10-QPeriod: Q3 FY2022

Bank of New York Mellon Corp Quarterly Report for Q3 Ended Sep 30, 2022

Filed November 7, 2022For Securities:BKBK-PKBNYBNY-PK

Summary

BNY Mellon's third quarter 2022 results show a mixed financial performance impacted by a significant goodwill impairment charge. While net interest revenue saw a substantial increase of 44% year-over-year, driven by higher interest rates, total revenue grew by 6% to $4.3 billion. This growth was primarily supported by the Securities Services and Market and Wealth Services segments, which reported revenue increases of 13% and 17% respectively. However, the Investment and Wealth Management segment experienced a 16% revenue decline. The company recorded a $680 million non-cash goodwill impairment charge in its Investment Management reporting unit, leading to a reported net income applicable to common shareholders of $319 million ($0.39 per diluted share). Excluding notable items, adjusted net income was $983 million ($1.21 per diluted share), representing a decrease from the prior year's adjusted net income of $926 million ($1.09 per diluted share). BNY Mellon's Assets Under Custody/Administration (AUC/A) decreased by 7% to $42.2 trillion, primarily due to lower market values and a stronger U.S. dollar, though partially offset by client inflows. Assets Under Management (AUM) also saw a significant decline of 23% to $1.8 trillion, attributed to the same factors. Despite these challenges, the company increased its quarterly cash dividend by 9% to $0.37 per share and maintained strong capital ratios, with a CET1 ratio of 10.0%.

Financial Highlights

38 data points
Beta

Net Income

$388.00M

EPS (Diluted)

$0.39

Total Assets

$427.95B

Cash & Equivalents

$9.60B

Free Cash Flow

$3.61B

Financial Statements
Beta
Interest Expense$1.06B
Net Income$388.00M
EPS (Basic)$0.39
EPS (Diluted)$0.39
Shares Outstanding (Basic)811.30M
Shares Outstanding (Diluted)814.52M

Key Highlights

  • 1Net interest revenue surged 44% year-over-year, benefiting from higher interest rates.
  • 2Total revenue increased by 6% to $4.3 billion, driven by strong performance in Securities Services and Market and Wealth Services.
  • 3A significant goodwill impairment charge of $680 million negatively impacted the Investment and Wealth Management segment and overall net income.
  • 4Assets Under Custody/Administration (AUC/A) decreased by 7% to $42.2 trillion and Assets Under Management (AUM) fell by 23% to $1.8 trillion, primarily due to market conditions and currency fluctuations.
  • 5BNY Mellon increased its quarterly common stock dividend by 9% to $0.37 per share.
  • 6Capital ratios remained strong, with the CET1 ratio at 10.0%.
  • 7The company completed the sale of BNY Alcentra Group Holdings, Inc. on November 1, 2022.

Frequently Asked Questions

The primary driver for the 44% year-over-year increase in net interest revenue was higher interest rates on interest-earning assets, partially offset by higher funding expenses and lower interest-earning asset balances.

BNY Mellon recorded a $680 million goodwill impairment charge in the third quarter of 2022 related to the Investment Management reporting unit. This impairment was driven by lower market values and a higher discount rate used in the valuation.

Market conditions, specifically lower market values and the unfavorable impact of a stronger U.S. dollar, led to a 7% decrease in AUC/A to $42.2 trillion and a 23% decrease in AUM to $1.8 trillion compared to the prior year.

BNY Mellon maintained a strong capital position, with its CET1 ratio under the Standardized Approach at 10.0% as of September 30, 2022, consistent with the previous quarter. The Tier 1 leverage ratio was 5.4%.