The Bank of New York Mellon Corp.
) second-quarter 2014 adjusted earnings per share of 62 cents beat
the Zacks Consensus Estimate of 56 cents reflecting strong growth
in assets under management (AUM). This marks the company's earnings
beat for the sixth consecutive quarter. Notably, results included
14 cents per share for the previously disclosed charges. This was
in line with the year-ago adjusted figure.
Better-than-expected results were mainly driven by strong AUM
growth, partly offset by a fall in net interest revenue, fee income
and a rise in non-interest expenses. Strong capital ratios were
among the positives, but asset quality was a mixed bag.
Net income applicable to common shareholders was $554 million
compared with $831 million in the prior-year quarter. Excluding the
after-tax impact of the previously disclosed charges related to
investment management funds and severance, net income in the second
quarter totaled $715 million.
The Bank Of New York Mellon Corporation -
Quarterly EPS (BNRI) | FindTheBest
BNY Mellon's total revenue came in at $3.75 billion, down 7% year
over year. However, revenues marginally beat the Zacks Consensus
Estimate of $3.74 billion.
Fully taxable equivalent net interest revenues were $736 million,
down 5% year over year. The fall was mainly due to lower yields on
investment securities, which was however, partially offset by
higher average deposits. Moreover, net interest margin declined 17
basis points to 0.98%.
Total fee and other revenues decreased 7% year over year to $2.98
billion on the back of lower investment services fees, foreign
exchange & other trading revenues and investment, and other
income. These were, nevertheless, partially offset by rise in
investment management & performance fees.
Total non-interest expenses came in at $2.95 billion, up 4% year
over year. The rise in expenses was primarily due to a rise in
other expenses, partially offset by fall in incentives and employee
benefits, business development, and amortization of tangible
AUM totaled $1.64 trillion as of Jun 30, 2014, up 15% from the
year-ago quarter. Assets under custody and administration totaled
$28.5 trillion as of Jun 30, 2014, increasing 9% year over year.
Both the increases were attributable to rise in market values as
well as net new business.
BNY Mellon's credit quality depicted a mixed bag. Non-performing
assets fell 30.4% year over year to $142 million. However,
allowance for loan losses increased 28.4% to $135.5 million in the
Provision for credit losses witnessed a benefit of $12 million,
compared with a benefit of $19 million in the prior-year quarter.
BNY Mellon's capital ratios remained strong. At the end of the
reported quarter, the company's common equity tier 1 capital ratio
(Standardized Basel 3 Transition) was 10.4% compared with 9.3% at
the end of the prior-year quarter. Tangible common equity ratio was
6.4% compared with 5.8% at the end of the prior-year quarter.
Capital Deployment Activities
During the reported quarter, BNY Mellon bought back 12.6 million
shares for $431 million. On Jul 8, 2014, the bank declared a
quarterly common dividend of $0.17 per share.
We believe BNY Mellon's enhanced capital deployment activities will
boost investors' confidence in the stock. Further, the top line is
expected to benefit from restructuring initiatives. However, a low
interest rate environment and stringent regulatory landscape will
likely hamper revenue growth in the coming quarters.
Currently, BNY Mellon carries a Zacks Rank #3 (Hold).
Other Major Banks
Among other major regional banks,
) posted second-quarter earnings per share of 80 cents, beat the
Zacks Consensus Estimate by 5.3%.
) reported second-quarter adjusted earnings per share of $1.24,
outpacing the Zacks Consensus Estimate of $1.08.
) is scheduled to report on Jul 24.
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