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

Executive summary

• Net income applicable to common shareholders rose 16% year-over-year to $1.11 billion in Q3 2024, with diluted EPS up 22% to $1.50 per share and adjusted EPS at $1.52, up 20%.

• Total revenue increased 5% year-over-year to $4.65 billion, driven by higher fee and other revenue and net interest income.

• Assets under custody/administration (AUC/A) reached $52.1 trillion, up 14% year-over-year; assets under management (AUM) grew 18% to $2.1 trillion.

• Announced and closed the acquisition of Archer to enhance managed account solutions and launched Alts Bridge for alternatives investing.

• Board approved a 12% increase in the quarterly dividend to $0.47 per share and repurchased $725 million in common stock during Q3.

Financial highlights

• Fee revenue increased 5% year-over-year, led by higher investment services, foreign exchange, and investment management fees; net interest income rose 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%; return on tangible common equity (ROTCE) at 22.8% (adjusted 23.2%).

• Book value per common share climbed to $51.78; tangible book value per share to $28.01.

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

Outlook and guidance

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

• 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.

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