BNY Mellon's (BK) Q1 Earnings Beat, AUM & Fee Income Rise

The Bank of New York Mellon Corporation’s BK first-quarter 2024 adjusted earnings of $1.29 per share handily outpaced the Zacks Consensus Estimate of $1.19. Also, the figure reflected a rise of 14% from the prior-year quarter.

Further, BK’s total revenues grew 3% year over year to $4.53 billion. The top line also beat the Zacks Consensus Estimate of $4.38 billion.

The primary driver for the increase in top line was an improvement in fee income and assets under custody and/or administration (AUC/A) and assets under management (AUM) balance.

 

The Bank of New York Mellon Corporation Price, Consensus and EPS Surprise The Bank of New York Mellon Corporation Price, Consensus and EPS Surprise

The Bank of New York Mellon Corporation price-consensus-eps-surprise-chart | The Bank of New York Mellon Corporation Quote

Increase in Fee Income Boosts Revenues

Total fee revenues were $3.31 billion, up 5% from the prior-year quarter. The increase was particularly driven by investment services fees, and investment management and performance fees.

BK’s investment services fees (the largest revenue component) grew 8% to $2.28 billion in the first quarter. Moreover, investment management and performance fees were stable at $776 million.

The rise in both the above-mentioned metrics was driven by improvement in AUM and AUC/A balances. As of Mar 31, 2024, AUM was $2.02 trillion, up 6% year over year, and AUC/A was $48.8 trillion, rising 5%. The growth primarily reflected higher market values driven by aglobal marketrally in the quarter.

Similar to BK, the other two major custodian banks – State Street STT and Northern Trust Corporation NTRS – witnessed improvement in AUC and AUM balances in the first quarter. This resulted in a rise in fee income for both companies.

For BK, other fee income components, financing-related fees and distribution and servicing fees jumped 10% and 27%, respectively, in the first quarter of 2024.

On the other hand, higher funding costs hurt BK’s net interest revenues (NIR). NIR, on a fully taxable-equivalent (FTE) basis, declined 8% year over year to $1.04 billion. The fall was due to changes in balance sheet size and mix, partly offset by higher interest rates.

Likewise, STT and NTRS recorded a decline in NIR in the first quarter, with the reasons being the same.

Additionally, total non-interest expenses (GAAP basis) were $3.18 billion for BNY Mellon, rising 2%. Almost all cost components increased.

In the first quarter, this Zacks Rank #3 (Hold) company recorded a provision for credit losses of $27 million, stable year over year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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