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NII Dip to Hurt BNY Mellon's (BK) Q4 Earnings, Fee Income to Aid
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The Bank of New York Mellon Corporation (BK - Free Report) is scheduled to report fourth-quarter and 2023 results on Jan 12, before market open. While the company’s revenues are expected to have witnessed an increase in the quarter on a year-over-year basis, earnings are likely to have declined.
In the last reported quarter, BK’s earnings surpassed the Zacks Consensus Estimate. Results were primarily aided by a rise in net interest revenues (NIR) and lower expenses. The assets under management (AUM) balance witnessed a rise, which, along with marginally higher fee revenues, was another positive.
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 8.7%, on average.
The Bank of New York Mellon Corporation Price and EPS Surprise
The Zacks Consensus Estimate for the company’s fourth-quarter earnings is pegged at $1.11, which has been unchanged over the past seven days. The consensus estimate indicates a decline of 14.6% from the year-ago quarter’s reported number. Our estimate for fourth-quarter earnings is pinned at $1.09 per share.
The consensus estimate for sales is pegged at $4.28 billion, implying a 9.3% rise from the prior-year quarter’s reported figure. Our estimate for the same is pinned at $4.26 billion.
Key Factors & Estimates for Q4
Fee Revenues: The Zacks Consensus Estimate for total investment services fee (comprising more than 50% of the company’s total revenues) is pegged at $2.21 billion, suggesting a rise of 1.7% from the prior-year quarter’s reported number. Our estimate for the same is pinned at $2.26 billion, indicating a year-over-year rise of 4.1%.
The consensus mark for financing-related fees is pegged at $45.86 million, which suggests a 6.7% year-over-year rise. Our estimate for financing-related fees is $45.6 million, indicating a rise of 6%.
The consensus estimate for distribution and servicing fees is pegged at $37.24 million, implying a 12.8% rise from the previous-year quarter’s reported figure. Our estimate for the same is pinned at $34.4 million.
The consensus estimate for foreign exchange revenues is pegged at $154 million, suggesting a decline of 18.9% from the prior-year quarter’s reported figure. Our estimate for the same is pinned at $143 million, indicating a 24.7% decline.
Thus, the consensus estimate for total fees and other revenues is pegged at $3.29 billion, suggesting a rise of 15.1% from the prior-year quarter’s reported number. We also project the metric to be $3.29 billion.
Net Interest Revenues: The overall lending scenario has been weak in the to-be-reported quarter amid a challenging macroeconomic backdrop.
While interest rates remained high in the fourth quarter, higher funding costs are likely to have put pressure on interest income growth, as well as margins. Moreover, at its December 2023 meeting, the Federal Reserve paused rate hikes and indicated no further rate increases in the near term.
Thus, due to weak loan demand, BK’s interest income is likely to have been negatively impacted in the quarter under review. Also, higher funding and deposit costs are likely to have put pressure on margin growth.
The consensus mark for fourth-quarter NIR is pegged at $983 million, indicating a 6.9% year-over-year decline. Our estimate for NIR is pinned at $965.7 million.
For 2023, management expects NIR to grow 20% year over year.
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 fourth-quarter non-interest expenses is $3.13 billion, suggesting a year-over-year decline of 2.4%.
Management expects full-year expenses (excluding notable items) to increase almost 4% year over year.
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 -1.31%.
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 the upcoming releases per our model, are Citizens Financial Group, Inc. (CFG - Free Report) and Comerica Incorporated (CMA - Free Report) .
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NII Dip to Hurt BNY Mellon's (BK) Q4 Earnings, Fee Income to Aid
The Bank of New York Mellon Corporation (BK - Free Report) is scheduled to report fourth-quarter and 2023 results on Jan 12, before market open. While the company’s revenues are expected to have witnessed an increase in the quarter on a year-over-year basis, earnings are likely to have declined.
In the last reported quarter, BK’s earnings surpassed the Zacks Consensus Estimate. Results were primarily aided by a rise in net interest revenues (NIR) and lower expenses. The assets under management (AUM) balance witnessed a rise, which, along with marginally higher fee revenues, was another positive.
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 8.7%, 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 fourth-quarter earnings is pegged at $1.11, which has been unchanged over the past seven days. The consensus estimate indicates a decline of 14.6% from the year-ago quarter’s reported number. Our estimate for fourth-quarter earnings is pinned at $1.09 per share.
The consensus estimate for sales is pegged at $4.28 billion, implying a 9.3% rise from the prior-year quarter’s reported figure. Our estimate for the same is pinned at $4.26 billion.
Key Factors & Estimates for Q4
Fee Revenues: The Zacks Consensus Estimate for total investment services fee (comprising more than 50% of the company’s total revenues) is pegged at $2.21 billion, suggesting a rise of 1.7% from the prior-year quarter’s reported number. Our estimate for the same is pinned at $2.26 billion, indicating a year-over-year rise of 4.1%.
The consensus mark for financing-related fees is pegged at $45.86 million, which suggests a 6.7% year-over-year rise. Our estimate for financing-related fees is $45.6 million, indicating a rise of 6%.
The consensus estimate for distribution and servicing fees is pegged at $37.24 million, implying a 12.8% rise from the previous-year quarter’s reported figure. Our estimate for the same is pinned at $34.4 million.
The consensus estimate for foreign exchange revenues is pegged at $154 million, suggesting a decline of 18.9% from the prior-year quarter’s reported figure. Our estimate for the same is pinned at $143 million, indicating a 24.7% decline.
Thus, the consensus estimate for total fees and other revenues is pegged at $3.29 billion, suggesting a rise of 15.1% from the prior-year quarter’s reported number. We also project the metric to be $3.29 billion.
Net Interest Revenues: The overall lending scenario has been weak in the to-be-reported quarter amid a challenging macroeconomic backdrop.
While interest rates remained high in the fourth quarter, higher funding costs are likely to have put pressure on interest income growth, as well as margins. Moreover, at its December 2023 meeting, the Federal Reserve paused rate hikes and indicated no further rate increases in the near term.
Thus, due to weak loan demand, BK’s interest income is likely to have been negatively impacted in the quarter under review. Also, higher funding and deposit costs are likely to have put pressure on margin growth.
The consensus mark for fourth-quarter NIR is pegged at $983 million, indicating a 6.9% year-over-year decline. Our estimate for NIR is pinned at $965.7 million.
For 2023, management expects NIR to grow 20% year over year.
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 fourth-quarter non-interest expenses is $3.13 billion, suggesting a year-over-year decline of 2.4%.
Management expects full-year expenses (excluding notable items) to increase almost 4% year over year.
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 -1.31%.
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 the upcoming releases per our model, are Citizens Financial Group, Inc. (CFG - Free Report) and Comerica Incorporated (CMA - Free Report) .
Citizens Financial is scheduled to release quarterly earnings on Jan 17. The company has a Zacks Rank #3 and an Earnings ESP of +0.59% at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Earnings ESP for Comerica is +3.28% and it carries a Zacks Rank #3 at present. The company is slated to report quarterly results on Jan 19.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.