Bank of New York Mellon Corp Quarterly Report for Q3 Ended Sep 30, 2011

Summary

For the third quarter of 2011, The Bank of New York Mellon Corporation (BK) reported net income applicable to common shareholders of $651 million, or $0.53 per diluted share. This represents a slight decrease from the $735 million ($0.59 per share) reported in the second quarter of 2011 but an increase from the $622 million ($0.51 per share) in the third quarter of 2010. Total revenue for the quarter was $3.69 billion, up 8% year-over-year, driven primarily by fee and other revenue, which rose 9% year-over-year to $2.89 billion. This growth was supported by strong performance in investment services fees, particularly asset servicing and issuer services, and an increase in foreign exchange revenue. The company also saw an increase in net interest revenue to $775 million, though the net interest margin compressed year-over-year due to higher client deposit investments in low-yielding assets. Assets under custody and administration stood at $25.9 trillion, while assets under management were $1.2 trillion, both showing year-over-year growth but a sequential decline reflecting market conditions. BNY Mellon continued to manage its capital effectively, repurchasing approximately $462 million of common shares in the quarter. The company maintained robust capital ratios, with its Basel I Tier 1 common equity to risk-weighted assets ratio at 12.5% and its estimated Basel III Tier 1 common equity ratio at 6.5%. Management highlighted an expense reduction initiative impacting approximately 1,500 positions to improve productivity and manage costs. The company also faced an $80 million litigation expense and a $22 million charge related to a change in executive management during the quarter, impacting noninterest expense. Overall, the report indicates a resilient performance with solid fee income growth, managed expenses despite specific charges, and continued focus on capital strength and client asset servicing.

Key Highlights

• 1Net income of $651 million, or $0.53 per diluted share, in Q3 2011.
• 2Total revenue increased 8% year-over-year to $3.69 billion.
• 3Fee and other revenue grew 9% year-over-year to $2.89 billion, driven by investment services fees.
• 4Assets under custody and administration reached $25.9 trillion, up 6% year-over-year.
• 5Assets under management increased 5% year-over-year to $1.2 trillion.
• 6BNY Mellon repurchased approximately $462 million of common stock during the quarter.
• 7Basel I Tier 1 common equity to risk-weighted assets ratio remained strong at 12.5%.

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