NEW YORK, Oct. 20, 2016
/PRNewswire/ --
- Earnings of $979 million or
$0.90 per common share on an adjusted
basis (a)
- Earnings per common share up 22% on both a GAAP and adjusted
basis year-over-year (a)
TOTAL REVENUE OF $3.94
BILLION
- Fee and other revenue increased 3% year-over-year
- Net interest revenue increased 2% year-over-year
CONTINUED FOCUS ON EXPENSE CONTROL
- Total noninterest expense decreased 1%
year-over-year
EXECUTING ON CAPITAL PLAN AND RETURNING VALUE TO COMMON
SHAREHOLDERS
- Repurchased 11.6 million common shares for $464 million
- Return on common equity of 11%; Adjusted return on tangible
common equity of 24% (a)
- SLR - transitional of 6.0%; SLR - fully phased-in of
5.7% (a)
The Bank of New York Mellon Corporation ("BNY Mellon") (NYSE:
BK) today reported third quarter net income applicable to common
shareholders of $974 million, or
$0.90 per diluted common share, or
$979 million, or $0.90 per diluted common share, as adjusted
(Non-GAAP). In the third quarter of 2015, net income
applicable to common shareholders was $820
million, or $0.74 per diluted
common share, or $828 million, or
$0.74 per diluted common share, as
adjusted (Non-GAAP). In the second quarter of 2016, net
income applicable to common shareholders was $825 million, or $0.75 per diluted common share, or $830 million, or $0.76 per diluted common share, as adjusted
(Non-GAAP) (a).
"We delivered strong results for the quarter, once again meeting
or exceeding our three-year Investor Day goals. Each of our
businesses performed well, as total revenue was up 4 percent and
our business improvement process continued to pay off, generating
more than 500 basis points of positive operating leverage. Our
strategy is benefiting our clients and shareholders through all
market environments," Gerald L.
Hassell, chairman and chief executive officer, said.
"We also strengthened our capital ratios while returning
significant capital to shareholders through repurchases and
dividends, and made progress in our resolution planning to ensure
that BNY Mellon can be resolved without posing systemic risk to the
financial system," Mr. Hassell added.
"We continue to invest in best-in-class technology and data
analytics to enhance our clients' experience with us and provide
actionable insights for them to drive better financial results and
investment performance. We are confident in our ability to
deliver world-class solutions to our clients while we achieve solid
growth rates and returns for our shareholders," Mr. Hassell
concluded.
(a)
|
These measures are
considered to be Non-GAAP. See "Supplemental information –
Explanation of GAAP and Non-GAAP financial measures" beginning on
page 24 for the adjusted earnings and earnings per common share
reconciliation and tangible common equity ratio
reconciliation. See "Capital and Liquidity" beginning on page
13 for the reconciliation of the SLR.
|
CONFERENCE CALL INFORMATION
Gerald L. Hassell, chairman and
chief executive officer, and Thomas P.
Gibbons, vice chairman and chief financial officer, along
with other members of the executive management team from BNY
Mellon, will host a conference call and simultaneous live audio
webcast at 8:00 a.m. EDT on
Oct. 20, 2016. This conference
call and audio webcast will include forward-looking statements and
may include other material information.
Investors and analysts wishing to access the conference call and
audio webcast may do so by dialing (888) 898-7224 (U.S.) or
(913) 312-9027 (International), and using the passcode: 619690, or
by logging on to www.bnymellon.com/investorrelations.
Earnings materials will be available at
www.bnymellon.com/investorrelations beginning at approximately
6:30 a.m. EDT on Oct. 20, 2016. Replays of the conference
call and audio webcast will be available beginning Oct. 20, 2016 at approximately 2 p.m. EDT through Nov.
20, 2016 by dialing (888) 203-1112 (U.S.) or
(719) 457-0820 (International), and using the passcode:
2620345. The archived version of the conference call and
audio webcast will also be available at
www.bnymellon.com/investorrelations for the same time period.
THIRD QUARTER 2016 FINANCIAL HIGHLIGHTS (a)
(comparisons are 3Q16 vs. 3Q15, unless otherwise stated)
|
Earnings per
share
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon
Corporation
|
(in millions,
except per share amounts)
|
3Q16
|
|
3Q15
|
|
Inc/(Dec)
|
|
3Q16
|
|
3Q15
|
|
Inc/(Dec)
|
GAAP
results
|
$
|
0.90
|
|
|
$
|
0.74
|
|
|
22
|
%
|
|
$
|
974
|
|
|
$
|
820
|
|
|
19
|
%
|
Add: M&I,
litigation and restructuring charges
|
0.01
|
|
|
0.01
|
|
|
|
|
13
|
|
|
8
|
|
|
|
Less: Recovery
related to Sentinel
|
0.01
|
|
|
N/A
|
|
|
|
8
|
|
|
N/A
|
|
|
Non-GAAP
results
|
$
|
0.90
|
|
|
$
|
0.74
|
|
(b)
|
22
|
%
|
|
$
|
979
|
|
|
$
|
828
|
|
|
18
|
%
|
- Total revenue of $3.9 billion,
increased 4% on both a GAAP and adjusted basis (Non-GAAP)
(a).
- Investment services fees increased 2% reflecting higher money
market fees, higher fees in Depositary Receipts and higher
securities lending revenue, partially offset by the unfavorable
impact of a stronger U.S. dollar.
- Investment management and performance fees increased 4% due to
higher market values and money market fees, offset by the
unfavorable impact of a stronger U.S. dollar and net outflows.
- Foreign exchange revenue decreased 3% reflecting lower volumes
and volatility, partially offset by the positive net impact of
foreign currency hedging activity.
- Investment and other income increased $33 million driven by higher asset-related and
seed capital gains.
- Net interest revenue increased $15
million driven by the actions we have taken to reduce the
levels of our lower yielding interest-earning assets and higher
yielding interest-bearing deposits, as well as the impact of higher
market interest rates.
- The provision for credit losses was a credit of $19 million, driven by net recoveries of
$13 million.
- Noninterest expense of $2.6
billion, decreased 1% on both a GAAP and adjusted basis
(Non-GAAP) (a). The decrease reflects lower expenses in most
categories, primarily driven by the favorable impact of a stronger
U.S. dollar, lower other, software and equipment, legal, net
occupancy and business development expenses, partially offset by
higher staff and distribution and servicing expenses.
- Effective tax rate of 24.6%.
- Assets under custody and/or administration ("AUC/A") and
Assets under management ("AUM")
- AUC/A of $30.5 trillion increased
7% reflecting higher market values, offset by the unfavorable
impact of a stronger U.S. dollar.
- Estimated new AUC/A wins in Asset Servicing of $150 billion in 3Q16.
- AUM of $1.72 trillion increased
6% reflecting higher market values offset by the unfavorable impact
of a stronger U.S. dollar (principally versus the British pound).
- Net long-term inflows of $1
billion in 3Q16 were a combination of $3 billion of inflows into actively managed
strategies and $2 billion of outflows
from index strategies.
- Net short-term outflows totaled $1
billion in 3Q16.
- Capital
- Repurchased 11.6 million common shares for $464 million in 3Q16.
- Return on common equity of 11%; Adjusted return on tangible
common equity of 24% in 3Q16 (a).
- SLR - transitional of 6.0%; SLR - fully phased-in of 5.7%
(a).
(a)
|
See "Supplemental
information – Explanation of GAAP and Non-GAAP financial measures"
beginning on page 24 for the reconciliation of Non-GAAP
measures. In all periods presented, Non-GAAP information
excludes the net income (loss) attributable to noncontrolling
interests of consolidated investment management funds, amortization
of intangible assets and M&I, litigation and restructuring
charges. Non-GAAP information for 3Q16 also excludes a
recovery of the previously impaired Sentinel Management Group, Inc.
("Sentinel") loan and 4Q15 also excludes the impairment charge
related to a court decision regarding Sentinel. See "Capital
and Liquidity" beginning on page 13 for the reconciliation of the
SLR.
|
(b)
|
Does not foot due
to rounding.
|
N/A - Not
applicable.
|
Note: Throughout
this document, sequential growth rates are
unannualized.
|
FINANCIAL SUMMARY
(dollars in
millions, except per share amounts; common shares in
thousands)
|
|
|
|
|
|
3Q16
vs.
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q15
|
2Q16
|
3Q15
|
Revenue:
|
|
|
|
|
|
|
|
Fee and other
revenue
|
$
|
3,150
|
|
$
|
2,999
|
|
$
|
2,970
|
|
$
|
2,950
|
|
$
|
3,053
|
|
5
|
%
|
3
|
%
|
Income (loss) from
consolidated investment management funds
|
17
|
|
10
|
|
(6)
|
|
16
|
|
(22)
|
|
|
|
Net interest
revenue
|
774
|
|
767
|
|
766
|
|
760
|
|
759
|
|
1
|
|
2
|
|
Total revenue –
GAAP
|
3,941
|
|
3,776
|
|
3,730
|
|
3,726
|
|
3,790
|
|
4
|
|
4
|
|
Less: Net
income (loss) attributable to noncontrolling interests
related
to consolidated investment management funds
|
9
|
|
4
|
|
(7)
|
|
5
|
|
(5)
|
|
|
|
Total revenue –
Non-GAAP
|
3,932
|
|
3,772
|
|
3,737
|
|
3,721
|
|
3,795
|
|
4
|
|
4
|
|
Provision for
credit losses
|
(19)
|
|
(9)
|
|
10
|
|
163
|
|
1
|
|
|
|
Expense:
|
|
|
|
|
|
|
|
Noninterest expense –
GAAP
|
2,643
|
|
2,620
|
|
2,629
|
|
2,692
|
|
2,680
|
|
1
|
|
(1)
|
|
Less:
Amortization of intangible assets
|
61
|
|
59
|
|
57
|
|
64
|
|
66
|
|
|
|
M&I, litigation
and restructuring charges
|
18
|
|
7
|
|
17
|
|
18
|
|
11
|
|
|
|
Total noninterest
expense – Non-GAAP
|
2,564
|
|
2,554
|
|
2,555
|
|
2,610
|
|
2,603
|
|
—
|
|
(1)
|
|
Income:
|
|
|
|
|
|
|
|
Income before income
taxes
|
1,317
|
|
1,165
|
|
1,091
|
|
871
|
|
1,109
|
|
13
|
%
|
19
|
%
|
Provision for income
taxes
|
324
|
|
290
|
|
283
|
|
175
|
|
282
|
|
|
|
Net income
|
$
|
993
|
|
$
|
875
|
|
$
|
808
|
|
$
|
696
|
|
$
|
827
|
|
|
|
Net (income) loss
attributable to noncontrolling interests (a)
|
(6)
|
|
(2)
|
|
9
|
|
(3)
|
|
6
|
|
|
|
Net income applicable
to shareholders of The Bank of New York Mellon
Corporation
|
987
|
|
873
|
|
817
|
|
693
|
|
833
|
|
|
|
Preferred stock
dividends
|
(13)
|
|
(48)
|
|
(13)
|
|
(56)
|
|
(13)
|
|
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon
Corporation
|
$
|
974
|
|
$
|
825
|
|
$
|
804
|
|
$
|
637
|
|
$
|
820
|
|
|
|
|
|
|
|
|
|
|
|
Operating leverage
(b)
|
|
|
|
|
|
349
|
bps
|
536
|
bps
|
Adjusted operating
leverage – Non-GAAP (b)
|
|
|
|
|
|
385
|
bps
|
511
|
bps
|
|
|
|
|
|
|
|
|
Key
Metrics:
|
|
|
|
|
|
|
|
Pre-tax operating
margin (c)
|
33
|
%
|
31
|
%
|
29
|
%
|
23
|
%
|
29
|
%
|
|
|
Adjusted pre-tax
operating margin – Non-GAAP (c)
|
35
|
%
|
33
|
%
|
31
|
%
|
30
|
%
|
31
|
%
|
|
|
|
|
|
|
|
|
|
|
Return on common
equity (annualized) (c)
|
10.8
|
%
|
9.3
|
%
|
9.2
|
%
|
7.1
|
%
|
9.1
|
%
|
|
|
Adjusted return on
common equity (annualized) – Non-GAAP (c)
|
11.3
|
%
|
9.7
|
%
|
9.7
|
%
|
8.9
|
%
|
9.7
|
%
|
|
|
|
|
|
|
|
|
|
|
Return on tangible
common equity (annualized) – Non-GAAP (d)
|
23.5
|
%
|
20.4
|
%
|
20.6
|
%
|
16.2
|
%
|
20.8
|
%
|
|
|
Adjusted return on
tangible common equity (annualized) – Non-GAAP
(c)(d)
|
23.6
|
%
|
20.5
|
%
|
20.8
|
%
|
19.0
|
%
|
21.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Fee revenue as a
percentage of total revenue
|
79
|
%
|
79
|
%
|
80
|
%
|
79
|
%
|
81
|
%
|
|
|
|
|
|
|
|
|
|
|
Percentage of
non-U.S. total revenue
|
36
|
%
|
34
|
%
|
33
|
%
|
34
|
%
|
37
|
%
|
|
|
|
|
|
|
|
|
|
|
Average common shares
and equivalents outstanding:
|
|
|
|
|
|
|
|
Basic
|
1,062,248
|
|
1,072,583
|
|
1,079,641
|
|
1,088,880
|
|
1,098,003
|
|
|
|
Diluted
|
1,067,682
|
|
1,078,271
|
|
1,085,284
|
|
1,096,385
|
|
1,105,645
|
|
|
|
|
|
|
|
|
|
|
|
Period
end:
|
|
|
|
|
|
|
|
Full-time
employees
|
52,300
|
|
52,200
|
|
52,100
|
|
51,200
|
|
51,300
|
|
|
|
Book value per common
share – GAAP (d)
|
$
|
34.19
|
|
$
|
33.72
|
|
$
|
33.34
|
|
$
|
32.69
|
|
$
|
32.59
|
|
|
|
Tangible book value
per common share – Non-GAAP (d)
|
$
|
16.67
|
|
$
|
16.25
|
|
$
|
15.87
|
|
$
|
15.27
|
|
$
|
15.16
|
|
|
|
Cash dividends per
common share
|
$
|
0.19
|
|
$
|
0.17
|
|
$
|
0.17
|
|
$
|
0.17
|
|
$
|
0.17
|
|
|
|
Common dividend
payout ratio
|
21
|
%
|
23
|
%
|
23
|
%
|
30
|
%
|
23
|
%
|
|
|
Closing stock price
per common share
|
$
|
39.88
|
|
$
|
38.85
|
|
$
|
36.83
|
|
$
|
41.22
|
|
$
|
39.15
|
|
|
|
Market
capitalization
|
$
|
42,167
|
|
$
|
41,479
|
|
$
|
39,669
|
|
$
|
44,738
|
|
$
|
42,789
|
|
|
|
Common shares
outstanding
|
1,057,337
|
|
1,067,674
|
|
1,077,083
|
|
1,085,343
|
|
1,092,953
|
|
|
|
(a)
|
Primarily
attributable to noncontrolling interests related to consolidated
investment management funds.
