Bank of New York Mellon Q4 Earnings Call Highlights

Core Insights - Bank of New York Mellon (BNY) reported record net income of $5.3 billion and record revenue of $20.1 billion for 2025, with a return on tangible common equity (ROTCE) of 26% [3][4][6] - The company achieved a total revenue of $5.2 billion in Q4, reflecting a 7% year-over-year increase, with fee revenue up 5% driven by investment services fees growth of 8% [1][6] - Management has raised medium-term targets, aiming for a pre-tax margin of 38% and ROTCE of 28%, with projected revenue growth of about 5% for 2026 [5][15][17] Financial Performance - Total revenue for 2025 was $20.1 billion, an 8% increase year over year, while expenses rose by 3%, leading to a pre-tax margin of 35% [3][4] - In Q4, earnings per share (EPS) reached $2.02, up 31% year over year, with firmwide assets under custody and/or administration (AUCA) at $59.3 trillion, a 14% increase [6][11] - Net interest income increased by 15% for the year, attributed to reinvestment of maturing securities at higher yields [2][7] Business Segment Performance - Security Services revenue was $2.5 billion, up 7% year over year, with significant growth in asset servicing fees [9][10] - Markets and Wealth Services revenue increased by 8% to $1.8 billion, while Investment and Wealth Management revenue declined by 2% to $854 million [16] - The company reported a pre-tax margin of 49% in Markets and Wealth Services, while Investment and Wealth Management had a pre-tax margin of 17% [16] Strategic Initiatives - BNY is focusing on scaling its platforms and AI initiatives, including the enterprise AI platform "Eliza" and collaborations with Google Cloud [5][13] - The firm is advancing its digital assets strategy, launching products like the Dreyfus Stablecoin Reserves Fund and exploring tokenized deposits [14] - Management highlighted a significant increase in clients utilizing multiple services, with organic fee growth reaching 3% in 2025 [12] Outlook - For 2026, BNY expects total revenue growth of approximately 5% and expenses to rise by 3-4%, with a target of over 100 basis points of positive operating leverage [15][18] - The company anticipates a quarterly tax rate of about 23% for 2026, with expectations for net interest margin to gradually improve [18]