10-QPeriod: Q1 FY2013

Bank of New York Mellon Corp Quarterly Report for Q1 Ended Mar 31, 2013

Filed May 9, 2013For Securities:BKBK-PKBNYBNY-PK

Summary

The Bank of New York Mellon Corporation (BK) reported its first quarter 2013 financial results, marked by a net loss of $266 million, or $0.23 per diluted share. This loss was significantly impacted by a substantial $854 million after-tax charge related to a U.S. Tax Court ruling that disallowed certain foreign tax credits for the 2001 and 2002 tax years. Excluding this one-time charge, the company would have reported a net income of $588 million, or $0.50 per diluted share, which is a slight decrease compared to the $619 million in net income reported in the first quarter of 2012. Despite the net loss, key business metrics showed growth. Assets under custody and/or administration (AUC/A) reached $26.3 trillion, a 2% increase year-over-year, driven by new business and market appreciation. Assets under management (AUM) hit a record $1.43 trillion, up 9% year-over-year, also benefiting from net new business and higher market values. Fee and other revenue remained stable year-over-year at $2.8 billion, with growth in investment management and asset servicing fees offsetting declines in other areas. Importantly, the company received Federal Reserve approval for its 2013 capital plan, leading to an increase in share repurchases and a dividend increase.

Financial Highlights

38 data points
Beta

Revenue

$3.61B

Net Income

-$253.00M

-7.0% Net Margin

EPS (Diluted)

$-0.23

Total Assets

$355.94B

Cash & Equivalents

$4.44B

Free Cash Flow

-$2.87B

Financial Statements
Beta
Revenue$3.61B
Operating Income-$253.00M
Interest Expense$96.00M
Net Income-$253.00M
EPS (Basic)$-0.23
EPS (Diluted)$-0.23
Shares Outstanding (Basic)1.16B
Shares Outstanding (Diluted)1.16B

Key Highlights

  • 1Reported a net loss of $266 million ($0.23/share) due to an $854 million after-tax charge from a tax court ruling on foreign tax credits.
  • 2Adjusted net income was $588 million ($0.50/share), a slight decrease from $619 million ($0.52/share) in Q1 2012.
  • 3Assets Under Custody and/or Administration (AUC/A) grew 2% year-over-year to $26.3 trillion.
  • 4Assets Under Management (AUM) reached a record $1.43 trillion, up 9% year-over-year.
  • 5Fee and other revenue remained flat year-over-year at $2.8 billion, with growth in Investment Management and Asset Servicing offsetting declines elsewhere.
  • 6Received Federal Reserve approval for the 2013 capital plan, enabling a 16% increase in share repurchase authorization and a 15% dividend increase.
  • 7Noninterest expense was flat year-over-year at $2.8 billion, though adjusted noninterest expense increased 6% due to specific provisions and integration costs.

Frequently Asked Questions

The primary reason for the net loss was a significant after-tax charge of $854 million related to a U.S. Tax Court ruling that disallowed certain foreign tax credits claimed for the 2001 and 2002 tax years. This charge impacted earnings by $0.73 per diluted common share.

BNY Mellon reported a record $1.43 trillion in Assets Under Management (AUM) at the end of the first quarter of 2013, representing a 9% increase year-over-year. This growth was driven by net new business and higher market values.

Following the Federal Reserve's non-objection to its 2013 capital plan, BNY Mellon's Board of Directors approved an increase in share repurchases to up to $1.35 billion and a 15% increase in the quarterly common stock dividend, raising it from $0.13 to $0.15 per share.

Net interest revenue decreased by $46 million compared to the first quarter of 2012, totaling $719 million. This decline was primarily attributed to lower reinvestment yields, reduced accretion, and the elimination of interest on European Central Bank deposits. The net interest margin (FTE) also decreased year-over-year to 1.11% from 1.32%.