|
(b)
|
Operating leverage
is the rate of increase (decrease) in total revenue less the rate
of increase (decrease) in total noninterest expense. See
"Supplemental information – Explanation of GAAP and Non-GAAP
financial measures" beginning on page 24 for the components of this
measure.
|
(c)
|
Non-GAAP
information for all periods presented excludes the net income
(loss) attributable to noncontrolling interests related to
consolidated investment management funds, amortization of
intangible assets and M&I, litigation and restructuring
charges. Non-GAAP information for 3Q16 also excludes a
recovery of the previously impaired Sentinel loan and 4Q15 also
excludes the impairment charge related to a court decision
regarding Sentinel. See "Supplemental information –
Explanation of GAAP and Non-GAAP financial measures" beginning on
page 24 for the reconciliation of Non-GAAP measures.
|
(d)
|
Tangible book
value per common share - Non-GAAP and tangible common equity
exclude goodwill and intangible assets, net of deferred tax
liabilities. See "Supplemental information – Explanation of
GAAP and Non-GAAP financial measures" beginning on page 24 for the
reconciliation of Non-GAAP measures.
|
bps – basis
points.
|
CONSOLIDATED BUSINESS METRICS
Consolidated
business metrics
|
|
|
|
|
|
|
3Q16
vs.
|
3Q16
|
|
2Q16
|
1Q16
|
4Q15
|
3Q15
|
2Q16
|
3Q15
|
Changes in AUM
(in billions): (a)
|
|
|
|
|
|
|
|
|
Beginning balance of
AUM
|
$
|
1,664
|
|
|
$
|
1,639
|
|
$
|
1,625
|
|
$
|
1,625
|
|
$
|
1,700
|
|
|
|
Net inflows
(outflows):
|
|
|
|
|
|
|
|
|
Long-term:
|
|
|
|
|
|
|
|
|
Equity
|
(3)
|
|
|
(2)
|
|
(3)
|
|
(9)
|
|
(4)
|
|
|
|
Fixed
income
|
—
|
|
|
(2)
|
|
—
|
|
1
|
|
(3)
|
|
|
|
Liability-driven
investments (b)
|
4
|
|
|
15
|
|
14
|
|
11
|
|
11
|
|
|
|
Alternative
investments
|
2
|
|
|
1
|
|
1
|
|
2
|
|
1
|
|
|
|
Total long-term
active inflows
|
3
|
|
|
12
|
|
12
|
|
5
|
|
5
|
|
|
|
Index
|
(2)
|
|
|
(17)
|
|
(11)
|
|
(16)
|
|
(10)
|
|
|
|
Total long-term
inflows (outflows)
|
1
|
|
|
(5)
|
|
1
|
|
(11)
|
|
(5)
|
|
|
|
Short
term:
|
|
|
|
|
|
|
|
|
Cash
|
(1)
|
|
|
4
|
|
(9)
|
|
2
|
|
(10)
|
|
|
|
Total net
(outflows)
|
—
|
|
|
(1)
|
|
(8)
|
|
(9)
|
|
(15)
|
|
|
|
Net market
impact/other
|
80
|
|
|
71
|
|
41
|
|
24
|
|
(35)
|
|
|
|
Net currency
impact
|
(29)
|
|
|
(47)
|
|
(19)
|
|
(15)
|
|
(25)
|
|
|
|
Acquisition
|
—
|
|
|
2
|
|
—
|
|
—
|
|
—
|
|
|
|
Ending balance of
AUM
|
$
|
1,715
|
|
(c)
|
$
|
1,664
|
|
$
|
1,639
|
|
$
|
1,625
|
|
$
|
1,625
|
|
3
|
%
|
6
|
%
|
|
|
|
|
|
|
|
|
|
AUM at period end,
by product type: (a)
|
|
|
|
|
|
|
|
|
Equity
|
13
|
%
|
|
14
|
%
|
14
|
%
|
14
|
%
|
14
|
%
|
|
|
Fixed
income
|
14
|
|
|
13
|
|
13
|
|
13
|
|
13
|
|
|
|
Index
|
18
|
|
|
18
|
|
19
|
|
20
|
|
20
|
|
|
|
Liability-driven
investments (b)
|
35
|
|
|
34
|
|
33
|
|
32
|
|
32
|
|
|
|
Alternative
investments
|
4
|
|
|
4
|
|
4
|
|
4
|
|
4
|
|
|
|
Cash
|
16
|
|
|
17
|
|
17
|
|
17
|
|
17
|
|
|
|
Total AUM
|
100
|
%
|
(c)
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Investment
Management:
|
|
|
|
|
|
|
|
|
Average loans (in
millions)
|
$
|
15,308
|
|
|
$
|
14,795
|
|
$
|
14,275
|
|
$
|
13,447
|
|
$
|
12,779
|
|
3
|
%
|
20
|
%
|
Average deposits
(in millions)
|
$
|
15,600
|
|
|
$
|
15,518
|
|
$
|
15,971
|
|
$
|
15,497
|
|
$
|
15,282
|
|
1
|
%
|
2
|
%
|
|
|
|
|
|
|
|
|
|
Investment
Services:
|
|
|
|
|
|
|
|
|
Average loans (in
millions)
|
$
|
44,329
|
|
|
$
|
43,786
|
|
$
|
45,004
|
|
$
|
45,844
|
|
$
|
46,222
|
|
1
|
%
|
(4)
|
%
|
Average deposits
(in millions)
|
$
|
220,316
|
|
|
$
|
221,998
|
|
$
|
215,707
|
|
$
|
229,241
|
|
$
|
232,250
|
|
(1)
|
%
|
(5)
|
%
|
|
|
|
|
|
|
|
|
|
AUC/A at period end
(in trillions) (d)
|
$
|
30.5
|
|
(c)
|
$
|
29.5
|
|
$
|
29.1
|
|
$
|
28.9
|
|
$
|
28.5
|
|
3
|
%
|
7
|
%
|
|
|
|
|
|
|
|
|
|
Market value of
securities on loan at period end (in billions)
(e)
|
$
|
288
|
|
|
$
|
278
|
|
$
|
300
|
|
$
|
277
|
|
$
|
288
|
|
4
|
%
|
—
|
%
|
|
|
|
|
|
|
|
|
|
Asset
servicing:
|
|
|
|
|
|
|
|
|
Estimated new
business wins (AUC/A) (in billions)
|
$
|
150
|
|
(c)
|
$
|
167
|
|
$
|
40
|
|
$
|
49
|
|
$
|
84
|
|
|
|
|
|
|
|
|
|
|
|
|
Depositary
Receipts:
|
|
|
|
|
|
|
|
|
Number of sponsored
programs
|
1,094
|
|
|
1,112
|
|
1,131
|
|
1,145
|
|
1,176
|
|
(2)
|
%
|
(7)
|
%
|
|
|
|
|
|
|
|
|
|
Clearing
services:
|
|
|
|
|
|
|
|
|
Average active
clearing accounts (U.S. platform) (in thousands)
|
5,942
|
|
|
5,946
|
|
5,947
|
|
5,959
|
|
6,107
|
|
—
|
%
|
(3)
|
%
|
Average long-term
mutual fund assets (U.S. platform)
(in millions)
|
$
|
443,112
|
|
|
$
|
431,150
|
|
$
|
415,025
|
|
$
|
437,260
|
|
$
|
447,287
|
|
3
|
%
|
(1)
|
%
|
Average investor
margin loans (U.S. platform) (in millions)
|
$
|
10,834
|
|
|
$
|
10,633
|
|
$
|
11,063
|
|
$
|
11,575
|
|
$
|
11,806
|
|
2
|
%
|
(8)
|
%
|
|
|
|
|
|
|
|
|
|
Broker-Dealer:
|
|
|
|
|
|
|
|
|
Average tri-party
repo balances (in billions)
|
$
|
2,212
|
|
|
$
|
2,108
|
|
$
|
2,104
|
|
$
|
2,153
|
|
$
|
2,142
|
|
5
|
%
|
3
|
%
|
(a)
|
Excludes
securities lending cash management assets and assets managed in the
Investment Services business and the Other segment.
|
(b)
|
Includes currency
overlay assets under management.
|
(c)
|
Preliminary.
|
(d)
|
Includes the AUC/A
of CIBC Mellon Global Securities Services Company ("CIBC Mellon"),
a joint venture with the Canadian Imperial Bank of Commerce, of
$1.2 trillion at Sept. 30, 2016, $1.1 trillion at June 30, 2016 and
March 31, 2016 and $1.0 trillion at Dec. 31, 2015 and Sept. 30,
2015.
|
(e)
|
Represents the
total amount of securities on loan managed by the Investment
Services business. Excludes securities for which BNY Mellon
acts as agent on behalf of CIBC Mellon clients, which totaled $64
billion at Sept. 30, 2016, $56 billion at June 30, 2016 and March
31, 2016, $55 billion at Dec. 31, 2015 and $61 billion at Sept. 30,
2015.
|
The following table presents key market metrics at period end
and on an average basis.
