10-QPeriod: Q1 FY2016

Bank of New York Mellon Corp Quarterly Report for Q1 Ended Mar 31, 2016

Filed May 10, 2016For Securities:BKBK-PKBNYBNY-PK

Summary

For the first quarter of 2016, Bank of New York Mellon Corporation (BK) reported net income applicable to common shareholders of $804 million, or $0.73 per diluted common share, an increase from $766 million, or $0.67 per diluted common share, in the first quarter of 2015. Assets under custody and/or administration (AUC/A) grew 2% year-over-year to $29.1 trillion, while assets under management (AUM) decreased 5% to $1.64 trillion. Investment services fees increased slightly by 1% year-over-year to $1.77 billion, driven by asset servicing and issuer services, while investment management and performance fees declined 6% to $812 million, primarily due to lower market values and net outflows. Net interest revenue increased by 5% to $766 million, with a net interest margin (FTE) of 1.01%. Noninterest expense decreased 3% year-over-year due to lower staff and other operating costs, partially offset by increased distribution and servicing expenses. BNY Mellon reported a fully phased-in CET1 ratio of 9.8% under the Advanced Approach and 11.0% under the Standardized Approach, indicating strong capital adequacy. The company also completed the acquisition of Atherton Lane Advisers, LLC, adding approximately $2.45 billion in AUM. A significant development noted is the FDIC and Federal Reserve's determination that BNY Mellon's 2015 resolution plan was not credible, requiring remedial actions by October 1, 2016.

Financial Statements
Beta
Revenue$3.74B
Interest Expense$117.00M
Net Income$817.00M
EPS (Basic)$0.73
EPS (Diluted)$0.73
Shares Outstanding (Basic)1.08B
Shares Outstanding (Diluted)1.09B

Key Highlights

  • 1Net income applicable to common shareholders increased to $804 million, or $0.73 per diluted share, from $766 million, or $0.67 per share, in the prior year's quarter.
  • 2Assets under custody and/or administration (AUC/A) grew 2% year-over-year to $29.1 trillion, indicating continued growth in servicing business.
  • 3Assets under management (AUM) decreased 5% year-over-year to $1.64 trillion, primarily due to net outflows and the impact of a stronger U.S. dollar.
  • 4Investment services fees increased 1% to $1.77 billion, driven by asset servicing and issuer services, while investment management fees decreased 6% to $812 million.
  • 5Net interest revenue rose 5% to $766 million, with a net interest margin (FTE) of 1.01%, showing an improvement in interest income generation.
  • 6Noninterest expense decreased 3% year-over-year to $2.63 billion, reflecting successful cost management initiatives.
  • 7The company is addressing a 'not credible' determination from regulators regarding its 2015 resolution plan, with a deadline of October 1, 2016, to remedy deficiencies.

Frequently Asked Questions

BNY Mellon reported net income applicable to common shareholders of $804 million, or $0.73 per diluted common share, for the first quarter of 2016.

AUC/A increased by 2% year-over-year to $29.1 trillion, while AUM decreased by 5% year-over-year to $1.64 trillion.

Investment services fees saw a slight increase of 1% to $1.77 billion, while investment management and performance fees decreased by 6% to $812 million. Net interest revenue increased by 5% to $766 million.

The FDIC and Federal Reserve determined BNY Mellon's 2015 resolution plan was not credible, requiring specific actions to be taken by October 1, 2016. Failure to address these could lead to stricter regulatory requirements or actions.