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Rise in Fee Income, NII Likely to Aid BNY Mellon's Q4 Earnings
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Key Takeaways
BNY Mellon is set to report Q4 results Jan. 13, with revenues and earnings expected to rise y/y.
BK's fee revenues are projected to grow, led by investment services fees, making up over half of revenues.
BK's NII is expected to increase despite rate cuts, supported by loan growth and stable funding costs.
The Bank of New York Mellon Corporation (BK - Free Report) is scheduled to report fourth-quarter and 2025 results on Jan. 13, before market open. The company’s quarterly revenues and earnings are expected to have increased on a year-over-year basis.
In the last reported quarter, BK’s earnings surpassed the Zacks Consensus Estimate. Results were primarily aided by a rise in fee revenues and net interest income (NII). Also, the company recorded a provision benefit, which was a tailwind. Growth in assets under custody and/or administration further supported results. However, higher expenses and a lower assets under management balance were undermining factors.
BNY Mellon has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average beat being 9.1%.
The Bank of New York Mellon Corporation Price and EPS Surprise
The consensus estimate for the company’s fourth-quarter earnings is pegged at $1.97 per share, which has been revised 1% higher over the past seven days. The figure reflects a rise of 14.5% from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for 2025 earnings is pegged at $7.40 per share, which indicates year-over-year growth of 22.7%.
The consensus estimate for quarterly sales is pegged at $5.12 billion, implying 5.6% year-over-year growth. The consensus estimate for full-year sales is $20 billion, implying 7.4% year-over-year growth.
BNY Mellon’s Other Key Estimates for Q4
Fee Revenues: The Zacks Consensus Estimate for total investment services fees (constituting more than 50% of the company’s total revenues) is pegged at $2.61 billion, suggesting a rise of 7.1% from the year-ago quarter’s actual. Our estimate for the metric is $2.58 billion.
The consensus mark for financing-related fees stands at $56 million, which indicates a 5.7% year-over-year rise. Our estimate for financing-related fees is $58.6 million.
The consensus estimate for distribution and servicing fees is pegged at $37.30 million, implying a 1% year-over-year rise. Our estimate for the same is also $37.30 million.
However, the consensus estimate for investment management and performance fees of $801 million indicates a year-over-year decline of 1%. Our estimate for the metric is $803.1 million.
The consensus estimate for foreign exchange revenues stands at $164 million, suggesting a 7.3% decline from the year-ago quarter. Our estimate for the same is $180.6 million.
The consensus estimate for total fees and other revenues is $3.85 billion, indicating a rise of 5.3% from the year-ago quarter’s actual. We project the metric to be $3.80 billion.
Management expects fee income in 2025 to improve from the $13.6 billion recorded in 2024.
NII: In the fourth quarter, the Federal Reserve cut interest rates twice. This, along with a rate cut in September, lowered rates to 3.50-3.75%. While this is likely to have hurt BNY Mellon’s NII to some extent, a solid lending scenario (per the Fed’s latest data, overall loan growth was robust) and stabilizing funding/deposit costs are expected to have offered much-needed support.
Hence, despite declining rates, stabilizing funding costs and robust loan growth are expected to have led to a rise in BNY Mellon’s NII in the quarter.
The consensus mark for NII is pegged at $1.27 billion, indicating a 6.5% year-over-year rise. We expect NII to be $1.24 billion.
Management expects fourth-quarter 2025 NII to be flat sequentially. Full-year NII is expected to rise 12% year over year.
Expenses: Because of higher restructuring charges and buyouts, BNY Mellon’s expenses have been elevated over the past few years. In the fourth quarter, overall costs are expected to have increased, driven by inflationary pressure, technology upgrades and a multi-year transformation plan.
Our estimate for fourth-quarter non-interest expenses is $3.34 billion, suggesting a marginal year-over-year decline.
Excluding notable items, management expects 2025 expenses to rise 3% from $12.5 billion in 2024. This is likely to be due to higher revenue-related expenses and continued investments, partly offset by the effects of efficiency savings.
What the Zacks Model Unveils for BK
According to our quantitative model, the chances of BNY Mellon beating the Zacks Consensus Estimate this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
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 +1.25%.
Here are a couple of other bank stocks that you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this time:
State Street (STT - Free Report) is scheduled to announce fourth-quarter 2025 results on Jan. 16. The company carries a Zacks Rank #3 and has an Earnings ESP of +0.33% at present.
Quarterly earnings estimates for State Street have been unchanged at $2.82 over the past week.
The Earnings ESP for KeyCorp (KEY - Free Report) is +1.20% and it carries a Zacks Rank #2 at present. The company is slated to report fourth-quarter 2025 results on Jan. 20.
