On July 12, 2024, Bank of New York Mellon Corp (BK, Financial) released its 8-K filing for the second quarter of 2024, reporting earnings per share (EPS) of $1.52, surpassing the analyst estimate of $1.42. The company also reported total revenue of $4,597 million, exceeding the estimated $4,523.50 million.
BNY Mellon is a global investment company involved in managing and servicing financial assets throughout the investment lifecycle. The bank provides financial services for institutions, corporations, and individual investors and delivers investment management and investment services in 35 countries and more than 100 markets. BNY Mellon is the largest global custody bank in the world, with $47.8 trillion in under custody or administration (as of Dec. 31, 2023), and can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute, or restructure investments. BNY Mellon's asset-management division manages about $2.0 trillion in assets.
Performance and Challenges
Bank of New York Mellon Corp (BK, Financial) reported a 16% year-over-year increase in EPS, reaching $1.52. Excluding notable items, the adjusted EPS was $1.51, up 9% year-over-year. The company achieved a return on tangible common equity (ROTCE) of 24.6% in the second quarter. Despite the positive results, the bank faces challenges such as a 6% decrease in net interest income due to changes in balance sheet mix, partially offset by higher interest rates.
Financial Achievements
The bank's total revenue increased by 2% year-over-year to $4.6 billion, driven by a 4% increase in fee revenue and higher client activity in fixed income and equity trading. Noninterest expense decreased by 1%, reflecting efficiency savings and lower litigation reserves. The bank's assets under custody and/or administration (AUC/A) increased by 6% to $49.5 trillion, and assets under management (AUM) grew by 7% to $2.0 trillion.
Key Financial Metrics
| Metric | 2Q24 | 1Q24 | 2Q23 |
|---|---|---|---|
| Total Revenue | $4,597 million | 2% | 2% |
| Net Income Applicable to Common Shareholders | $1,143 million | 20% | 10% |
| Diluted EPS | $1.52 | 22% | 16% |
| Pre-tax Operating Margin | 33% | 29% | 31% |
| ROE | 12.7% | 10.7% | 11.7% |
| ROTCE | 24.6% | 20.7% | 22.8% |
| Tier 1 Leverage Ratio | 5.8% | 5.9% | 5.7% |
| CET1 Ratio | 11.4% | 10.8% | 11.0% |
Analysis
Bank of New York Mellon Corp (BK, Financial) demonstrated strong financial performance in Q2 2024, driven by solid fee growth and continued expense discipline. The increase in AUC/A and AUM highlights the bank's ability to attract and retain clients, which is crucial for its long-term growth. The decrease in net interest income poses a challenge, but the bank's focus on efficiency savings and higher client activity in trading businesses mitigates this impact. Overall, the bank's performance underscores its resilience and strategic focus on enhancing shareholder value.
BNY delivered another quarter of improved financial performance, with positive operating leverage on the back of solid fee growth and continued expense discipline. The company reported earnings per share of $1.52, up 16% year-over-year. Excluding the impact of notable items, earnings per share were $1.51, up 9% year-over-year, and we generated a return on tangible common equity of 24% in the second quarter. Following the release of the Federal Reserves 2024 bank stress test in June, we increased our common dividend by 12% starting this quarter.
Explore the complete 8-K earnings release (here) from Bank of New York Mellon Corp for further details.
