Rise in Fee Income, NII Likely to Aid BK's Q4 Earnings (Revised)

Core Viewpoint - The Bank of New York Mellon Corporation (BK) is expected to report increased quarterly revenues and earnings for the fourth quarter and 2025 results on January 13, before market open [1][9]. Financial Performance - In the last reported quarter, BK's earnings exceeded the Zacks Consensus Estimate, driven by a rise in 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 consensus estimate for 2025 earnings 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 year-ago quarter [5]. - Financing-related fees are estimated at $56 million, indicating a 5.7% year-over-year rise [5]. - The total fees and other revenues are projected to be $3.85 billion, reflecting a 5.3% increase from the previous year [7]. Net Interest Income (NII) - The consensus estimate for NII is $1.27 billion, indicating a 6.5% year-over-year rise [10]. - Despite recent interest rate cuts, NII is expected to increase due to robust loan growth and stable funding costs [9][10]. Expense Outlook - Overall expenses are anticipated to rise 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]. - Management expects 2025 expenses to increase by 3% from $12.5 billion in 2024, driven by higher revenue-related expenses [12]. Earnings Surprise Potential - BK has a strong earnings surprise history, with an average beat of 9.1% over the trailing four quarters [3]. - The Earnings ESP for BK is +1.25%, indicating a high likelihood of beating the Zacks Consensus Estimate [13].