal year-over-year decline [11]. - For 2025, expenses are expected to rise 3% from $12.5 billion in 2024, driven by higher revenue-related expenses and continued investments [12]. Earnings Surprise Potential - BNY Mellon has a strong earnings surprise history, with an average beat of 9.1% over the last four quarters [3]. - The Earnings ESP for BNY Mellon is +1.25%, indicating a high likelihood of beating the Zacks Consensus Estimate [13]. - The company currently holds a Zacks Rank 2 (Buy) [14].