Over the past seven days, the Zacks Consensus Estimate for KeyCorp’s quarterly earnings has been unchanged at 38 cents per share.
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Rise in Fee Income, NII Likely to Aid BNY Mellon's Q4 Earnings
Key Takeaways
The Bank of New York Mellon Corporation (BK - Free Report) is scheduled to report fourth-quarter and 2025 results on Jan. 13, before market open. The company’s quarterly revenues and earnings are expected to have increased on a year-over-year basis.
In the last reported quarter, BK’s earnings surpassed the Zacks Consensus Estimate. Results were primarily aided by a rise in fee revenues and net interest income (NII). Also, the company recorded a provision benefit, which was a tailwind. Growth in assets under custody and/or administration further supported results. However, higher expenses and a lower assets under management balance were undermining factors.
BNY Mellon has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average beat being 9.1%.
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 consensus estimate for the company’s fourth-quarter earnings is pegged at $1.97 per share, which has been revised 1% higher over the past seven days. The figure reflects a rise of 14.5% from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for 2025 earnings is pegged at $7.40 per share, which indicates year-over-year growth of 22.7%.
The consensus estimate for quarterly sales is pegged at $5.12 billion, implying 5.6% year-over-year growth. The consensus estimate for full-year sales is $20 billion, implying 7.4% year-over-year growth.
BNY Mellon’s Other Key Estimates for Q4
Fee Revenues: The Zacks Consensus Estimate for total investment services fees (constituting more than 50% of the company’s total revenues) is pegged at $2.61 billion, suggesting a rise of 7.1% from the year-ago quarter’s actual. Our estimate for the metric is $2.58 billion.
The consensus mark for financing-related fees stands at $56 million, which indicates a 5.7% year-over-year rise. Our estimate for financing-related fees is $58.6 million.
The consensus estimate for distribution and servicing fees is pegged at $37.30 million, implying a 1% year-over-year rise. Our estimate for the same is also $37.30 million.
However, the consensus estimate for investment management and performance fees of $801 million indicates a year-over-year decline of 1%. Our estimate for the metric is $803.1 million.
The consensus estimate for foreign exchange revenues stands at $164 million, suggesting a 7.3% decline from the year-ago quarter. Our estimate for the same is $180.6 million.
The consensus estimate for total fees and other revenues is $3.85 billion, indicating a rise of 5.3% from the year-ago quarter’s actual. We project the metric to be $3.80 billion.
Management expects fee income in 2025 to improve from the $13.6 billion recorded in 2024.
NII: In the fourth quarter, the Federal Reserve cut interest rates twice. This, along with a rate cut in September, lowered rates to 3.50-3.75%. While this is likely to have hurt BNY Mellon’s NII to some extent, a solid lending scenario (per the Fed’s latest data, overall loan growth was robust) and stabilizing funding/deposit costs are expected to have offered much-needed support.
Hence, despite declining rates, stabilizing funding costs and robust loan growth are expected to have led to a rise in BNY Mellon’s NII in the quarter.
The consensus mark for NII is pegged at $1.27 billion, indicating a 6.5% year-over-year rise. We expect NII to be $1.24 billion.
Management expects fourth-quarter 2025 NII to be flat sequentially. Full-year NII is expected to rise 12% year over year.
Expenses: Because of higher restructuring charges and buyouts, BNY Mellon’s expenses have been elevated over the past few years. In the fourth quarter, overall costs are expected to have increased, driven by inflationary pressure, technology upgrades and a multi-year transformation plan.
Our estimate for fourth-quarter non-interest expenses is $3.34 billion, suggesting a marginal year-over-year decline.
Excluding notable items, management expects 2025 expenses to rise 3% from $12.5 billion in 2024. This is likely to be due to higher revenue-related expenses and continued investments, partly offset by the effects of efficiency savings.
What the Zacks Model Unveils for BK
According to our quantitative model, the chances of BNY Mellon beating the Zacks Consensus Estimate this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.
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 +1.25%.
Zacks Rank: The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Bank Stocks That Warrant a Look
Here are a couple of other bank stocks that you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this time:
State Street (STT - Free Report) is scheduled to announce fourth-quarter 2025 results on Jan. 16. The company carries a Zacks Rank #3 and has an Earnings ESP of +0.33% at present.
Quarterly earnings estimates for State Street have been unchanged at $2.82 over the past week.
The Earnings ESP for KeyCorp (KEY - Free Report) is +1.20% and it carries a Zacks Rank #2 at present. The company is slated to report fourth-quarter 2025 results on Jan. 20.
Over the past seven days, the Zacks Consensus Estimate for KeyCorp’s quarterly earnings has been unchanged at 38 cents per share.