Key market
metrics
|
|
|
|
|
|
3Q16
vs.
|
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q15
|
2Q16
|
3Q15
|
S&P 500 Index
(a)
|
2168
|
|
2099
|
|
2060
|
|
2044
|
|
1920
|
|
3
|
%
|
13
|
%
|
S&P 500 Index –
daily average
|
2162
|
|
2075
|
|
1951
|
|
2052
|
|
2027
|
|
4
|
|
7
|
|
FTSE 100 Index
(a)
|
6899
|
|
6504
|
|
6175
|
|
6242
|
|
6062
|
|
6
|
|
14
|
|
FTSE 100 Index –
daily average
|
6765
|
|
6204
|
|
5988
|
|
6271
|
|
6399
|
|
9
|
|
6
|
|
MSCI EAFE
(a)
|
1702
|
|
1608
|
|
1652
|
|
1716
|
|
1644
|
|
6
|
|
4
|
|
MSCI EAFE – daily
average
|
1677
|
|
1648
|
|
1593
|
|
1732
|
|
1785
|
|
2
|
|
(6)
|
|
Barclays Capital
Global Aggregate BondSM Index (a)(b)
|
386
|
|
382
|
|
368
|
|
342
|
|
346
|
|
1
|
|
12
|
|
NYSE and NASDAQ share
volume (in billions)
|
186
|
|
203
|
|
218
|
|
198
|
|
206
|
|
(8)
|
|
(10)
|
|
JPMorgan G7
Volatility Index – daily average (c)
|
10.19
|
|
11.12
|
|
10.60
|
|
9.49
|
|
9.93
|
|
(8)
|
|
3
|
|
Average Fed Funds
effective rate
|
0.39
|
%
|
0.37
|
%
|
0.36
|
%
|
0.16
|
%
|
0.13
|
%
|
2
|
bps
|
26
|
bps
|
Foreign exchange
rates vs. U.S. dollar:
|
|
|
|
|
|
|
|
British pound
(a)
|
$
|
1.30
|
|
$
|
1.34
|
|
$
|
1.44
|
|
$
|
1.48
|
|
$
|
1.52
|
|
(3)
|
%
|
(14)
|
%
|
British pound –
average rate
|
1.31
|
|
1.43
|
|
1.43
|
|
1.52
|
|
1.55
|
|
(8)
|
|
(15)
|
|
Euro
(a)
|
1.12
|
|
1.11
|
|
1.14
|
|
1.09
|
|
1.12
|
|
1
|
|
—
|
|
Euro – average
rate
|
1.12
|
|
1.13
|
|
1.10
|
|
1.10
|
|
1.11
|
|
(1)
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Period
end.
|
(b)
|
Unhedged in U.S.
dollar terms.
|
(c)
|
The JPMorgan G7
Volatility Index is based on the implied volatility in 3-month
currency options.
|
bps – basis
points.
|
FEE AND OTHER REVENUE
Fee and other
revenue
|
|
|
|
|
|
3Q16
vs.
|
(dollars in
millions)
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q15
|
2Q16
|
3Q15
|
Investment services
fees:
|
|
|
|
|
|
|
|
Asset servicing
(a)
|
$
|
1,067
|
|
$
|
1,069
|
|
$
|
1,040
|
|
$
|
1,032
|
|
$
|
1,057
|
|
—
|
%
|
1
|
%
|
Clearing
services
|
349
|
|
350
|
|
350
|
|
339
|
|
345
|
|
—
|
|
1
|
|
Issuer
services
|
337
|
|
234
|
|
244
|
|
199
|
|
313
|
|
44
|
|
8
|
|
Treasury
services
|
137
|
|
139
|
|
131
|
|
137
|
|
137
|
|
(1)
|
|
—
|
|
Total investment
services fees
|
1,890
|
|
1,792
|
|
1,765
|
|
1,707
|
|
1,852
|
|
5
|
|
2
|
|
Investment management
and performance fees
|
860
|
|
830
|
|
812
|
|
864
|
|
829
|
|
4
|
|
4
|
|
Foreign exchange and
other trading revenue
|
183
|
|
182
|
|
175
|
|
173
|
|
179
|
|
1
|
|
2
|
|
Financing-related
fees
|
58
|
|
57
|
|
54
|
|
51
|
|
71
|
|
2
|
|
(18)
|
|
Distribution and
servicing
|
43
|
|
43
|
|
39
|
|
41
|
|
41
|
|
—
|
|
5
|
|
Investment and other
income
|
92
|
|
74
|
|
105
|
|
93
|
|
59
|
|
24
|
|
56
|
|
Total fee
revenue
|
3,126
|
|
2,978
|
|
2,950
|
|
2,929
|
|
3,031
|
|
5
|
|
3
|
|
Net securities
gains
|
24
|
|
21
|
|
20
|
|
21
|
|
22
|
|
N/M
|
N/M
|
Total fee and other
revenue
|
$
|
3,150
|
|
$
|
2,999
|
|
$
|
2,970
|
|
$
|
2,950
|
|
$
|
3,053
|
|
5
|
%
|
3
|
%
|
(a)
|
Asset servicing
fees include securities lending revenue of $51 million in 3Q16, $52
million in 2Q16, $50 million in 1Q16, $46 million in 4Q15 and $38
million in 3Q15.
|
N/M – Not
meaningful.
|
KEY POINTS
- Asset servicing fees were $1.1
billion, an increase of 1% year-over-year and a slight
decrease sequentially. The year-over-year increase primarily
reflects higher money market fees and securities lending revenue,
partially offset by the unfavorable impact of a stronger U.S.
dollar and downsizing of the UK transfer agency business.
- Clearing services fees were $349
million, an increase of 1% year-over-year and a slight
decrease sequentially. The year-over-year increase was primarily
driven by higher money market fees, partially offset by the impact
of the previously disclosed lost business.
- Issuer services fees were $337
million, an increase of 8% year-over-year and 44%
sequentially. The year-over-year increase primarily reflects higher
corporate actions in Depositary Receipts and higher money market
fees in Corporate Trust. The sequential increase primarily reflects
seasonally higher fees in Depositary Receipts.
- Treasury services fees were $137
million, unchanged year-over-year and a decrease of 1%
sequentially.
- Investment management and performance fees were $860 million, an increase of 4% both
year-over-year and sequentially. The year-over-year increase
primarily reflects higher market values and money market fees,
partially offset by the unfavorable impact of a stronger U.S.
dollar (principally versus the British pound) and net outflows of
assets under management in prior periods. The sequential increase
primarily reflects higher market values.
•
|
Foreign exchange
and other trading revenue
|
|
|
|
|
|
|
(in
millions)
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q15
|
|
Foreign
exchange
|
$
|
175
|
|
$
|
166
|
|
$
|
171
|
|
$
|
165
|
|
$
|
180
|
|
|
Other trading revenue
(loss)
|
8
|
|
16
|
|
4
|
|
8
|
|
(1)
|
|
|
Total foreign
exchange and other trading revenue
|
$
|
183
|
|
$
|
182
|
|
$
|
175
|
|
$
|
173
|
|
$
|
179
|
|
Foreign exchange and other trading revenue totaled $183 million in 3Q16 compared with $179 million in 3Q15 and $182 million in 2Q16. In 3Q16, foreign
exchange revenue totaled $175
million, a decrease of 3% year-over-year and an increase of
5% sequentially. The year-over-year decrease primarily
reflects lower volumes and volatility, partially offset by the
positive net impact of foreign currency hedging activity. The
year-over-year decrease also reflects the continued trend of
clients migrating to lower margin products. The sequential
increase primarily reflects higher Depositary Receipt-related
foreign exchange activity, partially offset by
lower volatility.
Other trading revenue was $8
million in 3Q16, compared with a $1
million loss in 3Q15 and $16
million in 2Q16. The year-over-year increase primarily
reflects higher fixed income trading, partially offset by lower
equity and other trading. The sequential decrease primarily
reflects lower results from derivative trading and hedging
activity.
- Financing-related fees were $58
million in 3Q16 compared with $71
million in 3Q15 and $57
million in 2Q16. The year-over-year decrease primarily
reflects lower underwriting fees and lower fees related to secured
intraday credit provided to dealers in connection with their
tri-party repo activity.
- Distribution and servicing fees were $43
million in 3Q16 compared with $41
million in 3Q15 and $43
million in 2Q16. The year-over-year increase primarily
reflects higher money market fees, partially offset by fees paid to
introducing brokers.
•
|
Investment and
other income
|
|
|
|
|
|
|
(in
millions)
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q15
|
|
Corporate/bank-owned
life insurance
|
$
|
34
|
|
$
|
31
|
|
$
|
31
|
|
$
|
43
|
|
$
|
32
|
|
|
Expense
reimbursements from joint venture
|
18
|
|
17
|
|
17
|
|
16
|
|
16
|
|
|
Seed capital gains
(a)
|
16
|
|
11
|
|
11
|
|
10
|
|
7
|
|
|
Asset-related gains
(losses)
|
8
|
|
1
|
|
—
|
|
5
|
|
(9)
|
|
|
Lease-related gains
(losses)
|
—
|
|
—
|
|
44
|
|
(8)
|
|
—
|
|
|
Equity investment
(losses)
|
(1)
|
|
(4)
|
|
(3)
|
|
(2)
|
|
(6)
|
|
|
Other
income
|
17
|
|
18
|
|
5
|
|
29
|
|
19
|
|
|
Total investment and
other income
|
$
|
92
|
|
$
|
74
|
|
$
|
105
|
|
$
|
93
|
|
$
|
59
|
|
|
(a)
|
Excludes the gain
(loss) on seed capital investments in consolidated investment
management funds which are reflected in operations of consolidated
investment management funds, net of noncontrolling interests.
The gain (loss) on seed capital investments in consolidated
investment management funds was $8 million in 3Q16, $6 million in
2Q16, $1 million in 1Q16, $11 million in 4Q15 and $(17) million in
3Q15.
|
Investment and other income was $92
million in 3Q16 compared with $59
million in 3Q15 and $74
million in 2Q16. Both increases primarily reflect
higher asset-related and seed capital gains.
NET INTEREST REVENUE
Net interest
revenue
|
|
|
|
|
|
3Q16
vs.
|
(dollars in
millions)
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q15
|
2Q16
|
3Q15
|
Net interest revenue
(non-FTE)
|
$
|
774
|
|
$
|
767
|
|
$
|
766
|
|
$
|
760
|
|
$
|
759
|
|
1
|
%
|
2
|
%
|
Net interest revenue
(FTE)
|
786
|
|
780
|
|
780
|
|
774
|
|
773
|
|
1
|
|
2
|
|
Net interest margin
(FTE)
|
1.06
|
%
|
0.98
|
%
|
1.01
|
%
|
0.99
|
%
|
0.98
|
%
|
8
|
bps
|
8
|
bps
|
|
|
|
|
|
|
|
|
Selected average
balances:
|
|
|
|
|
|
|
|
Cash/interbank
investments
|
$
|
114,544
|
|
$
|
137,995
|
|
$
|
127,624
|
|
$
|
128,328
|
|
$
|
130,090
|
|
(17)
|
%
|
(12)
|
%
|
Trading account
securities
|
2,176
|
|
2,152
|
|
3,320
|
|
2,786
|
|
2,737
|
|
1
|
|
(20)
|
|
Securities
|
118,405
|
|
118,002
|
|
118,538
|
|
119,532
|
|
121,188
|
|
—
|
|
(2)
|
|
Loans
|
61,578
|
|
60,284
|
|
61,196
|
|
61,964
|
|
61,657
|
|
2
|
|
—
|
|
Interest-earning
assets
|
296,703
|
|
318,433
|
|
310,678
|
|
312,610
|
|
315,672
|
|
(7)
|
|
(6)
|
|
Interest-bearing
deposits
|
155,109
|
|
165,122
|
|
162,017
|
|
160,334
|
|
169,753
|
|
(6)
|
|
(9)
|
|
Noninterest-bearing
deposits
|
81,619
|
|
84,033
|
|
82,944
|
|
85,878
|
|
85,046
|
|
(3)
|
|
(4)
|
|
|
|
|
|
|
|
|
|
Selected average
yields/rates:
|
|
|
|
|
|
|
|
Cash/interbank
investments
|
0.43
|
%
|
0.44
|
%
|
0.43
|
%
|
0.32
|
%
|
0.32
|
%
|
|
|
Trading account
securities
|
2.62
|
|
2.45
|
|
2.16
|
|
2.79
|
|
2.74
|
|
|
|
Securities
|
1.56
|
|
1.56
|
|
1.61
|
|
1.62
|
|
1.60
|
|
|
|
Loans
|
1.84
|
|
1.85
|
|
1.76
|
|
1.54
|
|
1.56
|
|
|
|
Interest-earning
assets
|
1.19
|
|
1.14
|
|
1.16
|
|
1.08
|
|
1.08
|
|
|
|
Interest-bearing
deposits
|
(0.02)
|
|
0.03
|
|
0.04
|
|
0.01
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
Average
cash/interbank investments as a percentage of average
interest-earning assets
|
39
|
%
|
43
|
%
|
41
|
%
|
41
|
%
|
41
|
%
|
|
|
Average
noninterest-bearing deposits as a percentage of average
interest-earning assets
|
28
|
%
|
26
|
%
|
27
|
%
|
27
|
%
|
27
|
%
|
|
|
FTE – fully
taxable equivalent.
|
bps – basis
points.
|
KEY POINTS
- Net interest revenue totaled $774
million in 3Q16, an increase of $15
million year-over-year and $7
million sequentially. Both increases primarily reflect the
actions we have taken to reduce the levels of our lower yielding
interest-earning assets and higher yielding interest-bearing
deposits, as well as the impact of higher market interest rates.
The sequential increase also reflects higher average loans.
- As we previously indicated, we have been evaluating the impact
of our resolution plan strategy on net interest revenue. We
currently believe that it requires us to issue approximately
$2-4 billion of incremental unsecured
long-term debt above our typical funding requirements by
July 2017 to satisfy resource needs
in a time of distress. This estimate is subject to change as we
further refine our strategy and related assumptions. This is
currently expected to have a modest negative impact to net interest
revenue.
