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Higher Interest Rates to Aid BNY Mellon's (BK) Q2 Earnings
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The Bank of New York Mellon Corporation (BK - Free Report) is scheduled to report second-quarter 2023 results on Jul 18, before market open. The company’s revenues and earnings in the to-be-reported quarter are expected to have witnessed increases on a year-over-year basis.
In the last reported quarter, BK’s earnings surpassed the Zacks Consensus Estimate. Results were aided by a rise in net interest revenues and marginally higher fee revenues. However, asset balances witnessed a decline and higher expenses hurt results to some extent.
BNY Mellon has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with a surprise of 5.7%, on average.
The Bank of New York Mellon Corporation Price and EPS Surprise
The Zacks Consensus Estimate for the company’s second-quarter earnings is pegged at $1.22, which has been revised almost 1% higher over the past seven days. The consensus estimate indicates a rise of 6.1% from the year-ago quarter’s reported number. Our estimate for second-quarter earnings is pinned at $1.21 per share.
The consensus estimate for sales is pegged at $4.37 billion, implying a 2.8% rise from the prior-year quarter’s reported figure. Our estimate for the same is pinned at $4.36 billion.
Key Factors & Estimates for Q2
Fee Revenues: Supported by overall asset inflows, BNY Mellon is expected to have recorded an improvement in total assets under management (AUM) balance. Thus, the related fee is likely to have been positively impacted.
The Zacks Consensus Estimate for total investment services fee (comprising more than 50% of the company’s total revenues) is pegged at $2.20 billion, reflecting minimal change from the prior-year quarter’s reported number. Our estimate for the same is $2.24 billion, indicating a year-over-year rise of 1.6%.
The consensus mark for financing-related fees is pegged at $45.25 million, which suggests a 2.8% year-over-year rise. Our estimate for financing-related fees is $46.8 million, indicating a rise of 6.3%.
The consensus estimate for distribution and servicing fees is pegged at $33.34 million, indicating a 1.9% decline from the previous-year quarter’s reported figure. Our estimate for the same is $34.2 million.
The consensus estimate for foreign exchange revenues is pegged at $178 million, suggesting a decline of 19.8% from the prior-year quarter’s reported figure. Our estimate for the same is pinned at $211 million, indicating a 5% decline. The consensus mark for investment and other income of $79 million suggests a year-over-year decline of 13.2%.
Thus, the consensus estimate for total fees and other revenues is pegged at $3.30 billion, suggesting a decline of 3.9% from the prior-year quarter’s reported number. We also project the metric to be $3.30 billion.
Net Interest Revenues (NIR): Lending activities gradually waned in the quarter amid a challenging macroeconomic backdrop.
Nevertheless, the Federal Reserve raised interest rates by another 25 basis points during the June-ended quarter (it did not hike interest rates in the June FOMC meeting though). The policy rate now stands at 5-5.25%. While the inversion of the yield curve and rising funding costs are expected to have weighed on margins to some extent, BK’s interest income is likely to have improved in the quarter, supported by higher rates.
The consensus mark for NIR for the second quarter is pegged at $1.08 billion, indicating 30.5% year-over-year growth. Our estimate for NIR is $1.07 billion, suggesting a year-over-year rise of 29.5%.
Expenses: Because of higher restructuring charges, BNY Mellon’s expenses have been elevated over the past few years. Nevertheless, overall costs are expected to have been manageable in the quarter under review, given the elimination of unnecessary management layers.
Our estimate for second-quarter non-interest expenses is $3.08 billion, suggesting a year-over-year decline of 1.1%.
What the Zacks Model Unveils
According to our quantitative model, the chances of BNY Mellon beating the Zacks Consensus Estimate this time are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — which is required to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for BNY Mellon is -0.21%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Stocks That Warrant a Look
A couple of finance stocks that you may want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model, are Wells Fargo (WFC - Free Report) and PNC Financial (PNC - Free Report) .
PNC Financial is scheduled to release second-quarter 2023 earnings on Jul 18. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +1.41%.
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Higher Interest Rates to Aid BNY Mellon's (BK) Q2 Earnings
The Bank of New York Mellon Corporation (BK - Free Report) is scheduled to report second-quarter 2023 results on Jul 18, before market open. The company’s revenues and earnings in the to-be-reported quarter are expected to have witnessed increases on a year-over-year basis.
