10-QPeriod: Q3 FY2017

Bank of New York Mellon Corp Quarterly Report for Q3 Ended Sep 30, 2017

Filed November 7, 2017For Securities:BKBK-PKBNYBNY-PK

Summary

In the third quarter of 2017, Bank of New York Mellon Corporation (BK) demonstrated solid financial performance, with net income applicable to common shareholders rising to $983 million, or $0.94 per diluted common share, up from $974 million, or $0.90 per diluted common share, in the same period of the prior year. The company saw a healthy increase in both Assets Under Custody/Administration (AUC/A) and Assets Under Management (AUM), reaching record levels of $32.2 trillion and $1.8 trillion, respectively. This growth was driven by higher market values, favorable foreign currency movements, and net new business. BNY Mellon also made significant strategic and leadership changes, including the appointment of Charles W. Scharf as CEO and the increase in its quarterly cash dividend to $0.24 per common share, representing a 26% rise. The company continues to focus on enhancing client experience and leveraging its scale and expertise. While most business segments showed revenue growth, the company faced some headwinds, such as lower foreign exchange revenue due to decreased market volatility and a decline in Depositary Receipts revenue. Overall, the quarter reflects a stable performance with positive growth in key AUM metrics and a commitment to shareholder returns.

Financial Highlights

37 data points
Beta

Net Income

$1.02B

EPS (Diluted)

$0.94

Total Assets

$354.40B

Cash & Equivalents

$9.46B

Free Cash Flow

$5.00B

Financial Statements
Beta
Interest Expense$312.00M
Net Income$1.02B
EPS (Basic)$0.94
EPS (Diluted)$0.94
Shares Outstanding (Basic)1.04B
Shares Outstanding (Diluted)1.04B

Key Highlights

  • 1Net income applicable to common shareholders increased to $983 million ($0.94/share) from $974 million ($0.90/share) year-over-year.
  • 2Assets Under Custody/Administration (AUC/A) reached a record $32.2 trillion, a 6% increase year-over-year.
  • 3Assets Under Management (AUM) reached a record $1.82 trillion, a 6% increase year-over-year.
  • 4Investment services fees increased 1% year-over-year to $1.92 billion.
  • 5Investment management and performance fees increased 5% year-over-year to $901 million.
  • 6Net interest revenue increased 8% year-over-year to $839 million, with net interest margin improving to 1.15%.
  • 7Common stock dividend increased 26% to $0.24 per share.

Frequently Asked Questions

Revenue growth was primarily driven by increases in Investment Management and Performance Fees, which rose 5% year-over-year, and Investment Services fees, which grew 1% year-over-year. These increases were largely attributable to higher market values, net new business, and in some cases, favorable foreign currency impacts.

BNY Mellon saw strong growth in both key metrics. Assets Under Management (AUM) increased by 6% year-over-year to a record $1.82 trillion, while Assets Under Custody/Administration (AUC/A) also increased by 6% year-over-year to a record $32.2 trillion. This growth was supported by higher market values and net new business.

In July 2017, Charles W. Scharf was appointed Chief Executive Officer. Additionally, the company announced a definitive agreement to sell CenterSquare Investment Management, one of its investment management boutiques. The company also increased its quarterly cash dividend on common stock by 26% to $0.24 per share.

Foreign exchange revenue decreased by 10% compared to the third quarter of 2016, totaling $158 million. This decrease was primarily due to lower market volatility and reduced Depositary Receipt-related foreign exchange activity, although higher volumes partially offset the decline.