NONINTEREST EXPENSE
Noninterest
expense
|
|
|
|
|
|
3Q16
vs.
|
(dollars in
millions)
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q15
|
2Q16
|
3Q15
|
Staff
|
$
|
1,467
|
|
$
|
1,412
|
|
$
|
1,459
|
|
$
|
1,481
|
|
$
|
1,437
|
|
4
|
%
|
2
|
%
|
Professional, legal
and other purchased services
|
292
|
|
290
|
|
278
|
|
328
|
|
301
|
|
1
|
|
(3)
|
|
Software and
equipment
|
215
|
|
223
|
|
219
|
|
225
|
|
226
|
|
(4)
|
|
(5)
|
|
Net
occupancy
|
143
|
|
152
|
|
142
|
|
148
|
|
152
|
|
(6)
|
|
(6)
|
|
Distribution and
servicing
|
105
|
|
102
|
|
100
|
|
92
|
|
95
|
|
3
|
|
11
|
|
Sub-custodian
|
59
|
|
70
|
|
59
|
|
60
|
|
65
|
|
(16)
|
|
(9)
|
|
Business
development
|
52
|
|
65
|
|
57
|
|
75
|
|
59
|
|
(20)
|
|
(12)
|
|
Other
|
231
|
|
240
|
|
241
|
|
201
|
|
268
|
|
(4)
|
|
(14)
|
|
Amortization of
intangible assets
|
61
|
|
59
|
|
57
|
|
64
|
|
66
|
|
3
|
|
(8)
|
|
M&I, litigation
and restructuring charges
|
18
|
|
7
|
|
17
|
|
18
|
|
11
|
|
N/M
|
N/M
|
Total noninterest
expense – GAAP
|
$
|
2,643
|
|
$
|
2,620
|
|
$
|
2,629
|
|
$
|
2,692
|
|
$
|
2,680
|
|
1
|
%
|
(1)
|
%
|
|
|
|
|
|
|
|
|
Total staff expense
as a percentage of total revenue
|
37
|
%
|
37
|
%
|
39
|
%
|
40
|
%
|
38
|
%
|
|
|
|
|
|
|
|
|
|
|
Memo:
|
|
|
|
|
|
|
|
Total noninterest
expense excluding amortization of intangible assets and M&I,
litigation and restructuring charges – Non-GAAP
|
$
|
2,564
|
|
$
|
2,554
|
|
$
|
2,555
|
|
$
|
2,610
|
|
$
|
2,603
|
|
—
|
%
|
(1)
|
%
|
KEY POINTS
- Total noninterest expense decreased 1% year-over-year and
increased 1% sequentially. Total noninterest expense excluding
amortization of intangible assets and M&I, litigation and
restructuring charges (Non-GAAP) decreased 1% year-over-year and
increased slightly sequentially.
- The year-over-year decrease reflects lower expenses in most
categories, primarily driven by the favorable impact of a stronger
U.S. dollar, lower other, software and equipment, legal, net
occupancy and business development expenses, partially offset by
higher staff and distribution and servicing expenses. The increase
in staff expense was primarily due to higher incentive and
severance expenses and the annual employee merit increase,
partially offset by lower temporary services expense. We continue
to benefit from the savings generated by the business improvement
process, including the continued impact from vendor renegotiations,
and the execution of additional real estate actions that will
allows us to optimize our physical footprint and improve how our
employees work.
- The sequential increase primarily reflects higher staff expense
and M&I, litigation and restructuring charges, partially offset
by lower expenses in nearly all other expense categories including
business development, sub-custodian, net occupancy, other and
software and equipment expenses.
INVESTMENT SECURITIES PORTFOLIO
At Sept. 30, 2016, the fair value
of our investment securities portfolio totaled $118.7 billion. The net unrealized pre-tax
gain on our total securities portfolio was $1.4 billion at Sept. 30,
2016 compared with $1.6
billion at June 30, 2016. The decrease in the net
unrealized pre-tax gain was primarily driven by an increase in
market interest rates. At Sept. 30,
2016, the fair value of the held-to-maturity securities
totaled $41.4 billion and represented
35% of the fair value of the total investment securities
portfolio.
The following table shows the distribution of our investment
securities portfolio.
Investment
securities
portfolio
(dollars in
millions)
|
June 30,
2016
|
|
|
3Q16
change in unrealized gain
(loss)
|
|
Sept. 30,
2016
|
Fair value
as a % of amortized cost (a)
|
Unrealized
gain (loss)
|
|
Ratings
|
|
|
|
|
BB+
and lower
|
|
Fair
value
|
|
|
Amortized
cost
|
|
Fair
value
|
|
|
|
AAA/
AA-
|
A+/
A-
|
BBB+/
BBB-
|
Not
rated
|
Agency
RMBS
|
$
|
49,506
|
|
|
$
|
(70)
|
|
$
|
48,498
|
|
$
|
48,987
|
|
|
101
|
%
|
$
|
489
|
|
|
100
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
U.S.
Treasury
|
23,893
|
|
|
(154)
|
|
25,112
|
|
25,135
|
|
|
100
|
|
23
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Sovereign
debt/sovereign guaranteed
|
15,605
|
|
|
12
|
|
15,690
|
|
15,998
|
|
|
102
|
|
308
|
|
|
74
|
|
5
|
|
21
|
|
—
|
|
—
|
|
Non-agency RMBS
(b)
|
1,529
|
|
|
5
|
|
1,166
|
|
1,463
|
|
|
80
|
|
297
|
|
|
—
|
|
1
|
|
1
|
|
90
|
|
8
|
|
Non-agency
RMBS
|
797
|
|
|
8
|
|
741
|
|
757
|
|
|
94
|
|
16
|
|
|
8
|
|
4
|
|
16
|
|
71
|
|
1
|
|
European floating rate notes
|
1,104
|
|
|
15
|
|
869
|
|
851
|
|
|
98
|
|
(18)
|
|
|
71
|
|
22
|
|
7
|
|
—
|
|
—
|
|
Commercial
MBS
|
6,316
|
|
|
8
|
|
7,236
|
|
7,310
|
|
|
101
|
|
74
|
|
|
98
|
|
2
|
|
—
|
|
—
|
|
—
|
|
State and political
subdivisions
|
3,765
|
|
|
(24)
|
|
3,494
|
|
3,578
|
|
|
102
|
|
84
|
|
|
80
|
|
17
|
|
—
|
|
—
|
|
3
|
|
Foreign covered
bonds
|
2,376
|
|
|
(4)
|
|
2,395
|
|
2,433
|
|
|
102
|
|
38
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Corporate
bonds
|
1,610
|
|
|
(3)
|
|
1,585
|
|
1,638
|
|
|
103
|
|
53
|
|
|
16
|
|
68
|
|
16
|
|
—
|
|
—
|
|
CLO
|
2,482
|
|
|
16
|
|
2,530
|
|
2,534
|
|
|
100
|
|
4
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
—
|
|
U.S. Government
agencies
|
1,889
|
|
|
3
|
|
1,820
|
|
1,808
|
|
|
99
|
|
(12)
|
|
|
100
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Consumer
ABS
|
2,454
|
|
|
7
|
|
2,202
|
|
2,203
|
|
|
100
|
|
1
|
|
|
98
|
|
—
|
|
2
|
|
—
|
|
—
|
|
Other
(c)
|
4,002
|
|
|
(23)
|
|
3,931
|
|
3,961
|
|
|
101
|
|
30
|
|
|
60
|
|
—
|
|
38
|
|
—
|
|
2
|
|
Total investment
securities
|
$
|
117,328
|
(d)
|
|
$
|
(204)
|
|
$
|
117,269
|
|
$
|
118,656
|
(d)
|
|
101
|
%
|
$
|
1,387
|
|
(d)(e)
|
91
|
%
|
2
|
%
|
5
|
%
|
2
|
%
|
—
|
%
|
(a)
|
Amortized cost
before impairments.
|
(b)
|
These RMBS were
included in the former Grantor Trust and were marked-to-market in
2009. We believe these RMBS would receive higher credit
ratings if these ratings incorporated, as additional credit
enhancements, the difference between the written-down amortized
cost and the current face amount of each of these
securities.
|
(c)
|
Includes
commercial paper with a fair value of $1.7 billion and $1.5 billion
and money market funds with a fair value of $865 million and $931
million at June 30, 2016 and Sept. 30, 2016,
respectively.
|
(d)
|
Includes net
unrealized losses on derivatives hedging securities
available-for-sale of $1,023 million at June 30, 2016 and
$1,001 million at Sept. 30, 2016.
|
(e)
|
Unrealized gains
of $728 million at Sept. 30, 2016 related to available-for-sale
securities.
|
NONPERFORMING ASSETS
Nonperforming
assets (dollars in
millions)
|
Sept. 30,
2016
|
June 30,
2016
|
Sept. 30,
2015
|
Loans:
|
|
|
|
Other residential
mortgages
|
$
|
93
|
|
$
|
97
|
|
$
|
103
|
|
Wealth management
loans and mortgages
|
7
|
|
10
|
|
12
|
|
Lease
financing
|
4
|
|
4
|
|
—
|
|
Commercial real
estate
|
1
|
|
2
|
|
1
|
|
Financial
institutions
|
—
|
|
171
|
|
—
|
|
Total nonperforming
loans
|
105
|
|
284
|
|
116
|
|
Other assets
owned
|
4
|
|
5
|
|
7
|
|
Total nonperforming
assets
|
$
|
109
|
|
$
|
289
|
|
$
|
123
|
|
Nonperforming assets
ratio
|
0.17
|
%
|
0.45
|
%
|
0.20
|
%
|
Allowance for loan
losses/nonperforming loans
|
141.0
|
|
55.6
|
|
156.0
|
|
Total allowance for
credit losses/nonperforming loans
|
261.0
|
|
98.6
|
|
241.4
|
|
Nonperforming assets were $109
million at Sept. 30, 2016, a
decrease of $180 million compared
with June 30, 2016. The decrease in nonperforming loans
reflects the receipt of trust assets from the bankruptcy
proceedings of Sentinel.
ALLOWANCE FOR CREDIT LOSSES, PROVISION AND NET
CHARGE-OFFS
Allowance for
credit losses, provision and net
charge-offs (in
millions)
|
Sept. 30,
2016
|
June 30,
2016
|
Sept. 30,
2015
|
Allowance for credit
losses - beginning of period
|
$
|
280
|
|
$
|
287
|
|
$
|
278
|
|
Provision for credit
losses
|
(19)
|
|
(9)
|
|
1
|
|
Net
recoveries:
|
|
|
|
Financial
institutions
|
13
|
|
—
|
|
—
|
|
Other residential
mortgages
|
—
|
|
1
|
|
1
|
|
Foreign
|
—
|
|
1
|
|
—
|
|
Net
recoveries
|
13
|
|
2
|
|
1
|
|
Allowance for credit
losses - end of period
|
$
|
274
|
|
$
|
280
|
|
$
|
280
|
|
Allowance for loan
losses
|
$
|
148
|
|
$
|
158
|
|
$
|
181
|
|
Allowance for
lending-related commitments
|
126
|
|
122
|
|
99
|
|
The allowance for credit losses was $274
million at Sept. 30, 2016, a
decrease of $6 million compared with
$280 million at June 30,
2016. Net recoveries of $13
million in 3Q16 were recorded in the financial institutions
portfolio. The recovery reflects the receipt of trust assets from
the bankruptcy proceedings of Sentinel in excess of the carrying
value of $171 million.
CAPITAL AND LIQUIDITY
Capital
ratios
|
Sept. 30,
2016
|
June 30,
2016
|
Dec. 31,
2015
|
Consolidated
regulatory capital ratios: (a)
|
|
|
|
Standardized:
|
|
|
|
CET1 ratio
|
12.1
|
%
|
11.8
|
%
|
11.5
|
%
|
Tier 1 capital
ratio
|
14.3
|
|
13.4
|
|
13.1
|
|
Total (Tier 1 plus
Tier 2) capital ratio
|
14.7
|
|
13.8
|
|
13.5
|
|
Advanced:
|
|
|
|
CET1 ratio
|
10.5
|
|
10.2
|
|
10.8
|
|
Tier 1 capital
ratio
|
12.4
|
|
11.5
|
|
12.3
|
|
Total (Tier 1 plus
Tier 2) capital ratio
|
12.6
|
|
11.7
|
|
12.5
|
|
Leverage capital
ratio (b)
|
6.6
|
|
5.8
|
|
6.0
|
|
Supplementary
leverage ratio ("SLR")
|
6.0
|
|
5.3
|
|
5.4
|
|
BNY Mellon
shareholders' equity to total assets ratio – GAAP
(c)
|
10.6
|
|
10.4
|
|
9.7
|
|
BNY Mellon common
shareholders' equity to total assets ratio – GAAP
(c)
|
9.7
|
|
9.7
|
|
9.0
|
|
BNY Mellon tangible
common shareholders' equity to tangible assets of operations ratio
– Non-GAAP (c)
|
6.5
|
|
6.6
|
|
6.5
|
|
|
|
|
|
Selected
regulatory capital ratios – fully phased-in – Non-GAAP:
(a)(d)
|
|
|
|
CET1
ratio:
|
|
|
|
Standardized
Approach
|
11.3
|
|
11.0
|
|
10.2
|
|
Advanced
Approach
|
9.8
|
|
9.5
|
|
9.5
|
|
SLR
|
5.7
|
|
5.0
|
|
4.9
|
|
(a)
|
Regulatory capital
ratios for Sept. 30, 2016 are preliminary. For our CET1, Tier
1 capital and Total capital ratios, our effective capital ratios
under the U.S. capital rules are the lower of the ratios as
calculated under the Standardized and Advanced
Approaches.