In the last reported quarter, BK’s earnings surpassed the Zacks Consensus Estimate. Results were aided by a rise in net interest revenues and marginally higher fee revenues. However, asset balances witnessed a decline and higher expenses hurt results to some extent.
BNY Mellon has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with a surprise of 5.7%, on average.
The Bank of New York Mellon Corporation Price and EPS Surprise
The Bank of New York Mellon Corporation price-eps-surprise | The Bank of New York Mellon Corporation Quote
The Zacks Consensus Estimate for the company’s second-quarter earnings is pegged at $1.22, which has been revised almost 1% higher over the past seven days. The consensus estimate indicates a rise of 6.1% from the year-ago quarter’s reported number. Our estimate for second-quarter earnings is pinned at $1.21 per share.
The consensus estimate for sales is pegged at $4.37 billion, implying a 2.8% rise from the prior-year quarter’s reported figure. Our estimate for the same is pinned at $4.36 billion.
Key Factors & Estimates for Q2
Fee Revenues: Supported by overall asset inflows, BNY Mellon is expected to have recorded an improvement in total assets under management (AUM) balance. Thus, the related fee is likely to have been positively impacted.
The Zacks Consensus Estimate for total investment services fee (comprising more than 50% of the company’s total revenues) is pegged at $2.20 billion, reflecting minimal change from the prior-year quarter’s reported number. Our estimate for the same is $2.24 billion, indicating a year-over-year rise of 1.6%.
The consensus mark for financing-related fees is pegged at $45.25 million, which suggests a 2.8% year-over-year rise. Our estimate for financing-related fees is $46.8 million, indicating a rise of 6.3%.
The consensus estimate for distribution and servicing fees is pegged at $33.34 million, indicating a 1.9% decline from the previous-year quarter’s reported figure. Our estimate for the same is $34.2 million.
The consensus estimate for foreign exchange revenues is pegged at $178 million, suggesting a decline of 19.8% from the prior-year quarter’s reported figure. Our estimate for the same is pinned at $211 million, indicating a 5% decline. The consensus mark for investment and other income of $79 million suggests a year-over-year decline of 13.2%.
Thus, the consensus estimate for total fees and other revenues is pegged at $3.30 billion, suggesting a decline of 3.9% from the prior-year quarter’s reported number. We also project the metric to be $3.30 billion.
Net Interest Revenues (NIR): Lending activities gradually waned in the quarter amid a challenging macroeconomic backdrop.
Nevertheless, the Federal Reserve raised interest rates by another 25 basis points during the June-ended quarter (it did not hike interest rates in the June FOMC meeting though). The policy rate now stands at 5-5.25%. While the inversion of the yield curve and rising funding costs are expected to have weighed on margins to some extent, BK’s interest income is likely to have improved in the quarter, supported by higher rates.
The consensus mark for NIR for the second quarter is pegged at $1.08 billion, indicating 30.5% year-over-year growth. Our estimate for NIR is $1.07 billion, suggesting a year-over-year rise of 29.5%.
Expenses: Because of higher restructuring charges, BNY Mellon’s expenses have been elevated over the past few years. Nevertheless, overall costs are expected to have been manageable in the quarter under review, given the elimination of unnecessary management layers.
Our estimate for second-quarter non-interest expenses is $3.08 billion, suggesting a year-over-year decline of 1.1%.
What the Zacks Model Unveils
According to our quantitative model, the chances of BNY Mellon beating the Zacks Consensus Estimate this time are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — which is required to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for BNY Mellon is -0.21%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Stocks That Warrant a Look
A couple of finance stocks that you may want to consider, as these have the right combination of elements to post an earnings beat in their upcoming releases, per our model, are Wells Fargo (WFC - Free Report) and PNC Financial (PNC - Free Report) .
The Earnings ESP for Wells Fargo is +0.16% and it carries a Zacks Rank #3 at present. The company is slated to report second-quarter 2023 results on Jul 14. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PNC Financial is scheduled to release second-quarter 2023 earnings on Jul 18. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +1.41%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.