The Bank of New York Mellon (BK) Q3 2024 earnings summary

Executive summary

• Q3 2024 delivered strong results with revenue up 5% year-over-year to $4.65 billion and net income applicable to common shareholders rising 16% to $1.11 billion ($1.50 per diluted share); adjusted EPS was $1.52, up 20% year-over-year.

• Assets under custody/administration (AUC/A) reached a record $52.1 trillion, up 14% year-over-year, and assets under management (AUM) hit $2.1 trillion, up 18%.

• Return on tangible common equity (ROTCE) was 22.8% (adjusted 23.2%), and return on equity (ROE) was 12.0%.

• Strategic initiatives included the acquisition of Archer and the launch of Alts Bridge to expand managed account and alternative investment solutions.

• Board approved a 12% dividend increase to $0.47 per share and authorized a new $6.0 billion share repurchase program.

Financial highlights

• Fee revenue increased 5% year-over-year, led by investment services and management fees; net interest income grew 3% to $1.05 billion.

• Noninterest expense was flat year-over-year at $3.1 billion; up 1% excluding notable items.

• Pre-tax margin improved to 33% (up 480 bps year-over-year); operating leverage also improved.

• Provision for credit losses was $23 million, mainly due to higher commercial real estate allowances.

• Average total deposits were $285 billion, up 9% year-over-year.

Outlook and guidance

• Q4 net interest income expected to be slightly below Q3, but full-year NII to outperform January outlook by ~5 percentage points.

• Core expenses for 2024 expected to remain roughly flat, excluding notable items; effective tax rate for 2024 anticipated at the lower end of the 23%-24% range.

• Management expects continued growth in AUC/A and AUM, supported by market values and client inflows.

• Commitment to return 100% or more of 2024 earnings to shareholders through dividends and buybacks; 103% returned year-to-date.

• Regulatory and market trends are expected to drive demand for outsourcing and lower-fee asset management products.