10-QPeriod: Q2 FY2011

Bank of New York Mellon Corp Quarterly Report for Q2 Ended Jun 30, 2011

Filed August 8, 2011For Securities:BKBK-PKBNYBNY-PK

Summary

Bank of New York Mellon Corporation (BK) reported solid results for the second quarter of 2011, demonstrating resilience in a challenging economic environment. Net income applicable to common shareholders increased to $735 million, or $0.59 per diluted share, up from $625 million ($0.50 per share) in the prior quarter and $658 million ($0.54 per share) year-over-year. This growth was primarily driven by a significant increase in fee and other revenue, which rose 20% year-over-year to $3.06 billion, largely due to the impact of prior acquisitions and higher market values, alongside net new business. Assets under custody and administration (AUC) reached a record $26.3 trillion, and assets under management (AUM) also hit a record $1.27 trillion, indicating strong client trust and market growth. The company's capital position remained robust, with an estimated Basel III Tier 1 common equity ratio of 6.6% at quarter-end.

Financial Highlights

38 data points
Beta

Revenue

$3.83B

Net Income

$735.00M

19.2% Net Margin

EPS (Diluted)

$0.59

Total Assets

$304.71B

Cash & Equivalents

$5.56B

Free Cash Flow

$368.00M

Financial Statements
Beta
Revenue$3.83B
Operating Income$735.00M
Interest Expense$156.00M
Net Income$735.00M
EPS (Basic)$0.59
EPS (Diluted)$0.59
Shares Outstanding (Basic)1.23B
Shares Outstanding (Diluted)1.23B

Key Highlights

  • 1Net income increased to $735 million, or $0.59 per diluted share, showing sequential and year-over-year growth.
  • 2Total fee and other revenue grew 20% year-over-year to $3.06 billion, driven by Investment Services and Investment Management fees.
  • 3Assets Under Custody and Administration (AUC) reached a record $26.3 trillion, up 21% year-over-year.
  • 4Assets Under Management (AUM) reached a record $1.27 trillion, up 22% year-over-year.
  • 5Non-interest expense increased 22% year-over-year, primarily due to the impact of acquisitions and higher litigation/legal expenses.
  • 6Net interest revenue was $731 million, a 1% increase year-over-year, though net interest margin declined due to lower spreads in the low-rate environment.
  • 7Estimated Basel III Tier 1 common equity ratio stood at 6.6% at quarter-end, an improvement from the prior quarter.

Frequently Asked Questions

BNY Mellon's revenue growth was primarily driven by its fee and other revenue, which increased by 20% year-over-year to $3.06 billion. This was significantly boosted by higher fees from its Investment Services segment, aided by recent acquisitions and net new business, and improved performance in Investment Management fees due to higher market values and net new business.

The company saw record levels in both assets under custody and administration (AUC) and assets under management (AUM). AUC reached $26.3 trillion, a 21% year-over-year increase, reflecting acquisitions and net new business. AUM also grew to $1.27 trillion, up 22% year-over-year, driven by similar factors.

BNY Mellon reported a strong capital position. Its estimated Basel III Tier 1 common equity ratio was 6.6% at the end of the second quarter of 2011, an increase from the prior quarter. The company indicated that its strong capital generation and risk-weighted asset mix meant it did not anticipate accelerating its timeline to meet proposed Basel III capital guidelines.

Non-interest expense increased by 22% year-over-year to $2.82 billion. This rise was primarily attributed to the impact of recent acquisitions, higher litigation and legal expenses, and increased volume-related and business development expenses. Staff expenses also increased due to acquisitions, higher incentives, and annual merit increases.