10-QPeriod: Q1 FY2012

Bank of New York Mellon Corp Quarterly Report for Q1 Ended Mar 31, 2012

Filed May 9, 2012For Securities:BKBK-PKBNYBNY-PK

Summary

The Bank of New York Mellon Corporation (BK) reported a solid first quarter in 2012, with net income applicable to common shareholders of $619 million, or $0.52 per diluted share. This represents a slight decrease from the prior year's $625 million but a significant increase from the previous quarter's $505 million. The company achieved record levels in both Assets Under Custody and Administration (AUC/A) at $26.6 trillion and Assets Under Management (AUM) at $1.31 trillion, demonstrating continued growth in its core businesses. Fee and other revenue remained stable year-over-year, supported by strong performance in asset servicing and clearing services, although investment management and performance fees saw a slight decline. Net interest revenue increased year-over-year, driven by higher client deposits and investment securities, though net interest margin slightly compressed. BNY Mellon's capital position remains strong, with its estimated Basel III Tier 1 common equity ratio improving to 7.6%. The company also received Federal Reserve approval for its 2012 capital plan, which includes $1.16 billion in share repurchases and a continued quarterly dividend of $0.13 per share. The company's focus on operational excellence initiatives is expected to yield significant cost savings.

Financial Highlights

38 data points
Beta

Revenue

$3.63B

Net Income

$619.00M

17.0% Net Margin

EPS (Diluted)

$0.52

Total Assets

$300.17B

Cash & Equivalents

$4.33B

Free Cash Flow

-$15.00M

Financial Statements
Beta
Revenue$3.63B
Operating Income$619.00M
Interest Expense$147.00M
Net Income$619.00M
EPS (Basic)$0.52
EPS (Diluted)$0.52
Shares Outstanding (Basic)1.19B
Shares Outstanding (Diluted)1.20B

Key Highlights

  • 1Net income of $619 million, or $0.52 per diluted share, demonstrating resilience in its core businesses.
  • 2Record AUC/A of $26.6 trillion and AUM of $1.31 trillion, underscoring growth in core services.
  • 3Fee and other revenue remained stable year-over-year, with strong growth in asset servicing and clearing services.
  • 4Net interest revenue increased year-over-year, reflecting higher client deposits and investment securities.
  • 5Estimated Basel III Tier 1 common equity ratio improved to 7.6%, indicating a strengthening capital position.
  • 6Approved 2012 capital plan includes share repurchases of up to $1.16 billion and a $0.13 per share quarterly dividend, returning capital to shareholders.
  • 7Noninterest expense increased year-over-year, primarily due to higher litigation and legal expenses, but operational excellence initiatives are on track for significant cost savings.

Frequently Asked Questions

BNY Mellon reported stable fee and other revenue year-over-year at $2.838 billion. Investment services fees saw a slight decrease primarily due to the sale of the Shareowner Services business, but asset servicing and clearing services fees showed growth. Investment management and performance fees decreased slightly due to higher money market fee waivers. Net interest revenue increased year-over-year to $765 million, driven by higher client deposits and investment securities, although the net interest margin compressed.

BNY Mellon's capital position remains strong, with its estimated Basel III Tier 1 common equity ratio improving to 7.6% at the end of Q1 2012. The company received regulatory approval for its 2012 capital plan, which includes the repurchase of up to $1.16 billion of common stock and the continuation of its quarterly cash dividend of $0.13 per share, demonstrating a commitment to returning capital to shareholders.

Total noninterest expense increased by 2% year-over-year to $2.756 billion. This increase was primarily attributed to higher litigation and legal expenses, as well as increased incentive and pension expenses. However, the company is implementing operational excellence initiatives aimed at reducing expenses, and they are on track to achieve significant pre-tax savings in 2012.

Growth in BNY Mellon's core businesses was driven by record levels in Assets Under Custody and Administration (AUC/A) to $26.6 trillion and Assets Under Management (AUM) to $1.31 trillion. These increases were primarily attributed to net new business wins and favorable market value appreciation in both the Investment Services and Investment Management segments.