10-QPeriod: Q3 FY2014

Bank of New York Mellon Corp Quarterly Report for Q3 Ended Sep 30, 2014

Filed November 7, 2014For Securities:BKBK-PKBNYBNY-PK

Summary

The Bank of New York Mellon Corporation (BK) reported solid results for the third quarter of 2014, driven by strong performance in its Investment Services and Investment Management businesses. Total revenue saw a significant increase year-over-year, largely due to substantial gains from the sale of its equity investment in Wing Hang Bank and the One Wall Street office building. Fee and other revenue benefited from increases in asset servicing fees and investment management fees, reflecting higher market values and net new business. Net interest revenue experienced a year-over-year decrease due to lower asset yields, although this was partially offset by higher average interest-earning assets. The company also highlighted its strategic exit from the derivatives sales and trading business and the acquisition of Cutwater Asset Management, which is expected to close in early 2015. BNY Mellon maintained strong capital ratios, exceeding regulatory requirements and expressing confidence in its ability to meet upcoming Basel III and Supplementary Leverage Ratio (SLR) requirements.

Financial Highlights

38 data points
Beta

Revenue

$4.59B

Net Income

$1.08B

23.6% Net Margin

EPS (Diluted)

$0.93

Total Assets

$386.30B

Cash & Equivalents

$6.41B

Free Cash Flow

$698.00M

Financial Statements
Beta
Revenue$4.59B
Operating Income$2.33B
Interest Expense$88.00M
Net Income$1.08B
EPS (Basic)$0.93
EPS (Diluted)$0.93
Shares Outstanding (Basic)1.13B
Shares Outstanding (Diluted)1.13B

Key Highlights

  • 1Total revenue increased significantly due to substantial gains from asset sales (Wing Hang and One Wall Street).
  • 2Investment Services fees increased 5% year-over-year, driven by organic growth, higher market values, and net new business.
  • 3Investment Management and performance fees rose 7% year-over-year, reflecting higher equity markets and a weaker U.S. dollar.
  • 4Net interest revenue decreased 7% year-over-year due to lower asset yields, partially offset by higher interest-earning assets.
  • 5BNY Mellon announced plans to exit its derivatives sales and trading business and acquired Cutwater Asset Management.
  • 6The company reported strong capital ratios, with an estimated Basel III CET1 ratio of 10.2% under the Advanced Approach and 10.8% under the Standardized Approach.
  • 7BNY Mellon repurchased 11.0 million common shares for $431 million in the third quarter.

Frequently Asked Questions

BNY Mellon's revenue growth in Q3 2014 was primarily driven by significant gains from the sale of its equity investment in Wing Hang Bank ($315 million after-tax gain) and the sale of its One Wall Street office building ($204 million after-tax gain). Additionally, fee and other revenue was boosted by higher asset servicing fees and investment management and performance fees, reflecting positive market conditions and business growth.

BNY Mellon maintained a strong capital position. Its estimated Basel III Common Equity Tier 1 (CET1) ratio was 10.2% under the Advanced Approach and 10.8% under the Standardized Approach on a fully phased-in basis as of September 30, 2014. The company expressed confidence in its ability to meet upcoming regulatory capital requirements.

BNY Mellon announced its intention to exit the derivatives sales and trading business over the next several years. The company also announced an agreement to acquire Cutwater Asset Management, a U.S.-based fixed income specialist, expected to close in early 2015.