01—Abstract
Summary
Summary of the 8-K filed January 15, 2025. Cited figures are marked; the original filing is the authoritative source.
Bank of New York Mellon (BNY) reported record fourth-quarter 2024 results, with full-year 2024 net income applicable to common shareholders of $4.3 billiona on record revenue of $18.6 billion, and returned $4.4 billion of capital to common shareholders.
Fourth-quarter GAAP diluted EPS was $1.54b, or $1.72 excluding notable items, which primarily include $165 million of noninterest expense tied to severance and litigation reserves. Total revenue rose 11% year over year to $4.8 billion, and noninterest expense fell 16% to $3.4 billion, largely because the prior-year quarter included a large FDIC special assessment. Excluding notable items, expenses rose 2%, and pre-tax margin was 30% on a GAAP basis, or 34% excluding notable items.
The quarter's profitability and balance sheet trends were mixed. Return on tangible common equity was 23.3%c (26.1% excluding notable items), supported by fee revenue growth of 9% and net interest income growth of 8%. Capital ratios moved lower, with the CET1 ratio falling to 11.2% from 11.9% in the prior quarter and the Tier 1 leverage ratio falling to 5.7% from 6.0%, reflecting lower accumulated other comprehensive income, capital returns, and higher risk-weighted assets.
Management guided to 2025 net interest income of roughly $13.6 billiond and fee revenue growth in the mid-single digits, with expenses (excluding notable items) up 1–2%, and it reiterated that it aims to meet or exceed its medium-term targets through the cycle. For investors, the key takeaways are strong operating leverage and margin expansion, offset by a lower CET1 ratio and a shift in the capital return profile.
Full-year capital returns of $4.4 billion equaled a 102% total payout ratio, so further capital return pace will depend on earnings growth and capital levels. This summary is drawn only from the filed exhibits and does not reflect any forward-looking commentary beyond the guidance provided.
02—Key points
Key Highlights
- Record full-year 2024 revenue of $18.6 billion (up 5%) and record net income applicable to common shareholders of $4.3 billion (up 41%); full-year diluted EPS of $5.80, or $6.03 excluding notable items.
- Fourth-quarter diluted EPS of $1.54 (up 633% YoY, which reflects the prior-year FDIC special assessment), or $1.72 excluding notable items; pre-tax margin of 30% GAAP and 34% adjusted.
- Fourth-quarter total revenue of $4.8 billion (up 11% YoY), with fee revenue up 9% and net interest income up 8%; noninterest expense down 16% to $3.4 billion, or up 2% excluding notable items.
- Return on tangible common equity of 23.3% for Q4 (26.1% adjusted) and 22.8% for full-year 2024 (23.8% adjusted), both above the company's ≥23% medium-term target.
- CET1 ratio fell to 11.2% from 11.9% in Q3 and Tier 1 leverage ratio fell to 5.7% from 6.0%, driven by lower AOCI, capital returns, and higher risk-weighted assets.
- Capital returns of $4.4 billion in 2024 ($1.3 billion dividends and $3.1 billion buybacks), a 102% total payout ratio for the full year; Q4 returned $1.1 billion, including $750 million of repurchases.
- 2025 outlook calls for net interest income of about $13.6 billion, fee revenue up mid-single digits, and expenses excluding notable items up 1–2%, with a continued focus on positive operating leverage.
03—Questions
Frequently Asked Questions
Why did reported Q4 2024 EPS rise so sharply from the prior year?
Q4 2023 EPS of $0.21 was depressed by a $632 million FDIC special assessment and other notable charges. Q4 2024 GAAP EPS of $1.54 benefited from the absence of that charge, although $165 million of severance and litigation reserves weighed on the quarter. Excluding notable items, adjusted EPS rose 33% to $1.72.
What drove the decline in CET1 and Tier 1 leverage ratios?
BNY's CET1 capital fell $933 million quarter over quarter, mainly due to lower accumulated other comprehensive income and capital returned through buybacks and dividends, partly offset by earnings. Risk-weighted assets also rose by $2.0 billion, pushing the CET1 ratio down to 11.2% from 11.9%. The Tier 1 leverage ratio declined to 5.7% from 6.0% on lower capital and higher average assets.
What is the 2025 outlook?
BNY expects 2025 net interest income of roughly $13.6 billion, based on market-implied forward rates as of year-end 2024, with fee revenue up mid-single digits and expenses excluding notable items up 1–2%. The company aims for continued positive operating leverage and capital returns, and it says it expects to meet or exceed its medium-term targets through the cycle.
How strong is BNY's balance sheet and liquidity position?
At year-end 2024, the CET1 ratio was 11.2%, the Tier 1 capital ratio 13.7%, and the total capital ratio 14.8%. The average liquidity coverage ratio was 115% and the average net stable funding ratio was 132%, both above regulatory minimums. Preliminary year-end figures may still change when the 10-K is filed.
What were the main drivers of Q4 2024 revenue growth?
Total revenue rose 11% YoY to $4.8 billion. Fee revenue increased 9% on higher market values, client activity, net new business and foreign exchange revenue, and net interest income rose 8% on higher securities portfolio yields and balance sheet growth. Investment and other revenue improved mainly because Q4 2023 included a $144 million reduction in the fair value of a contingent consideration receivable.
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