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BNY Q3 Earnings Call Highlights Raised Outlook and AI Push
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Key Takeaways
BNY raised its 2026 operating leverage outlook to nearly 500 bps, with revenue growth projected at 12-13%.
400 plus AI solutions are in production as BNY targets greater employee capacity and revenue opportunities.
Securities Services revenue rose 15% to $2.82B, while net interest income climbed 15% to $1.42B.
The Bank of New York Mellon Corporation (BNY - Free Report) raised its 2026 revenue growth and operating leverage outlook, following broad-based business momentum in the third quarter. Management emphasized stronger client engagement, platform integration and technology investments as key growth drivers.
Highlights of Earnings Call
BNY reported revenues of $5.68 billion, beating the Zacks Consensus Estimate of $5.56 billion. Earnings per share of $2.37 surpassed the consensus estimate of $2.26.
The earnings call also highlighted artificial intelligence (AI) deployment, expanding securities services opportunities and resilient net interest income. Executives addressed questions about spending, capital allocation and the sustainability of business growth.
BNY Raises 2026 Growth and Margin Expectations
Chief financial officer Dermot McDonogh raised the company's 2026 operating leverage outlook to nearly 500 basis points from 400 basis points previously.
Management now anticipates full-year revenue growth, excluding notable items, around the midpoint of 12-13%, supported by expected net interest income growth of 15%.
BNY also raised its expense growth outlook to the midpoint of 7-8%, reflecting higher revenue-related costs. Guidance assumes a broadly constructive operating environment and current market-implied interest rates.
BNY's AI Investments Target Capacity and Growth
Chief executive officer Robin Vince emphasized AI's potential to expand employee capacity, improve client offerings and create new revenue opportunities.
During questioning from Wells Fargo Securities, Vince explained that BNY spends approximately $4 billion annually on technology but does not separately disclose AI expenditures. Management instead prioritizes investment returns and disciplined operating costs.
Responding to BofA Securities, Vince highlighted more than 400 AI solutions in production. The company's Eliza platform supports model selection, cost management and governance, while AI adoption increasingly extends toward client-facing applications.
BNY Sees Broader Securities Services Opportunities
Securities Services revenues increased 15% year over year to $2.82 billion, supported by higher client activity, new business and market values.
McDonogh highlighted 26% growth in ETF servicing assets under custody and administration and 14% growth in alternatives. Issuer Services benefited from corporate trust activity, including pass-through revenue associated with Trump Accounts.
During questioning from Wolfe Research, Vince explained that BNY is shifting Securities Services toward growth after improving operating efficiency. Expansion opportunities include new regions, additional client solutions and cross-platform services.
BNY's Wealth and Collateral Platforms Gain Traction
Market and Wealth Services generated revenue growth of 12%, supported by payments activity, wealth solutions and collateral management.
McDonogh reported $48 billion in net new Wealth Solutions assets, representing 7% annualized growth. Responding to Goldman Sachs, he reaffirmed the medium-term expectation for mid-single-digit net new asset growth.
Clearance and Collateral Management recorded average collateral balances of $8.3 trillion, up 14%. McDonogh indicated that international expansion, debt issuance and greater platform activity support its longer-term opportunities.
BNY Expects Continued Interest Income Support
Net interest income increased 15% year over year to $1.42 billion, benefiting from securities reinvestment and balance sheet growth, despite deposit margin compression.
During questioning from BMO Capital Markets, McDonogh anticipated a seasonal deposit recovery in the fourth quarter. Approximately $5 billion of securities mature quarterly, allowing reinvestment at higher yields.
BNY returned approximately $1.4 billion to common shareholders during the quarter. Its 5.7% Tier 1 leverage ratio remained within management's targeted 5.5-6% range.
BNY Expands Digital Asset Capabilities
Vince highlighted the launch of BNY's Global Digital Transfer Agency, supporting tokenized fund servicing and integration with existing investment infrastructure.
The company also introduced a digitally native money market fund using BLIQUID tokens, alongside tokenization initiatives involving BlackRock and Baillie Gifford.
BNY expanded cross-border payments capabilities through pay-to-wallet functionality, reflecting management's emphasis on connecting traditional financial services with emerging digital infrastructure.
BNY Maintains Focus on Execution
Management characterized the quarter as evidence of progress from its integrated platform and commercial operating models. Vince highlighted 15 consecutive quarters of year-over-year sales growth.
Executives emphasized disciplined investment, organic growth and deeper client relationships while acknowledging continued market volatility and operating uncertainties.
What BNY's Zacks Rank and Style Scores Indicate
BNY currently carries a Zacks Rank #3 (Hold), indicating a neutral near-term earnings revision outlook. Its Value Score of F, Growth Score of D and Momentum Score of B reflect stronger momentum characteristics than valuation or growth attributes.
The stock's VGM Score of F indicates an unfavorable combination of value, growth and momentum characteristics under Zacks' methodology. Its overall score profile is less favorable than the A- or B-rated combinations generally preferred alongside a top Zacks Rank. The Zacks Rank may change as analysts revise earnings estimates following the latest results.