|
(b)
|
The leverage
capital ratio is based on Tier 1 capital, as phased-in and
quarterly average total assets.
|
(c)
|
See "Supplemental
information – Explanation of GAAP and Non-GAAP financial measures"
beginning on page 24 for a reconciliation of these
ratios.
|
(d)
|
Estimated.
|
|
|
|
|
|
|
CET1 generation in
3Q16 – preliminary
|
Transitional basis (b)
|
|
Fully phased-in
- Non-GAAP
(c)
|
|
|
|
|
(in
millions)
|
|
CET1 – Beginning of
period
|
$
|
18,275
|
|
$
|
16,873
|
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon Corporation –
GAAP
|
974
|
|
974
|
|
|
Goodwill and
intangible assets, net of related deferred tax
liabilities
|
109
|
|
131
|
|
|
Gross CET1
generated
|
1,083
|
|
1,105
|
|
|
Capital
deployed:
|
|
|
|
Dividends
|
(205)
|
|
(205)
|
|
|
Common stock
repurchased
|
(464)
|
|
(464)
|
|
|
Total capital
deployed
|
(669)
|
|
(669)
|
|
|
Other comprehensive
income
|
(211)
|
|
(233)
|
|
|
Additional paid-in
capital (a)
|
74
|
|
74
|
|
|
Other
|
7
|
|
9
|
|
|
Total other
deductions
|
(130)
|
|
(150)
|
|
|
Net CET1
generated
|
284
|
|
286
|
|
|
CET1 – End of
period
|
$
|
18,559
|
|
$
|
17,159
|
|
|
(a)
|
Primarily related
to stock awards, the exercise of stock options and stock issued for
employee benefit plans.
|
(b)
|
Reflects
transitional adjustments to CET1 required under the U.S. capital
rules.
|
(c)
|
Estimated.
|
The table presented below compares the fully phased-in Basel III
capital components and risk-based ratios to those capital
components and ratios determined on a transitional basis.
Basel III capital
components and ratios
|
Sept. 30, 2016
(a)
|
|
June 30,
2016
|
|
Dec. 31,
2015
|
(dollars in
millions)
|
Transitional basis (b)
|
|
Fully
phased-in -
Non-GAAP (c)
|
|
|
Transitional basis (b)
|
|
Fully phased-in
- Non-GAAP
(c)
|
|
|
Transitional basis (b)
|
|
Fully phased-in
- Non-GAAP
(c)
|
|
CET1:
|
|
|
|
|
|
|
|
|
Common shareholders'
equity
|
$
|
36,450
|
|
$
|
36,153
|
|
|
$
|
36,282
|
|
$
|
36,007
|
|
|
$
|
36,067
|
|
$
|
35,485
|
|
Goodwill and
intangible assets
|
(17,505)
|
|
(18,527)
|
|
|
(17,614)
|
|
(18,658)
|
|
|
(17,295)
|
|
(18,911)
|
|
Net pension fund
assets
|
(56)
|
|
(94)
|
|
|
(56)
|
|
(94)
|
|
|
(46)
|
|
(116)
|
|
Equity method
investments
|
(314)
|
|
(347)
|
|
|
(322)
|
|
(356)
|
|
|
(296)
|
|
(347)
|
|
Deferred tax
assets
|
(15)
|
|
(25)
|
|
|
(14)
|
|
(23)
|
|
|
(8)
|
|
(20)
|
|
Other
|
(1)
|
|
(1)
|
|
|
(1)
|
|
(3)
|
|
|
(5)
|
|
(9)
|
|
Total CET1
|
18,559
|
|
17,159
|
|
|
18,275
|
|
16,873
|
|
|
18,417
|
|
16,082
|
|
Other Tier 1
capital:
|
|
|
|
|
|
|
|
|
Preferred
stock
|
3,542
|
|
3,542
|
|
|
2,552
|
|
2,552
|
|
|
2,552
|
|
2,552
|
|
Trust preferred
securities
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
74
|
|
—
|
|
Deferred tax
assets
|
(10)
|
|
—
|
|
|
(9)
|
|
—
|
|
|
(12)
|
|
—
|
|
Net pension fund
assets
|
(38)
|
|
—
|
|
|
(38)
|
|
—
|
|
|
(70)
|
|
—
|
|
Other
|
(110)
|
|
(109)
|
|
|
(112)
|
|
(110)
|
|
|
(25)
|
|
(22)
|
|
Total Tier 1
capital
|
21,943
|
|
20,592
|
|
|
20,668
|
|
19,315
|
|
|
20,936
|
|
18,612
|
|
|
|
|
|
|
|
|
|
|
Tier 2
capital:
|
|
|
|
|
|
|
|
|
Trust preferred
securities
|
156
|
|
—
|
|
|
161
|
|
—
|
|
|
222
|
|
—
|
|
Subordinated
debt
|
149
|
|
149
|
|
|
149
|
|
149
|
|
|
149
|
|
149
|
|
Allowance for credit
losses
|
274
|
|
274
|
|
|
280
|
|
280
|
|
|
275
|
|
275
|
|
Other
|
(6)
|
|
(7)
|
|
|
(6)
|
|
(7)
|
|
|
(12)
|
|
(12)
|
|
Total Tier 2 capital
- Standardized Approach
|
573
|
|
416
|
|
|
584
|
|
422
|
|
|
634
|
|
412
|
|
Excess of expected
credit losses
|
27
|
|
27
|
|
|
36
|
|
36
|
|
|
37
|
|
37
|
|
Less: Allowance for
credit losses
|
274
|
|
274
|
|
|
280
|
|
280
|
|
|
275
|
|
275
|
|
Total Tier 2 capital
- Advanced Approach
|
$
|
326
|
|
$
|
169
|
|
|
$
|
340
|
|
$
|
178
|
|
|
$
|
396
|
|
$
|
174
|
|
|
|
|
|
|
|
|
|
|
Total
capital:
|
|
|
|
|
|
|
|
|
Standardized
Approach
|
$
|
22,516
|
|
$
|
21,008
|
|
|
$
|
21,252
|
|
$
|
19,737
|
|
|
$
|
21,570
|
|
$
|
19,024
|
|
Advanced
Approach
|
$
|
22,269
|
|
$
|
20,761
|
|
|
$
|
21,008
|
|
$
|
19,493
|
|
|
$
|
21,332
|
|
$
|
18,786
|
|
|
|
|
|
|
|
|
|
|
Risk-weighted
assets:
|
|
|
|
|
|
|
|
|
Standardized
Approach
|
$
|
153,042
|
|
$
|
151,797
|
|
|
$
|
154,464
|
|
$
|
153,198
|
|
|
$
|
159,893
|
|
$
|
158,015
|
|
Advanced
Approach
|
$
|
177,104
|
|
$
|
175,784
|
|
|
$
|
179,172
|
|
$
|
177,829
|
|
|
$
|
170,384
|
|
$
|
168,509
|
|
|
|
|
|
|
|
|
|
|
Standardized
Approach:
|
|
|
|
|
|
|
|
|
CET1 ratio
|
12.1
|
%
|
11.3
|
%
|
|
11.8
|
%
|
11.0
|
%
|
|
11.5
|
%
|
10.2
|
%
|
Tier 1 capital
ratio
|
14.3
|
|
13.6
|
|
|
13.4
|
|
12.6
|
|
|
13.1
|
|
11.8
|
|
Total (Tier 1 plus
Tier 2) capital ratio
|
14.7
|
|
13.8
|
|
|
13.8
|
|
12.9
|
|
|
13.5
|
|
12.0
|
|
Advanced
Approach:
|
|
|
|
|
|
|
|
|
CET1 ratio
|
10.5
|
%
|
9.8
|
%
|
|
10.2
|
%
|
9.5
|
%
|
|
10.8
|
%
|
9.5
|
%
|
Tier 1 capital
ratio
|
12.4
|
|
11.7
|
|
|
11.5
|
|
10.9
|
|
|
12.3
|
|
11.0
|
|
Total (Tier 1 plus
Tier 2) capital ratio
|
12.6
|
|
11.8
|
|
|
11.7
|
|
11.0
|
|
|
12.5
|
|
11.1
|
|
(a)
|
Preliminary.
|
(b)
|
Reflects
transitional adjustments to CET1, Tier 1 capital and Tier 2 capital
required under the U.S. capital rules.
|
(c)
|
Estimated.
|
BNY Mellon has presented its estimated fully phased-in CET1 and
other risk-based capital ratios and the fully phased-in SLR based
on its interpretation of the U.S. capital rules, which are being
gradually phased-in over a multi-year period, and on the
application of such rules to BNY Mellon's businesses as currently
conducted. Management views the estimated fully phased-in
CET1 and other risk-based capital ratios and fully phased-in SLR as
key measures in monitoring BNY Mellon's capital position and
progress against future regulatory capital standards.
Additionally, the presentation of the estimated fully phased-in
CET1 and other risk-based capital ratios and fully phased-in SLR
are intended to allow investors to compare these ratios with
estimates presented by other companies.
Our capital and liquidity ratios are necessarily subject to,
among other things, BNY Mellon's further review of applicable
rules, anticipated compliance with all necessary enhancements to
model calibration, approval by regulators of certain models used as
part of RWA calculations, other refinements, further implementation
guidance from regulators, market practices and standards and any
changes BNY Mellon may make to its businesses. Consequently,
our capital and liquidity ratios remain subject to ongoing review
and revision and may change based on these factors.
Supplementary Leverage Ratio ("SLR")
The following table presents the SLR on both the transitional
and fully phased-in Basel III basis for BNY Mellon and our largest
bank subsidiary, The Bank of New York Mellon.
SLR
|
Sept. 30, 2016
(a)
|
|
June 30,
2016
|
|
December
31, 2015
|
(dollars in
millions)
|
Transitional
basis
|
|
Fully phased-in - Non-GAAP (b)
|
|
|
Transitional
basis
|
|
Fully phased-in - Non-GAAP (b)
|
|
|
Transitional
basis
|
|
Fully phased-in
- Non-GAAP
(b)
|
|
Consolidated:
|
|
|
|
|
|
|
|
|
Tier 1
capital
|
$
|
21,943
|
|
$
|
20,592
|
|
|
$
|
20,668
|
|
$
|
19,315
|
|
|
$
|
20,936
|
|
$
|
18,612
|
|
|
|
|
|
|
|
|
|
|
Total leverage
exposure:
|
|
|
|
|
|
|
|
|
Quarterly average
total assets
|
$
|
351,230
|
|
$
|
351,230
|
|
|
$
|
374,220
|
|
$
|
374,220
|
|
|
$
|
368,590
|
|
$
|
368,590
|
|
Less: Amounts
deducted from Tier 1 capital
|
17,760
|
|
19,095
|
|
|
17,876
|
|
19,234
|
|
|
17,650
|
|
19,403
|
|
Total on-balance
sheet assets
|
333,470
|
|
332,135
|
|
|
356,344
|
|
354,986
|
|
|
350,940
|
|
349,187
|
|
Off-balance sheet
exposures:
|
|
|
|
|
|
|
|
|
Potential future
exposure for derivatives contracts (plus certain other
items)
|
6,149
|
|
6,149
|
|
|
6,125
|
|
6,125
|
|
|
7,158
|
|
7,158
|
|
Repo-style
transaction exposures
|
447
|
|
447
|
|
|
402
|
|
402
|
|
|
440
|
|
440
|
|
Credit-equivalent
amount of other off-balance sheet exposures (less SLR
exclusions)
|
23,571
|
|
23,571
|
|
|
24,157
|
|
24,157
|
|
|
26,025
|
|
26,025
|
|
Total off-balance
sheet exposures
|
30,167
|
|
30,167
|
|
|
30,684
|
|
30,684
|
|
|
33,623
|
|
33,623
|
|
Total leverage
exposure
|
$
|
363,637
|
|
$
|
362,302
|
|
|
$
|
387,028
|
|
$
|
385,670
|
|
|
$
|
384,563
|
|
$
|
382,810
|
|
|
|
|
|
|
|
|
|
|
SLR - Consolidated
(c)
|
6.0
|
%
|
5.7
|
%
|
|
5.3
|
%
|
5.0
|
%
|
|
5.4
|
%
|
4.9
|
%
|
|
|
|
|
|
|
|
|
|
The Bank of New
York Mellon, our largest bank subsidiary:
|
|
|
|
|
|
|
|
|
Tier 1
capital
|
$
|
18,701
|
|
$
|
17,592
|
|
|
$
|
18,049
|
|
$
|
16,948
|
|
|
$
|
16,814
|
|
$
|
15,142
|
|
Total leverage
exposure
|
$
|
299,615
|
|
$
|
299,236
|
|
|
$
|
322,978
|
|
$
|
322,588
|
|
|
$
|
316,812
|
|
$
|
316,270
|
|
|
|
|
|
|
|
|
|
|
SLR - The Bank of New
York Mellon (c)
|
6.2
|
%
|
5.9
|
%
|
|
5.6
|
%
|
5.3
|
%
|
|
5.3
|
%
|
4.8
|
%
|
(a)
|
Sept. 30, 2016
information is preliminary.
|
(b)
|
Estimated.
|
(c)
|
The estimated
fully phased-in SLR (Non-GAAP) is based on our interpretation of
the U.S. capital rules. When the SLR is fully phased-in in
2018 as a required minimum ratio, we expect to maintain an SLR of
over 5%. The minimum required SLR is 3% and there is a 2%
buffer, in addition to the minimum, that is applicable to U.S.
