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BNY Mellon (BK) Beats on Q3 Earnings as Revenues Improve
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The Bank of New York Mellon Corporation’s (BK - Free Report) third-quarter 2017 earnings per share of 94 cents surpassed the Zacks Consensus Estimate of 93 cents. The figure also came in 4.4% higher than the prior-year quarter tally.
Results benefitted from an improvement in both net interest revenues and fee revenues. Also, assets under management (AUM) reflected growth. However, a marginal rise in expenses acted as a headwind.
Net income applicable to common shareholders came in at $983 million, increasing nearly 1% year over year.
Revenues Improve, Costs Rise
Total revenues (non-GAAP) for the quarter increased 2.1% year over year to $4.01 billion. The figure marginally surpassed the Zacks Consensus Estimate of $3.99 billion.
Net interest revenue, on a fully taxable-equivalent basis, was $851 million, up 8% year over year. The rise was driven by higher interest rates, partly offset by a fall in average deposits and loans.
Additionally, net interest margin grew 10 basis points year over year to 1.16%.
Total fee and other revenues increased nearly 1% from the prior-year quarter to $3.17 billion. The rise was primarily driven by higher total investment services fees, and investment management and performance fees.
Total non-interest expenses (non-GAAP) came in at $2.60 billion, increasing 1% year over year. This reflects an increase in all expense components, except net occupancy costs, business development expenses, bank assessment charges and amortization of intangible assets.
Strong Asset Position
As of Sep 30, 2017, AUM was $1.82 trillion, up 6% year over year. This reflected higher market values, net inflows and the favorable impact of a weaker U.S. dollar (principally versus the British pound).
Moreover, assets under custody and administration of $32.2 trillion were up 6% year over year. Higher market values and the favorable impact of a weaker U.S. dollar largely drove the rise.
Credit Quality: A Mixed Bag
As of Sep 30, 2017, non-performing assets came in at $94 million, down from $109 million registered in the prior-year quarter.
However, allowance for loan losses increased 8.8% year over year to $161 million. Provision for credit losses was a benefit of $6 million compared with $19 million in the year-ago quarter.
Capital Ratios Improve
As of Sep 30, 2017, common equity Tier-1 ratio (Standardized Basel 3 fully phased-in) came in at 11.9% compared with 11.3% as of Dec 31, 2016. Leverage capital ratio was 6.8%, up from 6.6% as of Dec 31, 2016.
Share Repurchase
During the reported quarter, BNY Mellon bought back 12 million shares for $650 million.
Our Viewpoint
BNY Mellon’s restructuring initiatives and inorganic growth strategy will go a long way in supporting its bottom line. Further, its strong global reach and gradually easing margin pressure are expected to support profitability in the long run.
However, concentration risk arising from significant dependence on fee-based income remains a major concern for the company in the near term.
Bank Of New York Mellon Corporation (The) Price, Consensus and EPS Surprise
Among other major regional banks, SunTrust Banks, Inc. (STI - Free Report) is slated to announce third-quarter 2017 results on Oct 20, whileState Street Corp. (STT - Free Report) and Fifth Third Bancorp (FITB - Free Report) are slated to come up with their quarterly numbers on Oct 23 and Oct 24, respectively.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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BNY Mellon (BK) Beats on Q3 Earnings as Revenues Improve
The Bank of New York Mellon Corporation’s (BK - Free Report) third-quarter 2017 earnings per share of 94 cents surpassed the Zacks Consensus Estimate of 93 cents. The figure also came in 4.4% higher than the prior-year quarter tally.
Results benefitted from an improvement in both net interest revenues and fee revenues. Also, assets under management (AUM) reflected growth. However, a marginal rise in expenses acted as a headwind.
Net income applicable to common shareholders came in at $983 million, increasing nearly 1% year over year.
Revenues Improve, Costs Rise
Total revenues (non-GAAP) for the quarter increased 2.1% year over year to $4.01 billion. The figure marginally surpassed the Zacks Consensus Estimate of $3.99 billion.
Net interest revenue, on a fully taxable-equivalent basis, was $851 million, up 8% year over year. The rise was driven by higher interest rates, partly offset by a fall in average deposits and loans.
Additionally, net interest margin grew 10 basis points year over year to 1.16%.
Total fee and other revenues increased nearly 1% from the prior-year quarter to $3.17 billion. The rise was primarily driven by higher total investment services fees, and investment management and performance fees.
Total non-interest expenses (non-GAAP) came in at $2.60 billion, increasing 1% year over year. This reflects an increase in all expense components, except net occupancy costs, business development expenses, bank assessment charges and amortization of intangible assets.
Strong Asset Position
As of Sep 30, 2017, AUM was $1.82 trillion, up 6% year over year. This reflected higher market values, net inflows and the favorable impact of a weaker U.S. dollar (principally versus the British pound).
Moreover, assets under custody and administration of $32.2 trillion were up 6% year over year. Higher market values and the favorable impact of a weaker U.S. dollar largely drove the rise.
Credit Quality: A Mixed Bag
As of Sep 30, 2017, non-performing assets came in at $94 million, down from $109 million registered in the prior-year quarter.
However, allowance for loan losses increased 8.8% year over year to $161 million. Provision for credit losses was a benefit of $6 million compared with $19 million in the year-ago quarter.
Capital Ratios Improve
As of Sep 30, 2017, common equity Tier-1 ratio (Standardized Basel 3 fully phased-in) came in at 11.9% compared with 11.3% as of Dec 31, 2016. Leverage capital ratio was 6.8%, up from 6.6% as of Dec 31, 2016.
Share Repurchase
During the reported quarter, BNY Mellon bought back 12 million shares for $650 million.
Our Viewpoint
BNY Mellon’s restructuring initiatives and inorganic growth strategy will go a long way in supporting its bottom line. Further, its strong global reach and gradually easing margin pressure are expected to support profitability in the long run.
However, concentration risk arising from significant dependence on fee-based income remains a major concern for the company in the near term.
Bank Of New York Mellon Corporation (The) Price, Consensus and EPS Surprise
Bank Of New York Mellon Corporation (The) Price, Consensus and EPS Surprise | Bank Of New York Mellon Corporation (The) Quote
Currently, BNY Mellon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other major regional banks, SunTrust Banks, Inc. (STI - Free Report) is slated to announce third-quarter 2017 results on Oct 20, whileState Street Corp. (STT - Free Report) and Fifth Third Bancorp (FITB - Free Report) are slated to come up with their quarterly numbers on Oct 23 and Oct 24, respectively.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>