View the Zacks #1 Rank List
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BNY Q3 Earnings Call Highlights Raised Outlook and AI Push
Key Takeaways
The Bank of New York Mellon Corporation (BNY - Free Report) raised its 2026 revenue growth and operating leverage outlook, following broad-based business momentum in the third quarter. Management emphasized stronger client engagement, platform integration and technology investments as key growth drivers.
Highlights of Earnings Call
BNY reported revenues of $5.68 billion, beating the Zacks Consensus Estimate of $5.56 billion. Earnings per share of $2.37 surpassed the consensus estimate of $2.26.
BNY Price, Consensus and EPS Surprise
BNY price-consensus-eps-surprise-chart | BNY Quote
The earnings call also highlighted artificial intelligence (AI) deployment, expanding securities services opportunities and resilient net interest income. Executives addressed questions about spending, capital allocation and the sustainability of business growth.
BNY Raises 2026 Growth and Margin Expectations
Chief financial officer Dermot McDonogh raised the company's 2026 operating leverage outlook to nearly 500 basis points from 400 basis points previously.
Management now anticipates full-year revenue growth, excluding notable items, around the midpoint of 12-13%, supported by expected net interest income growth of 15%.
BNY also raised its expense growth outlook to the midpoint of 7-8%, reflecting higher revenue-related costs. Guidance assumes a broadly constructive operating environment and current market-implied interest rates.
BNY's AI Investments Target Capacity and Growth
Chief executive officer Robin Vince emphasized AI's potential to expand employee capacity, improve client offerings and create new revenue opportunities.
During questioning from Wells Fargo Securities, Vince explained that BNY spends approximately $4 billion annually on technology but does not separately disclose AI expenditures. Management instead prioritizes investment returns and disciplined operating costs.
Responding to BofA Securities, Vince highlighted more than 400 AI solutions in production. The company's Eliza platform supports model selection, cost management and governance, while AI adoption increasingly extends toward client-facing applications.
BNY Sees Broader Securities Services Opportunities
Securities Services revenues increased 15% year over year to $2.82 billion, supported by higher client activity, new business and market values.
McDonogh highlighted 26% growth in ETF servicing assets under custody and administration and 14% growth in alternatives. Issuer Services benefited from corporate trust activity, including pass-through revenue associated with Trump Accounts.
During questioning from Wolfe Research, Vince explained that BNY is shifting Securities Services toward growth after improving operating efficiency. Expansion opportunities include new regions, additional client solutions and cross-platform services.
BNY's Wealth and Collateral Platforms Gain Traction
Market and Wealth Services generated revenue growth of 12%, supported by payments activity, wealth solutions and collateral management.
McDonogh reported $48 billion in net new Wealth Solutions assets, representing 7% annualized growth. Responding to Goldman Sachs, he reaffirmed the medium-term expectation for mid-single-digit net new asset growth.
Clearance and Collateral Management recorded average collateral balances of $8.3 trillion, up 14%. McDonogh indicated that international expansion, debt issuance and greater platform activity support its longer-term opportunities.
BNY Expects Continued Interest Income Support
Net interest income increased 15% year over year to $1.42 billion, benefiting from securities reinvestment and balance sheet growth, despite deposit margin compression.
During questioning from BMO Capital Markets, McDonogh anticipated a seasonal deposit recovery in the fourth quarter. Approximately $5 billion of securities mature quarterly, allowing reinvestment at higher yields.
BNY returned approximately $1.4 billion to common shareholders during the quarter. Its 5.7% Tier 1 leverage ratio remained within management's targeted 5.5-6% range.
BNY Expands Digital Asset Capabilities
Vince highlighted the launch of BNY's Global Digital Transfer Agency, supporting tokenized fund servicing and integration with existing investment infrastructure.
The company also introduced a digitally native money market fund using BLIQUID tokens, alongside tokenization initiatives involving BlackRock and Baillie Gifford.
BNY expanded cross-border payments capabilities through pay-to-wallet functionality, reflecting management's emphasis on connecting traditional financial services with emerging digital infrastructure.
BNY Maintains Focus on Execution
Management characterized the quarter as evidence of progress from its integrated platform and commercial operating models. Vince highlighted 15 consecutive quarters of year-over-year sales growth.
Executives emphasized disciplined investment, organic growth and deeper client relationships while acknowledging continued market volatility and operating uncertainties.
What BNY's Zacks Rank and Style Scores Indicate
BNY currently carries a Zacks Rank #3 (Hold), indicating a neutral near-term earnings revision outlook. Its Value Score of F, Growth Score of D and Momentum Score of B reflect stronger momentum characteristics than valuation or growth attributes.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The stock's VGM Score of F indicates an unfavorable combination of value, growth and momentum characteristics under Zacks' methodology. Its overall score profile is less favorable than the A- or B-rated combinations generally preferred alongside a top Zacks Rank. The Zacks Rank may change as analysts revise earnings estimates following the latest results.