G-SIBs. The insured depository institution subsidiaries of
the U.S. G-SIBs, including those of BNY Mellon, must maintain a 6%
SLR to be considered "well capitalized."
|
Liquidity Coverage Ratio ("LCR")
The U.S. LCR rules became effective Jan.
1, 2015 and currently require BNY Mellon to meet an LCR of
90%, increasing to 100% when fully phased-in on Jan. 1, 2017. Our estimated LCR on a
consolidated basis is compliant with the fully phased-in
requirements of the U.S. LCR as of Sept. 30,
2016 based on our understanding of the U.S. LCR rules.
Our consolidated HQLA before haircuts, totaled $195 billion at Sept. 30,
2016, compared with $191
billion at June 30, 2016 and $218 billion at Dec. 31,
2015.
INVESTMENT MANAGEMENT provides investment management
services to institutional and retail investors, as well as
investment management, wealth and estate planning and private
banking solutions to high net worth individuals and families, and
foundations and endowments.
(dollars in
millions, unless otherwise noted)
|
|
|
|
|
|
|
3Q16
vs.
|
3Q16
|
|
2Q16
|
1Q16
|
4Q15
|
3Q15
|
2Q16
|
3Q15
|
Revenue:
|
|
|
|
|
|
|
|
|
Investment management
fees:
|
|
|
|
|
|
|
|
|
Mutual
funds
|
$
|
309
|
|
|
$
|
304
|
|
$
|
300
|
|
$
|
294
|
|
$
|
301
|
|
2
|
%
|
3
|
%
|
Institutional
clients
|
362
|
|
|
344
|
|
334
|
|
350
|
|
347
|
|
5
|
|
4
|
|
Wealth
management
|
166
|
|
|
160
|
|
152
|
|
155
|
|
156
|
|
4
|
|
6
|
|
Investment management
fees (a)
|
837
|
|
|
808
|
|
786
|
|
799
|
|
804
|
|
4
|
|
4
|
|
Performance
fees
|
8
|
|
|
9
|
|
11
|
|
55
|
|
7
|
|
N/M
|
14
|
|
Investment management
and performance fees
|
845
|
|
|
817
|
|
797
|
|
854
|
|
811
|
|
3
|
|
4
|
|
Distribution and
servicing
|
49
|
|
|
49
|
|
46
|
|
39
|
|
37
|
|
—
|
|
32
|
|
Other
(a)
|
(18)
|
|
|
(10)
|
|
(31)
|
|
22
|
|
(5)
|
|
N/M
|
N/M
|
Total fee and other
revenue (a)
|
876
|
|
|
856
|
|
812
|
|
915
|
|
843
|
|
2
|
|
4
|
|
Net interest
revenue
|
82
|
|
|
82
|
|
83
|
|
84
|
|
83
|
|
—
|
|
(1)
|
|
Total
revenue
|
958
|
|
|
938
|
|
895
|
|
999
|
|
926
|
|
2
|
|
3
|
|
Provision for credit
losses
|
—
|
|
|
1
|
|
(1)
|
|
(4)
|
|
1
|
|
N/M
|
N/M
|
Noninterest expense
(ex. amortization of intangible assets)
|
680
|
|
|
684
|
|
660
|
|
689
|
|
665
|
|
(1)
|
|
2
|
|
Income before taxes
(ex. amortization of intangible assets)
|
278
|
|
|
253
|
|
236
|
|
314
|
|
260
|
|
10
|
|
7
|
|
Amortization of
intangible assets
|
22
|
|
|
19
|
|
19
|
|
24
|
|
24
|
|
16
|
|
(8)
|
|
Income before
taxes
|
$
|
256
|
|
|
$
|
234
|
|
$
|
217
|
|
$
|
290
|
|
$
|
236
|
|
9
|
%
|
8
|
%
|
|
|
|
|
|
|
|
|
|
Pre-tax operating
margin
|
27
|
%
|
|
25
|
%
|
24
|
%
|
29
|
%
|
25
|
%
|
|
|
Adjusted pre-tax
operating margin - Non-GAAP (b)
|
33
|
%
|
|
31
|
%
|
30
|
%
|
36
|
%
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Changes in AUM
(in billions): (c)
|
|
|
|
|
|
|
|
|
Beginning balance of
AUM
|
$
|
1,664
|
|
|
$
|
1,639
|
|
$
|
1,625
|
|
$
|
1,625
|
|
$
|
1,700
|
|
|
|
Net inflows
(outflows):
|
|
|
|
|
|
|
|
|
Long-term:
|
|
|
|
|
|
|
|
|
Equity
|
(3)
|
|
|
(2)
|
|
(3)
|
|
(9)
|
|
(4)
|
|
|
|
Fixed
income
|
—
|
|
|
(2)
|
|
—
|
|
1
|
|
(3)
|
|
|
|
Liability-driven
investments (d)
|
4
|
|
|
15
|
|
14
|
|
11
|
|
11
|
|
|
|
Alternative
investments
|
2
|
|
|
1
|
|
1
|
|
2
|
|
1
|
|
|
|
Total long-term
active inflows
|
3
|
|
|
12
|
|
12
|
|
5
|
|
5
|
|
|
|
Index
|
(2)
|
|
|
(17)
|
|
(11)
|
|
(16)
|
|
(10)
|
|
|
|
Total long-term
inflows (outflows)
|
1
|
|
|
(5)
|
|
1
|
|
(11)
|
|
(5)
|
|
|
|
Short
term:
|
|
|
|
|
|
|
|
|
Cash
|
(1)
|
|
|
4
|
|
(9)
|
|
2
|
|
(10)
|
|
|
|
Total net inflows
(outflows)
|
—
|
|
|
(1)
|
|
(8)
|
|
(9)
|
|
(15)
|
|
|
|
Net market
impact/other
|
80
|
|
|
71
|
|
41
|
|
24
|
|
(35)
|
|
|
|
Net currency
impact
|
(29)
|
|
|
(47)
|
|
(19)
|
|
(15)
|
|
(25)
|
|
|
|
Acquisition
|
—
|
|
|
2
|
|
—
|
|
—
|
|
—
|
|
|
|
Ending balance of
AUM
|
$
|
1,715
|
|
(e)
|
$
|
1,664
|
|
$
|
1,639
|
|
$
|
1,625
|
|
$
|
1,625
|
|
3
|
%
|
6
|
%
|
|
|
|
|
|
|
|
|
|
AUM at period end,
by product type: (c)
|
|
|
|
|
|
|
|
|
Equity
|
13
|
%
|
|
14
|
%
|
14
|
%
|
14
|
%
|
14
|
%
|
|
|
Fixed
income
|
14
|
|
|
13
|
|
13
|
|
13
|
|
13
|
|
|
|
Index
|
18
|
|
|
18
|
|
19
|
|
20
|
|
20
|
|
|
|
Liability-driven
investments (d)
|
35
|
|
|
34
|
|
33
|
|
32
|
|
32
|
|
|
|
Alternative
investments
|
4
|
|
|
4
|
|
4
|
|
4
|
|
4
|
|
|
|
Cash
|
16
|
|
|
17
|
|
17
|
|
17
|
|
17
|
|
|
|
Total AUM
|
100
|
%
|
(e)
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Average
balances:
|
|
|
|
|
|
|
|
|
Average
loans
|
$
|
15,308
|
|
|
$
|
14,795
|
|
$
|
14,275
|
|
$
|
13,447
|
|
$
|
12,779
|
|
3
|
%
|
20
|
%
|
Average
deposits
|
$
|
15,600
|
|
|
$
|
15,518
|
|
$
|
15,971
|
|
$
|
15,497
|
|
$
|
15,282
|
|
1
|
%
|
2
|
%
|
(a)
|
Total fee and
other revenue includes the impact of the consolidated investment
management funds, net of noncontrolling interests. See page
28 for a breakdown of the revenue line items in the Investment
Management business impacted by the consolidated investment
management funds. Additionally, other revenue includes asset
servicing, treasury services, foreign exchange and other trading
revenue and investment and other income.
|
(b)
|
Excludes the net
negative impact of money market fee waivers, amortization of
intangible assets and provision for credit losses and is net of
distribution and servicing expense. See "Supplemental
information – Explanation of GAAP and Non-GAAP financial measures"
beginning on page 24 for the reconciliation of this Non-GAAP
measure.
|
(c)
|
Excludes
securities lending cash management assets and assets managed in the
Investment Services business and the Other segment.
|
(d)
|
Includes currency
overlay assets under management.
|
(e)
|
Preliminary.
|
N/M – Not
meaningful.
|
INVESTMENT MANAGEMENT KEY POINTS
- Income before taxes, excluding amortization of intangible
assets, totaled $278 million in 3Q16,
an increase of 7% year-over-year and 10% sequentially.
- Pre-tax operating margin of 27% in 3Q16 increased 126 basis
points year-over-year and 184 basis points sequentially.
- Adjusted pre-tax operating margin (Non-GAAP) of 33% in 3Q16
decreased 17 basis points year-over-year and increased 220 basis
points sequentially.
- Total revenue was $958 million,
an increase of 3% year-over-year and 2% sequentially.
- 40% non-U.S. revenue in 3Q16 vs. 42% in 3Q15.
- Investment management fees were $837
million, an increase of 4% both year-over-year and
sequentially. The year-over-year increase primarily reflects higher
market values and money market fees, partially offset by the
unfavorable impact of a stronger U.S. dollar (principally versus
the British pound) and net outflows of assets under management in
prior periods. The sequential increase primarily reflects higher
market values.
- Net long-term inflows of $1
billion in 3Q16 were a combination of $3 billion of inflows into actively managed
strategies and $2 billion of outflows
from index strategies.
- 3Q16 is our 5th consecutive quarter with active
inflows reflecting our strategy to focus on high-value active
solutions.
- Net short-term outflows were $1
billion in 3Q16.
- Performance fees were $8 million
in 3Q16 compared with $7 million in
3Q15 and $9 million in 2Q16.
- Distribution and servicing fees were $49
million in 3Q16 compared with $37
million in 3Q15 and $49
million in 2Q16. The year-over-year increase primarily
reflects higher money market fees.
- Other revenue was a loss of $18
million in 3Q16 compared with a loss of $5 million in 3Q15 and a loss of $10 million in 2Q16. Both decreases primarily
reflect losses on hedging activity and investments, partially
offset by higher seed capital gains. The year-over-year decrease
also reflects payments to Investment Services related to higher
money market fees.
- Net interest revenue decreased 1% year-over-year and was
unchanged sequentially. The year-over-year decrease primarily
reflects the impact of the 1Q16 changes in the internal crediting
rates, partially offset by record average loans and higher average
deposits.
- Average loans increased 20% year-over-year and 3% sequentially;
average deposits increased 2% year-over-year and 1% sequentially.
The increases in average loans were driven by our program to extend
banking solutions to high net worth clients.
- Total noninterest expense (excluding amortization of intangible
assets) increased 2% year-over-year and decreased 1% sequentially.
The year-over-year increase was primarily driven by higher
distribution and servicing expense as a result of lower money
market fee waivers and higher incentive and severance expenses,
partially offset by the impact of a stronger U.S. dollar. The
sequential decrease primarily reflects lower other expenses,
partially offset by higher incentive and severance expenses.
INVESTMENT SERVICES provides global custody and related
services, broker-dealer services, global collateral services,
corporate trust, depositary receipt and clearing services as well
as global payment/working capital solutions to global financial
institutions and credit-related activities.
