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BNY Mellon (BK) Q4 Earnings Top Estimates, AUM Increase Y/Y
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Bank of New York Mellon Corporation’s (BK - Free Report) fourth-quarter 2023 adjusted earnings of $1.28 per share surpassed the Zacks Consensus Estimate of $1.12. However, the bottom line reflects a fall of 1.5% from the prior-year quarter.
Results have been primarily aided by a rise in net interest revenues and fee revenues. The assets under management (AUM) balance witnessed a rise, which was another major positive for the company. However, higher expenses have hurt the results to some extent. Also, the credit quality was weak in the reported quarter.
Net income applicable to common shareholders (GAAP basis) was $256 million or 33 cents per share, down from $509 million or 62 cents per share recorded in the year-ago quarter.
For 2023, adjusted earnings of $5.05 per share surpassed the Zacks Consensus Estimate of $4.87. The bottom line reflects a rise of 10% from the prior-year period. Net income applicable to common shareholders (GAAP basis) was $3.15 billion or $4.00 per share, up from $2.36 billion or $2.90 per share recorded in the year-ago period.
Revenues & Expenses Rise
Total revenues increased 10% year over year to $4.31 billion. The top line surpassed the Zacks Consensus Estimate of $4.29 billion.
For 2023, revenues were $17.50 billion, up 6.9% year over year. The top line outpaced the Zacks Consensus Estimate of $17.48 billion.
Net interest revenues, on a fully taxable-equivalent (FTE) basis, were $1.10 billion, up 4.3% year over year. The rise reflected higher interest rates, partially offset by changes in balance sheet size and mix.
The net interest margin (FTE basis) expanded 7 basis points (bps) year over year to 1.26%. Our estimate for NIM was 1.14%.
Total fee and other revenues increased 12.2% year over year to $3.21 billion. The rise was driven by an increase in investment services fees, financing-related fees, and distribution and servicing fees. Our estimate for the same was $3.29 billion.
Total non-interest expenses (GAAP basis) were $3.89 billion, rising 20.4% year over year. Almost all cost components increased, except for professional, legal and other purchased services, and amortization of intangible assets. Also, in the reported quarter, the company did not record any expense related to goodwill impairment.
Asset Balances Improve
As of Dec 31, 2023, AUM was $1.97 trillion, up 7.1% year over year. The rise reflected the favorable impacts of a weaker U.S. dollar and higher market values, partially offset by cumulative net outflows. Our estimate for AUM was $1.84 trillion.
Assets under custody and/or administration of $47.8 trillion increased 7.9% year over year, primarily reflecting higher market values.
Credit Quality Deteriorate
The allowance for loan losses, as a percentage of total loans, was 0.45%, up 18 bps from the prior-year quarter. In the reported quarter, the company recorded a provision for credit losses of $84 million compared with a provision of $20 million in the year-ago quarter.
As of Dec 31, 2023, non-performing assets were $237 million, up significantly year over year.
Capital Position Improves
As of Dec 31, 2023, the common equity Tier 1 ratio was 11.6%, up from 11.2% as of the Dec 31, 2022 level. Tier 1 leverage ratio was 6%, up from 5.8% as of Dec 31, 2022.
Our Take
Higher interest rates, BNY Mellon’s global footprint and a strong balance sheet position are likely to keep supporting its top-line growth in the near term. However, concentration risk due to the company’s higher dependence on fee-based revenues is worrisome.
The Bank of New York Mellon Corporation Price, Consensus and EPS Surprise
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BNY Mellon (BK) Q4 Earnings Top Estimates, AUM Increase Y/Y
Bank of New York Mellon Corporation’s (BK - Free Report) fourth-quarter 2023 adjusted earnings of $1.28 per share surpassed the Zacks Consensus Estimate of $1.12. However, the bottom line reflects a fall of 1.5% from the prior-year quarter.
Results have been primarily aided by a rise in net interest revenues and fee revenues. The assets under management (AUM) balance witnessed a rise, which was another major positive for the company. However, higher expenses have hurt the results to some extent. Also, the credit quality was weak in the reported quarter.
Net income applicable to common shareholders (GAAP basis) was $256 million or 33 cents per share, down from $509 million or 62 cents per share recorded in the year-ago quarter.
For 2023, adjusted earnings of $5.05 per share surpassed the Zacks Consensus Estimate of $4.87. The bottom line reflects a rise of 10% from the prior-year period. Net income applicable to common shareholders (GAAP basis) was $3.15 billion or $4.00 per share, up from $2.36 billion or $2.90 per share recorded in the year-ago period.
Revenues & Expenses Rise
Total revenues increased 10% year over year to $4.31 billion. The top line surpassed the Zacks Consensus Estimate of $4.29 billion.
For 2023, revenues were $17.50 billion, up 6.9% year over year. The top line outpaced the Zacks Consensus Estimate of $17.48 billion.
Net interest revenues, on a fully taxable-equivalent (FTE) basis, were $1.10 billion, up 4.3% year over year. The rise reflected higher interest rates, partially offset by changes in balance sheet size and mix.
The net interest margin (FTE basis) expanded 7 basis points (bps) year over year to 1.26%. Our estimate for NIM was 1.14%.
Total fee and other revenues increased 12.2% year over year to $3.21 billion. The rise was driven by an increase in investment services fees, financing-related fees, and distribution and servicing fees. Our estimate for the same was $3.29 billion.
Total non-interest expenses (GAAP basis) were $3.89 billion, rising 20.4% year over year. Almost all cost components increased, except for professional, legal and other purchased services, and amortization of intangible assets. Also, in the reported quarter, the company did not record any expense related to goodwill impairment.
Asset Balances Improve
As of Dec 31, 2023, AUM was $1.97 trillion, up 7.1% year over year. The rise reflected the favorable impacts of a weaker U.S. dollar and higher market values, partially offset by cumulative net outflows. Our estimate for AUM was $1.84 trillion.
Assets under custody and/or administration of $47.8 trillion increased 7.9% year over year, primarily reflecting higher market values.
Credit Quality Deteriorate
The allowance for loan losses, as a percentage of total loans, was 0.45%, up 18 bps from the prior-year quarter. In the reported quarter, the company recorded a provision for credit losses of $84 million compared with a provision of $20 million in the year-ago quarter.
As of Dec 31, 2023, non-performing assets were $237 million, up significantly year over year.
Capital Position Improves
As of Dec 31, 2023, the common equity Tier 1 ratio was 11.6%, up from 11.2% as of the Dec 31, 2022 level. Tier 1 leverage ratio was 6%, up from 5.8% as of Dec 31, 2022.
Our Take
Higher interest rates, BNY Mellon’s global footprint and a strong balance sheet position are likely to keep supporting its top-line growth in the near term. However, concentration risk due to the company’s higher dependence on fee-based revenues is worrisome.
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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Dates of Other Banks
We now look forward to the earnings release of Hancock Whitney (HWC - Free Report) and Bank OZK (OZK - Free Report) .
HWC is slated to release fourth-quarter numbers on Jan 16 and OZK will release quarterly results on Jan 18.