10-QPeriod: Q2 FY2015

Bank of New York Mellon Corp Quarterly Report for Q2 Ended Jun 30, 2015

Filed August 7, 2015For Securities:BKBK-PKBNYBNY-PK

Summary

Bank of New York Mellon Corp. (BK) reported solid results for the second quarter of 2015, with net income applicable to common shareholders of $830 million, or $0.73 per diluted share. On a non-GAAP basis, which excludes litigation and restructuring charges, net income was $868 million, or $0.77 per diluted share. This represents a significant improvement compared to the second quarter of 2014, where net income was $554 million ($0.48 per share), or $715 million ($0.62 per share) on a non-GAAP basis. Key business segments performed well. Investment Services fees increased by 4% year-over-year, driven by growth in asset servicing and clearing services. Assets under Custody/Administration (AUC/A) remained strong at $28.6 trillion, a slight increase from the prior year, reflecting higher market values and organic growth. Assets Under Management (AUM) also grew to $1.7 trillion, driven by higher market values, net new business, and the acquisition of Cutwater Asset Management. The company also addressed significant legal matters, reaching a settlement in principle for a foreign exchange-related class action lawsuit for $180 million, resulting in a $50 million pre-tax charge. Additionally, a settlement with the UK Financial Conduct Authority resulted in a £126 million ($190 million) fine, which was covered by existing legal reserves. Despite these charges, the company's financial performance remained robust.

Financial Highlights

38 data points
Beta

Revenue

$3.85B

Net Income

$853.00M

22.2% Net Margin

EPS (Diluted)

$0.73

Total Assets

$395.25B

Cash & Equivalents

$8.35B

Free Cash Flow

$2.56B

Financial Statements
Beta
Revenue$3.85B
Operating Income$1.63B
Interest Expense$68.00M
Net Income$853.00M
EPS (Basic)$0.74
EPS (Diluted)$0.73
Shares Outstanding (Basic)1.11B
Shares Outstanding (Diluted)1.12B

Key Highlights

  • 1Net income applicable to common shareholders was $830 million ($0.73 per diluted share) for Q2 2015, up significantly from $554 million ($0.48 per diluted share) in Q2 2014.
  • 2Non-GAAP net income was $868 million ($0.77 per diluted share) in Q2 2015, excluding litigation and restructuring charges.
  • 3Assets Under Custody/Administration (AUC/A) grew slightly to $28.6 trillion from $28.5 trillion year-over-year.
  • 4Assets Under Management (AUM) increased by 5% year-over-year to $1.72 trillion.
  • 5Investment Services fees rose 4% year-over-year to $1.79 billion.
  • 6Foreign exchange and other trading revenue increased 44% year-over-year to $187 million.
  • 7BNY Mellon reached a settlement in principle for FX litigation, incurring a $50 million pre-tax charge.

Frequently Asked Questions

BNY Mellon's net income applicable to common shareholders significantly increased to $830 million ($0.73 per diluted share) in Q2 2015, compared to $554 million ($0.48 per diluted share) in Q2 2014. On a non-GAAP basis, the improvement was also substantial, with net income rising from $715 million ($0.62 per diluted share) in Q2 2014 to $868 million ($0.77 per diluted share) in Q2 2015.

Revenue growth was driven by increases in Investment Services fees, which rose 4% year-over-year due to higher asset servicing and clearing services revenue. Foreign exchange and other trading revenue also saw a significant increase of 44%, attributed to higher market volatility and volumes. Growth in AUM and AUC/A also contributed positively.

Yes, BNY Mellon reached a settlement in principle for a foreign exchange-related class action lawsuit, resulting in a $50 million pre-tax charge. Additionally, the company paid a £126 million ($190 million) fine to the UK Financial Conduct Authority, which was covered by existing legal reserves. These charges were reflected in the company's results.

The company's capital position remained strong. The estimated Common Equity Tier 1 (CET1) ratio was 9.9% under the Advanced Approach and 10.0% under the Standardized Approach on a fully phased-in basis at June 30, 2015, both of which are considered well-capitalized.