(dollars in
millions, unless otherwise noted)
|
|
|
|
|
|
|
3Q16
vs.
|
3Q16
|
|
2Q16
|
1Q16
|
4Q15
|
3Q15
|
2Q16
|
3Q15
|
Revenue:
|
|
|
|
|
|
|
|
|
Investment services
fees:
|
|
|
|
|
|
|
|
|
Asset
servicing
|
$
|
1,039
|
|
|
$
|
1,043
|
|
$
|
1,016
|
|
$
|
1,009
|
|
$
|
1,034
|
|
—
|
%
|
—
|
%
|
Clearing
services
|
347
|
|
|
350
|
|
348
|
|
337
|
|
345
|
|
(1)
|
|
1
|
|
Issuer
services
|
336
|
|
|
233
|
|
244
|
|
199
|
|
312
|
|
44
|
|
8
|
|
Treasury
services
|
136
|
|
|
137
|
|
129
|
|
135
|
|
135
|
|
(1)
|
|
1
|
|
Total investment
services fees
|
1,858
|
|
|
1,763
|
|
1,737
|
|
1,680
|
|
1,826
|
|
5
|
|
2
|
|
Foreign exchange and
other trading revenue
|
177
|
|
|
161
|
|
168
|
|
150
|
|
179
|
|
10
|
|
(1)
|
|
Other
(a)
|
148
|
|
|
130
|
|
125
|
|
127
|
|
129
|
|
14
|
|
15
|
|
Total fee and other
revenue
|
2,183
|
|
|
2,054
|
|
2,030
|
|
1,957
|
|
2,134
|
|
6
|
|
2
|
|
Net interest
revenue
|
715
|
|
|
690
|
|
679
|
|
664
|
|
662
|
|
4
|
|
8
|
|
Total
revenue
|
2,898
|
|
|
2,744
|
|
2,709
|
|
2,621
|
|
2,796
|
|
6
|
|
4
|
|
Provision for credit
losses
|
1
|
|
|
(7)
|
|
14
|
|
8
|
|
7
|
|
N/M
|
N/M
|
Noninterest expense
(ex. amortization of intangible assets)
|
1,812
|
|
|
1,819
|
|
1,770
|
|
1,791
|
|
1,853
|
|
—
|
|
(2)
|
|
Income before taxes
(ex. amortization of intangible assets)
|
1,085
|
|
|
932
|
|
925
|
|
822
|
|
936
|
|
16
|
|
16
|
|
Amortization of
intangible assets
|
39
|
|
|
40
|
|
38
|
|
40
|
|
41
|
|
(3)
|
|
(5)
|
|
Income before
taxes
|
$
|
1,046
|
|
|
$
|
892
|
|
$
|
887
|
|
$
|
782
|
|
$
|
895
|
|
17
|
%
|
17
|
%
|
|
|
|
|
|
|
|
|
|
Pre-tax operating
margin
|
36
|
%
|
|
33
|
%
|
33
|
%
|
30
|
%
|
32
|
%
|
|
|
Pre-tax operating
margin (ex. provision for credit losses and amortization of
intangible assets)
|
37
|
%
|
|
34
|
%
|
35
|
%
|
32
|
%
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Investment services
fees as a percentage of noninterest expense (ex. amortization of
intangible assets)
|
103
|
%
|
|
97
|
%
|
98
|
%
|
94
|
%
|
99
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Securities lending
revenue
|
$
|
42
|
|
|
$
|
42
|
|
$
|
42
|
|
$
|
39
|
|
$
|
33
|
|
—
|
%
|
27
|
%
|
|
|
|
|
|
|
|
|
|
Metrics:
|
|
|
|
|
|
|
|
|
Average
loans
|
$
|
44,329
|
|
|
$
|
43,786
|
|
$
|
45,004
|
|
$
|
45,844
|
|
$
|
46,222
|
|
1
|
%
|
(4)
|
%
|
Average
deposits
|
$
|
220,316
|
|
|
$
|
221,998
|
|
$
|
215,707
|
|
$
|
229,241
|
|
$
|
232,250
|
|
(1)
|
%
|
(5)
|
%
|
|
|
|
|
|
|
|
|
|
AUC/A at period end
(in trillions) (b)
|
$
|
30.5
|
|
(c)
|
$
|
29.5
|
|
$
|
29.1
|
|
$
|
28.9
|
|
$
|
28.5
|
|
3
|
%
|
7
|
%
|
Market value of
securities on loan at period end
(in billions) (d)
|
$
|
288
|
|
|
$
|
278
|
|
$
|
300
|
|
$
|
277
|
|
$
|
288
|
|
4
|
%
|
—
|
%
|
|
|
|
|
|
|
|
|
|
Asset
servicing:
|
|
|
|
|
|
|
|
|
Estimated new
business wins (AUC/A) (in billions)
|
$
|
150
|
|
(c)
|
$
|
167
|
|
$
|
40
|
|
$
|
49
|
|
$
|
84
|
|
|
|
|
|
|
|
|
|
|
|
|
Depositary
Receipts:
|
|
|
|
|
|
|
|
|
Number of sponsored
programs
|
1,094
|
|
|
1,112
|
|
1,131
|
|
1,145
|
|
1,176
|
|
(2)
|
%
|
(7)
|
%
|
|
|
|
|
|
|
|
|
|
Clearing
services:
|
|
|
|
|
|
|
|
|
Average active
clearing accounts (U.S. platform)
(in thousands)
|
5,942
|
|
|
5,946
|
|
5,947
|
|
5,959
|
|
6,107
|
|
—
|
%
|
(3)
|
%
|
Average long-term
mutual fund assets (U.S. platform)
|
$
|
443,112
|
|
|
$
|
431,150
|
|
$
|
415,025
|
|
$
|
437,260
|
|
$
|
447,287
|
|
3
|
%
|
(1)
|
%
|
Average investor
margin loans (U.S. platform)
|
$
|
10,834
|
|
|
$
|
10,633
|
|
$
|
11,063
|
|
$
|
11,575
|
|
$
|
11,806
|
|
2
|
%
|
(8)
|
%
|
|
|
|
|
|
|
|
|
|
Broker-Dealer:
|
|
|
|
|
|
|
|
|
Average tri-party
repo balances (in billions)
|
$
|
2,212
|
|
|
$
|
2,108
|
|
$
|
2,104
|
|
$
|
2,153
|
|
$
|
2,142
|
|
5
|
%
|
3
|
%
|
(a)
|
Other revenue
includes investment management fees, financing-related fees,
distribution and servicing revenue and investment and other
income.
|
(b)
|
Includes the AUC/A
of CIBC Mellon of $1.2 trillion at Sept. 30, 2016, $1.1 trillion at
June 30, 2016 and March 31, 2016 and $1.0 trillion at Dec. 31, 2015
and Sept. 30, 2015.
|
(c)
|
Preliminary.
|
(d)
|
Represents the
total amount of securities on loan managed by the Investment
Services business. Excludes securities for which BNY Mellon
acts as agent on behalf of CIBC Mellon clients, which totaled $64
billion at Sept. 30, 2016, $56 billion at June 30, 2016 and March
31, 2016, $55 billion at Dec. 31, 2015 and $61 billion at Sept. 30,
2015.
|
N/M - Not
meaningful.
|
INVESTMENT SERVICES KEY POINTS
- Income before taxes, excluding amortization of intangible
assets, totaled $1.1 billion in 3Q16.
- The pre-tax operating margin, excluding the provision for
credit losses and amortization of intangible assets, was 37% in
3Q16 and the investment services fees as a percentage of
noninterest expense (ex. amortization of intangible assets) was
103% in 3Q16, reflecting the continued focus on the business
improvement process to drive operating leverage.
- Investment services fees were $1.9
billion, an increase of 2% year-over-year and 5%
sequentially.
- Asset servicing fees (global custody, broker-dealer services
and global collateral services) were $1.039
billion in 3Q16 compared with $1.034
billion in 3Q15 and $1.043
billion in 2Q16. The year-over-year increase primarily
reflects higher money market fees and securities lending revenue,
partially offset by the unfavorable impact of a stronger U.S.
dollar and downsizing of the UK transfer agency business.
- Estimated new business wins (AUC/A) in Asset Servicing of
$150 billion in 3Q16.
- Clearing services fees were $347
million in 3Q16 compared with $345
million in 3Q15 and $350
million in 2Q16. The year-over-year increase was primarily
driven by higher money market fees, partially offset by the impact
of the previously disclosed lost business.
- Issuer services fees (Corporate Trust and Depositary Receipts)
were $336 million in 3Q16 compared
with $312 million in 3Q15 and
$233 million in 2Q16. The
year-over-year increase primarily reflects higher corporate actions
in Depositary Receipts and higher money market fees in Corporate
Trust. The sequential increase primarily reflects seasonally higher
fees in Depositary Receipts.
- Treasury services fees were $136
million in 3Q16 compared with $135
million in 3Q15 and $137
million in 2Q16.
- Foreign exchange and other trading revenue was $177 million in 3Q16 compared with $179 million in 3Q15 and $161 million in 2Q16. The year-over-year decrease
primarily reflects lower volumes and volatility. The year-over-year
decrease also reflects the continued trend of clients migrating to
lower margin products. The sequential increase primarily reflects
higher Depositary Receipt-related foreign exchange activity,
partially offset by lower volatility.
- Other revenue was $148 million in
3Q16 compared with $129 million in
3Q15 and $130 million in 2Q16. Both
comparisons reflect increased payments from Investment Management
related to higher money market fees, and termination fees related
to lost business in our clearing services business. The
year-over-year increase is partially offset by certain fees paid to
introducing brokers and lower financing-related fees. The
sequential increase also reflects higher financing-related
fees.
- Net interest revenue was $715
million in 3Q16 compared with $662
million in 3Q15 and $690
million in 2Q16. The year-over-year increase primarily
reflects the impact of the 1Q16 changes in the internal crediting
rates for deposits. The sequential increase primarily reflects
higher asset yields and lower interest on deposits.
- Noninterest expense (excluding amortization of intangible
assets) was $1.812 billion in 3Q16
compared with $1.853 billion in 3Q15
and $1.819 billion in 2Q16. The
year-over-year decrease primarily reflects lower other, temporary
services and legal expenses. Both decreases also reflect lower
sub-custodian and business development expenses, partially offset
by higher incentive and severance expenses and the annual employee
merit increase.
OTHER SEGMENT primarily includes leasing operations,
corporate treasury activities, derivatives, global markets,
business exits and other corporate revenue and expense items.
|
|
|
|
|
|
(dollars in
millions)
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q15
|
Revenue:
|
|
|
|
|
|
Fee and other
revenue
|
$
|
100
|
|
$
|
95
|
|
$
|
129
|
|
$
|
89
|
|
$
|
59
|
|
Net interest
(expense) revenue
|
(23)
|
|
(5)
|
|
4
|
|
12
|
|
14
|
|
Total
revenue
|
77
|
|
90
|
|
133
|
|
101
|
|
73
|
|
Provision for credit
losses
|
(20)
|
|
(3)
|
|
(3)
|
|
159
|
|
(7)
|
|
Noninterest expense
(ex. amortization of intangible assets and restructuring charges
(recoveries))
|
88
|
|
53
|
|
141
|
|
150
|
|
97
|
|
Income (loss) before
taxes (ex. amortization of intangible assets and restructuring
charges (recoveries))
|
9
|
|
40
|
|
(5)
|
|
(208)
|
|
(17)
|
|
Amortization of
intangible assets
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
M&I and
restructuring charges (recoveries)
|
—
|
|
3
|
|
(1)
|
|
(4)
|
|
(2)
|
|
Income (loss) before
taxes
|
$
|
9
|
|
$
|
37
|
|
$
|
(4)
|
|
$
|
(204)
|
|
$
|
(16)
|
|
|
|
|
|
|
|
Average loans and
leases
|
$
|
1,941
|
|
$
|
1,703
|
|
$
|
1,917
|
|
$
|
2,673
|
|
$
|
2,656
|
|
KEY POINTS
- Total fee and other revenue increased $41 million compared with 3Q15 and $5 million compared with 2Q16. Both increases
primarily reflect higher asset-related gains. The year-over-year
increase also reflects the positive net impact of foreign currency
hedging activity and higher fixed income trading.
- Net interest revenue decreased $37
million compared with 3Q15 and $18
million compared with 2Q16. Both decreases were driven by
the results of the leasing portfolio inclusive of changes to
internal transfer pricing in 1Q16.
- The provision for credit losses was a credit of $20 million in 3Q16 primarily reflecting a net
recovery of $13 million recorded in
the financial institutions portfolio. The recovery reflects the
receipt of trust assets from the bankruptcy proceedings of Sentinel
in excess of the carrying value.
- Noninterest expense, excluding amortization of intangible
assets and restructuring charges (recoveries), decreased
$9 million compared with 3Q15 and
increased $35 million compared with
2Q16. The year-over-year decrease primarily reflects lower
equipment and occupancy expenses, partially offset by higher other
expense. The sequential increase was primarily driven by the annual
employee merit increase and higher professional, legal, and other
purchased services.
