10-QPeriod: Q1 FY2015

Bank of New York Mellon Corp Quarterly Report for Q1 Ended Mar 31, 2015

Filed May 8, 2015For Securities:BKBK-PKBNYBNY-PK

Summary

The Bank of New York Mellon Corporation (BK) reported solid financial performance for the first quarter of 2015, demonstrating growth in key business segments and effective expense management. Net income applicable to common shareholders increased year-over-year to $766 million, or $0.67 per diluted share, compared to $661 million, or $0.57 per diluted share, in the prior year quarter. This improvement was driven by robust growth in assets under custody/administration (AUC/A) and assets under management (AUM), which reached $28.5 trillion and $1.7 trillion, respectively, reflecting higher market values and net new business. Fee and other revenue saw a 4% increase year-over-year, supported by strong performance in investment services and foreign exchange trading. BNY Mellon also made significant strides in its capital management and strategic initiatives. The company received a non-objection from the Federal Reserve for its 2015 capital plan, paving the way for an approved share repurchase program of up to $3.1 billion. Furthermore, the company resolved substantially all foreign exchange-related legal actions for $714 million, which was covered by existing reserves, indicating a proactive approach to managing legal contingencies. While noninterest expense remained controlled, the company continues to invest in compliance and risk functions, reflecting the evolving regulatory landscape.

Financial Highlights

39 data points
Beta

Revenue

$3.76B

Net Income

$779.00M

20.7% Net Margin

EPS (Diluted)

$0.67

Total Assets

$392.34B

Cash & Equivalents

$7.17B

Free Cash Flow

-$233.00M

Financial Statements
Beta
Revenue$3.76B
Operating Income$779.00M
Interest Expense$79.00M
Net Income$779.00M
EPS (Basic)$0.67
EPS (Diluted)$0.67
Shares Outstanding (Basic)1.12B
Shares Outstanding (Diluted)1.13B

Key Highlights

  • 1Net income applicable to common shareholders rose to $766 million ($0.67/share) from $661 million ($0.57/share) in Q1 2014.
  • 2Assets under custody and/or administration (AUC/A) increased 2% year-over-year to $28.5 trillion.
  • 3Assets under management (AUM) grew 7% year-over-year to a record $1.74 trillion.
  • 4Investment services fees increased 3% year-over-year to $1.75 billion.
  • 5Foreign exchange and other trading revenue increased significantly by 67% year-over-year to $229 million.
  • 6The company's 2015 capital plan received a non-objection from the Federal Reserve, allowing for significant share repurchases.
  • 7BNY Mellon resolved substantially all foreign exchange-related litigation for $714 million, covered by existing reserves.

Frequently Asked Questions

BNY Mellon's earnings growth in Q1 2015 was primarily driven by an increase in assets under custody/administration (AUC/A) and assets under management (AUM), which benefited from higher market values and net new business. Additionally, strong performance in investment services fees and a significant increase in foreign exchange trading revenue contributed positively to the results.

Total noninterest expense decreased slightly by 1% year-over-year to $2.7 billion. This was achieved through lower expenses across most categories, partly offset by investments in compliance and risk functions. Staff expenses saw a 2% decrease year-over-year, influenced by a stronger U.S. dollar, headcount reductions, and a pension plan curtailment gain.

Key strategic developments include the Federal Reserve's non-objection to BNY Mellon's 2015 capital plan, enabling a substantial share repurchase program. The company also resolved significant foreign exchange-related litigation for $714 million, which was fully covered by existing reserves. The acquisition of Cutwater Asset Management and an agreement to sell Meriten Investment Management were also noted.

BNY Mellon reported strong capital adequacy ratios, with its estimated fully phased-in Basel III CET1 ratio calculated under the Advanced Approach at 9.2% and under the Standardized Approach at 9.6%. The company stated it was considered 'well capitalized' by regulators.