10-QPeriod: Q1 FY2022

Bank of New York Mellon Corp Quarterly Report for Q1 Ended Mar 31, 2022

Filed May 6, 2022For Securities:BKBK-PKBNYBNY-PK

Summary

BNY Mellon's first quarter 2022 report shows a net income applicable to common shareholders of $699 million, or $0.86 per diluted common share, a decrease from $858 million, or $0.97 per diluted common share, in the prior year's first quarter. Total revenue remained flat at $3.9 billion. Fee and other revenue saw a 3% decrease, primarily impacted by accelerated amortization of deferred costs related to Russia sanctions and the Russia-Ukraine war, which is expected to impact annual revenue by $80 million to $100 million. Net interest revenue increased by 7% year-over-year, driven by higher interest rates. Noninterest expense increased by approximately 5.5%, attributed to investments in growth and infrastructure. The company announced a leadership succession, with Todd Gibbons retiring as CEO in August 2022, and Robin Vince appointed as CEO-Elect. Key capital metrics showed a decrease in the CET1 ratio to 10.1% from 11.2% due to unrealized losses on securities available-for-sale and increased risk-weighted assets, partially offset by earnings. The company repurchased $118 million in common shares and paid $278 million in dividends.

Financial Highlights

38 data points
Beta

Net Income

$773.00M

EPS (Diluted)

$0.86

Total Assets

$473.81B

Cash & Equivalents

$9.54B

Free Cash Flow

$3.16B

Financial Statements
Beta
Interest Expense$80.00M
Net Income$773.00M
EPS (Basic)$0.86
EPS (Diluted)$0.86
Shares Outstanding (Basic)809.47M
Shares Outstanding (Diluted)813.99M

Key Highlights

  • 1Net income applicable to common shareholders decreased to $699 million ($0.86/share) from $858 million ($0.97/share) year-over-year.
  • 2Total revenue remained flat at $3.9 billion.
  • 3Fee and other revenue decreased 3% primarily due to Russia-related impacts, with an estimated $80-100 million annual revenue impact.
  • 4Net interest revenue increased 7% year-over-year, benefiting from higher interest rates.
  • 5Noninterest expense increased 5.5% due to investments in growth, infrastructure, and efficiency initiatives.
  • 6Common Equity Tier 1 (CET1) ratio decreased to 10.1% from 11.2% due to unrealized losses on securities and increased risk-weighted assets.
  • 7The company announced the upcoming retirement of CEO Todd Gibbons and the appointment of Robin Vince as CEO-Elect.

Frequently Asked Questions

The decrease in Fee and Other Revenue was primarily driven by an $88 million reduction due to the accelerated amortization of deferred costs for depositary receipts services related to Russia. Additionally, the Russia-Ukraine war and resulting sanctions led to a cessation of new banking business in Russia and suspension of investment management purchases of Russian securities, contributing to an estimated annual revenue impact of $80 million to $100 million.

BNY Mellon's Common Equity Tier 1 (CET1) ratio decreased to 10.1% as of March 31, 2022, down from 11.2% as of December 31, 2021. This decrease was primarily attributed to unrealized losses on securities available-for-sale, higher risk-weighted assets resulting from the implementation of the Standardized Approach to Counterparty Credit Risk, and capital deployed through dividends. These factors were partially offset by capital generated through earnings.

The conflict resulted in BNY Mellon ceasing new banking business in Russia and suspending investment management purchases of Russian securities. This led to an approximate $90 million reduction in fee revenue in the first quarter of 2022 and is expected to impact annual revenue by an estimated $80 million to $100 million. The company continues to support multinational clients with their exposures in Russia through custody and recordkeeping services.

Net interest revenue increased by 7% compared to the first quarter of 2021 and 3% compared to the fourth quarter of 2021. This increase was primarily driven by higher interest rates on interest-earning assets, a change in asset mix, and lower funding expense, partially offset by lower interest-earning assets. The company's net interest margin also improved.