We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
BNY Mellon (BK) Q2 Earnings Beat Estimates as Costs Decline
Read MoreHide Full Article
The Bank of New York Mellon Corporation’s (BK - Free Report) second-quarter 2019 earnings per share of $1.01 surpassed the Zacks Consensus Estimate of 94 cents. However, the figure reflects a decline of 1.9% from the prior-year quarter.
Results benefited from a decline in expenses along with growth in assets under management (AUM). Moreover, the company’s capital position improved in the quarter. However, a decline in revenues was a headwind.
Net income applicable to common shareholders for the quarter under review was $969 million, down from $1.1 billion recorded in the prior-year quarter.
Revenues Decline, Costs Drop
Total revenues (GAAP basis), excluding income from consolidated investment management funds declined 5.1% year over year to $3.91 billion. The figure marginally surpassed the Zacks Consensus Estimate of $3.90 billion.
Net interest revenues, on a fully taxable-equivalent basis (non-GAAP basis), were $806 million, down 12.5% year over year. This decline was due to lower non-interest bearing deposits, and loan balances and higher deposit rates, partly offset by higher asset yields.
Also, non-GAAP net interest margin (FTE basis) contracted 14 basis points year over year to 1.12%.
Total fee and other revenues declined 3.1% year over year to $3.11 billion. This decrease was due to a fall in all components of fee revenues except for total investment services fees.
Total non-interest expenses were $2.65 billion, down nearly 3.6% year over year. This reflects a decrease in all expense components, except for professional, legal and other purchased services, software and equipment, and sub-custodian and clearing costs.
Solid Asset Position
As of Jun 30, 2019, AUM was $1.8 trillion, up 2.1% year over year. This reflects higher market value, partly offset by net outflows and the unfavorable impact of stronger U.S. dollar.
Assets under custody and/or administration of $35.5 trillion increased 5.7% year over year, reflecting higher market values and net new businesses, partly offset by the unfavorable impact of stronger U.S. dollar.
Credit Quality: Mixed Bag
As of Jun 30, 2019, non-performing assets were $186 million, up from $82 million registered at the end of the prior-year quarter. Provision for credit losses in the quarter under review was a benefit of $8 million compared with a benefit of $3 million in the year-ago quarter. Allowance for loan losses decreased 6.4% year over year to $146 million.
Capital Position Improves
As of Jun 30, 2019, common equity Tier 1 ratio was 11.2% compared with 11% as of Jun 30, 2018. Tier 1 Leverage ratio was 6.8%, up from 6.7% registered as of Jun 30, 2018.
Capital Deployment Update
During the second quarter, BNY Mellon bought back 15.3 million shares for $750 million. Further, it paid dividends worth $270 million to common shareholders.
Our Viewpoint
While the company’s restructuring initiatives and inorganic growth strategy will go a long way in supporting its bottom line; concentration risk, rising from significant dependence on fee-based income, remains a major near-term concern. Moreover, higher expenses (mainly due to rise in investment-related costs, and litigation and restructuring charges) are likely to hamper bottom-line growth to some extent.
The Bank of New York Mellon Corporation Price, Consensus and EPS Surprise
Among other banks, FB Financial Corp. (FBK - Free Report) and Community Bank System (CBU - Free Report) are scheduled to release quarterly results on Jul 22 while Atlantic Capital Bancshares will report earnings on Jul 25.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
Image: Bigstock
BNY Mellon (BK) Q2 Earnings Beat Estimates as Costs Decline
The Bank of New York Mellon Corporation’s (BK - Free Report) second-quarter 2019 earnings per share of $1.01 surpassed the Zacks Consensus Estimate of 94 cents. However, the figure reflects a decline of 1.9% from the prior-year quarter.
Results benefited from a decline in expenses along with growth in assets under management (AUM). Moreover, the company’s capital position improved in the quarter. However, a decline in revenues was a headwind.
Net income applicable to common shareholders for the quarter under review was $969 million, down from $1.1 billion recorded in the prior-year quarter.
Revenues Decline, Costs Drop
Total revenues (GAAP basis), excluding income from consolidated investment management funds declined 5.1% year over year to $3.91 billion. The figure marginally surpassed the Zacks Consensus Estimate of $3.90 billion.
Net interest revenues, on a fully taxable-equivalent basis (non-GAAP basis), were $806 million, down 12.5% year over year. This decline was due to lower non-interest bearing deposits, and loan balances and higher deposit rates, partly offset by higher asset yields.
Also, non-GAAP net interest margin (FTE basis) contracted 14 basis points year over year to 1.12%.
Total fee and other revenues declined 3.1% year over year to $3.11 billion. This decrease was due to a fall in all components of fee revenues except for total investment services fees.
Total non-interest expenses were $2.65 billion, down nearly 3.6% year over year. This reflects a decrease in all expense components, except for professional, legal and other purchased services, software and equipment, and sub-custodian and clearing costs.
Solid Asset Position
As of Jun 30, 2019, AUM was $1.8 trillion, up 2.1% year over year. This reflects higher market value, partly offset by net outflows and the unfavorable impact of stronger U.S. dollar.
Assets under custody and/or administration of $35.5 trillion increased 5.7% year over year, reflecting higher market values and net new businesses, partly offset by the unfavorable impact of stronger U.S. dollar.
Credit Quality: Mixed Bag
As of Jun 30, 2019, non-performing assets were $186 million, up from $82 million registered at the end of the prior-year quarter. Provision for credit losses in the quarter under review was a benefit of $8 million compared with a benefit of $3 million in the year-ago quarter. Allowance for loan losses decreased 6.4% year over year to $146 million.
Capital Position Improves
As of Jun 30, 2019, common equity Tier 1 ratio was 11.2% compared with 11% as of Jun 30, 2018. Tier 1 Leverage ratio was 6.8%, up from 6.7% registered as of Jun 30, 2018.
Capital Deployment Update
During the second quarter, BNY Mellon bought back 15.3 million shares for $750 million. Further, it paid dividends worth $270 million to common shareholders.
Our Viewpoint
While the company’s restructuring initiatives and inorganic growth strategy will go a long way in supporting its bottom line; concentration risk, rising from significant dependence on fee-based income, remains a major near-term concern. Moreover, higher expenses (mainly due to rise in investment-related costs, and litigation and restructuring charges) are likely to hamper bottom-line growth to some extent.
The Bank of New York Mellon Corporation Price, Consensus and EPS Surprise
The Bank of New York Mellon Corporation price-consensus-eps-surprise-chart | The Bank of New York Mellon Corporation Quote
Currently, BNY Mellon carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Schedule of Other Banks
Among other banks, FB Financial Corp. (FBK - Free Report) and Community Bank System (CBU - Free Report) are scheduled to release quarterly results on Jul 22 while Atlantic Capital Bancshares will report earnings on Jul 25.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>