THE BANK OF NEW YORK MELLON
CORPORATION
Condensed Consolidated Income
Statement
(in
millions)
|
Quarter
ended
|
|
Year-to-date
|
|
Sept. 30,
2016
|
June 30,
2016
|
Sept. 30,
2015
|
|
Sept. 30,
2016
|
Sept. 30,
2015
|
|
|
|
Fee and other
revenue
|
|
|
|
|
|
|
|
Investment services
fees:
|
|
|
|
|
|
|
|
Asset
servicing
|
$
|
1,067
|
|
$
|
1,069
|
|
$
|
1,057
|
|
|
$
|
3,176
|
|
$
|
3,155
|
|
|
Clearing
services
|
349
|
|
350
|
|
345
|
|
|
1,049
|
|
1,036
|
|
|
Issuer
services
|
337
|
|
234
|
|
313
|
|
|
815
|
|
779
|
|
|
Treasury
services
|
137
|
|
139
|
|
137
|
|
|
407
|
|
418
|
|
|
Total investment
services fees
|
1,890
|
|
1,792
|
|
1,852
|
|
|
5,447
|
|
5,388
|
|
|
Investment management
and performance fees
|
860
|
|
830
|
|
829
|
|
|
2,502
|
|
2,574
|
|
|
Foreign exchange and
other trading revenue
|
183
|
|
182
|
|
179
|
|
|
540
|
|
595
|
|
|
Financing-related
fees
|
58
|
|
57
|
|
71
|
|
|
169
|
|
169
|
|
|
Distribution and
servicing
|
43
|
|
43
|
|
41
|
|
|
125
|
|
121
|
|
|
Investment and other
income
|
92
|
|
74
|
|
59
|
|
|
271
|
|
223
|
|
|
Total fee
revenue
|
3,126
|
|
2,978
|
|
3,031
|
|
|
9,054
|
|
9,070
|
|
|
Net securities
gains
|
24
|
|
21
|
|
22
|
|
|
65
|
|
62
|
|
|
Total fee and other
revenue
|
3,150
|
|
2,999
|
|
3,053
|
|
|
9,119
|
|
9,132
|
|
|
Operations of
consolidated investment management funds
|
|
|
|
|
|
|
|
Investment income
(loss)
|
20
|
|
10
|
|
(6)
|
|
|
27
|
|
96
|
|
|
Interest of
investment management fund note holders
|
3
|
|
—
|
|
16
|
|
|
6
|
|
26
|
|
|
Income (loss) from
consolidated investment management funds
|
17
|
|
10
|
|
(22)
|
|
|
21
|
|
70
|
|
|
Net interest
revenue
|
|
|
|
|
|
|
|
Interest
revenue
|
874
|
|
890
|
|
838
|
|
|
2,647
|
|
2,492
|
|
|
Interest
expense
|
100
|
|
123
|
|
79
|
|
|
340
|
|
226
|
|
|
Net interest
revenue
|
774
|
|
767
|
|
759
|
|
|
2,307
|
|
2,266
|
|
|
Total
revenue
|
3,941
|
|
3,776
|
|
3,790
|
|
|
11,447
|
|
11,468
|
|
|
Provision for
credit losses
|
(19)
|
|
(9)
|
|
1
|
|
|
(18)
|
|
(3)
|
|
|
Noninterest
expense
|
|
|
|
|
|
|
|
Staff
|
1,467
|
|
1,412
|
|
1,437
|
|
|
4,338
|
|
4,356
|
|
|
Professional, legal
and other purchased services
|
292
|
|
290
|
|
301
|
|
|
860
|
|
902
|
|
|
Software and
equipment
|
215
|
|
223
|
|
226
|
|
|
657
|
|
682
|
|
|
Net
occupancy
|
143
|
|
152
|
|
152
|
|
|
437
|
|
452
|
|
|
Distribution and
servicing
|
105
|
|
102
|
|
95
|
|
|
307
|
|
289
|
|
|
Sub-custodian
|
59
|
|
70
|
|
65
|
|
|
188
|
|
210
|
|
|
Business
development
|
52
|
|
65
|
|
59
|
|
|
174
|
|
192
|
|
|
Other
|
231
|
|
240
|
|
268
|
|
|
712
|
|
760
|
|
|
Amortization of
intangible assets
|
61
|
|
59
|
|
66
|
|
|
177
|
|
197
|
|
|
M&I, litigation
and restructuring charges
|
18
|
|
7
|
|
11
|
|
|
42
|
|
67
|
|
|
Total noninterest
expense
|
2,643
|
|
2,620
|
|
2,680
|
|
|
7,892
|
|
8,107
|
|
|
Income
|
|
|
|
|
|
|
|
Income before income
taxes
|
1,317
|
|
1,165
|
|
1,109
|
|
|
3,573
|
|
3,364
|
|
|
Provision for income
taxes
|
324
|
|
290
|
|
282
|
|
|
897
|
|
838
|
|
|
Net income
|
993
|
|
875
|
|
827
|
|
|
2,676
|
|
2,526
|
|
|
Net (income) loss
attributable to noncontrolling interests (includes $(9), $(4), $5,
$(6) and $(63) related to consolidated investment management funds,
respectively)
|
(6)
|
|
(2)
|
|
6
|
|
|
1
|
|
(61)
|
|
|
Net income applicable
to shareholders of The Bank of New York Mellon
Corporation
|
987
|
|
873
|
|
833
|
|
|
2,677
|
|
2,465
|
|
|
Preferred stock
dividends
|
(13)
|
|
(48)
|
|
(13)
|
|
|
(74)
|
|
(49)
|
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon
Corporation
|
$
|
974
|
|
$
|
825
|
|
$
|
820
|
|
|
$
|
2,603
|
|
$
|
2,416
|
|
|
THE BANK OF NEW YORK MELLON
CORPORATION
Condensed Consolidated Income Statement -
continued
Net income
applicable to common shareholders of The Bank of New York Mellon
Corporation used for the earnings per share
calculation
|
Quarter
ended
|
|
Year-to-date
|
|
Sept. 30,
2016
|
June 30,
2016
|
Sept. 30,
2015
|
|
Sept. 30,
2016
|
Sept. 30,
2015
|
|
(in
millions)
|
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon
Corporation
|
$
|
974
|
|
$
|
825
|
|
$
|
820
|
|
|
$
|
2,603
|
|
$
|
2,416
|
|
|
Less: Earnings
allocated to participating securities
|
15
|
|
13
|
|
6
|
|
|
39
|
|
34
|
|
|
Net income applicable
to the common shareholders of The Bank of New York Mellon
Corporation after required adjustments for the calculation of basic
and diluted earnings per common share
|
$
|
959
|
|
$
|
812
|
|
$
|
814
|
|
|
$
|
2,564
|
|
$
|
2,382
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common
shares and equivalents outstanding of The Bank of New York Mellon
Corporation
|
Quarter
ended
|
|
Year-to-date
|
|
Sept. 30,
2016
|
June 30,
2016
|
Sept. 30,
2015
|
|
Sept. 30,
2016
|
Sept. 30,
2015
|
|
(in
thousands)
|
|
|
Basic
|
|
1,062,248
|
|
|
1,072,583
|
|
|
1,098,003
|
|
|
|
1,071,457
|
|
|
1,110,056
|
|
|
Diluted
|
|
1,067,682
|
|
|
1,078,271
|
|
|
1,105,645
|
|
|
|
1,077,150
|
|
|
1,117,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
applicable to the common shareholders of The Bank of New York
Mellon Corporation
|
Quarter
ended
|
|
Year-to-date
|
|
Sept. 30,
2016
|
June 30,
2016
|
Sept. 30,
2015
|
|
Sept. 30,
2016
|
Sept. 30,
2015
|
|
(in
dollars)
|
|
|
Basic
|
$
|
0.90
|
|
$
|
0.76
|
|
$
|
0.74
|
|
|
$
|
2.39
|
|
$
|
2.15
|
|
|
Diluted
|
$
|
0.90
|
|
$
|
0.75
|
|
$
|
0.74
|
|
|
$
|
2.38
|
|
$
|
2.13
|
|
|
THE BANK OF NEW YORK MELLON
CORPORATION
Consolidated Balance Sheet
(dollars in
millions, except per share amounts)
|
Sept. 30,
2016
|
June 30,
2016
|
Dec. 31,
2015
|
|
|
Assets
|
|
|
|
|
Cash and due
from:
|
|
|
|
|
Banks
|
$
|
4,957
|
|
$
|
5,809
|
|
$
|
6,537
|
|
|
Interest-bearing
deposits with the Federal Reserve and other central
banks
|
80,359
|
|
88,080
|
|
113,203
|
|
|
Interest-bearing
deposits with banks
|
14,416
|
|
13,303
|
|
15,146
|
|
|
Federal funds sold
and securities purchased under resale agreements
|
34,851
|
|
28,060
|
|
24,373
|
|
|
Securities:
|
|
|
|
|
Held-to-maturity (fair
value of $41,387, $41,804 and $43,204)
|
40,728
|
|
41,053
|
|
43,312
|
|
|
Available-for-sale
|
78,270
|
|
76,547
|
|
75,867
|
|
|
Total
securities
|
118,998
|
|
117,600
|
|
119,179
|
|
|
Trading
assets
|
5,340
|
|
7,148
|
|
7,368
|
|
|
Loans
|
65,997
|
|
64,513
|
|
63,703
|
|
|
Allowance for loan
losses
|
(148)
|
|
(158)
|
|
(157)
|
|
|
Net loans
|
65,849
|
|
64,355
|
|
63,546
|
|
|
Premises and
equipment
|
1,338
|
|
1,399
|
|
1,379
|
|
|
Accrued interest
receivable
|
522
|
|
540
|
|
562
|
|
|
Goodwill
|
17,449
|
|
17,501
|
|
17,618
|
|
|
Intangible
assets
|
3,671
|
|
3,738
|
|
3,842
|
|
|
Other
assets
|
25,355
|
|
23,735
|
|
19,626
|
|
|
Subtotal assets of
operations
|
373,105
|
|
371,268
|
|
392,379
|
|
|
Assets of
consolidated investment management funds, at fair value:
|
|
|
|
|
Trading
assets
|
873
|
|
959
|
|
1,228
|
|
|
Other
assets
|
136
|
|
124
|
|
173
|
|
|
Subtotal assets of
consolidated investment management funds, at fair value
|
1,009
|
|
1,083
|
|
1,401
|
|
|
Total
assets
|
$
|
374,114
|
|
$
|
372,351
|
|
$
|
393,780
|
|
|
Liabilities
|
|
|
|
|
Deposits:
|
|
|
|
|
Noninterest-bearing
(principally U.S. offices)
|
$
|
105,632
|
|
$
|
99,035
|
|
$
|
96,277
|
|
|
Interest-bearing
deposits in U.S. offices
|
56,713
|
|
58,519
|
|
51,704
|
|
|
Interest-bearing
deposits in Non-U.S. offices
|
99,033
|
|
102,124
|
|
131,629
|
|
|
Total
deposits
|
261,378
|
|
259,678
|
|
279,610
|
|
|
Federal funds
purchased and securities sold under repurchase
agreements
|
8,052
|
|
7,611
|
|
15,002
|
|
|
Trading
liabilities
|
4,154
|
|
6,195
|
|
4,501
|
|
|
Payables to customers
and broker-dealers
|
21,162
|
|
21,172
|
|
21,900
|
|
|
Other borrowed
funds
|
993
|
|
1,098
|
|
523
|
|
|
Accrued taxes and
other expenses
|
5,687
|
|
5,385
|
|
5,986
|
|
|
Other liabilities
(includes allowance for lending-related commitments of $126, $122
and $118)
|
7,709
|
|
8,105
|
|
5,490
|
|
|
Long-term
debt
|
24,374
|
|
23,573
|
|
21,547
|
|
|
Subtotal liabilities
of operations
|
333,509
|
|
332,817
|
|
354,559
|
|
|
Liabilities of
consolidated investment management funds, at fair value:
|
|
|
|
|
Trading
liabilities
|
219
|
|
214
|
|
229
|
|
|
Other
liabilities
|
13
|
|
23
|
|
17
|
|
|
Subtotal liabilities
of consolidated investment management funds, at fair
value
|
232
|
|
237
|
|
246
|
|
|
Total
liabilities
|
333,741
|
|
333,054
|
|
354,805
|
|
|
Temporary
equity
|
|
|
|
|
Redeemable
noncontrolling interests
|
178
|
|
172
|
|
200
|
|
|
Permanent
equity
|
|
|
|
|
Preferred stock – par
value $0.01 per share; authorized 100,000,000 shares; issued
35,826, 25,826 and 25,826 shares
|
3,542
|
|
2,552
|
|
2,552
|
|
|
Common stock – par
value $0.01 per share; authorized 3,500,000,000 shares; issued
1,325,167,583, 1,323,941,399 and 1,312,941,113 shares
|
13
|
|
13
|
|
13
|
|
|
Additional paid-in
capital
|
25,637
|
|
25,563
|
|
25,262
|
|
|
Retained
earnings
|
22,002
|
|
21,233
|
|
19,974
|
|
|
Accumulated other
comprehensive loss, net of tax
|
(2,785)
|
|
(2,552)
|
|
(2,600)
|
|
|
Less: Treasury
stock of 267,830,962, 256,266,980 and 227,598,128 common shares, at
cost
|
(8,714)
|
|
(8,250)
|
|
(7,164)
|
|
|
Total The Bank of New
York Mellon Corporation shareholders' equity
|
39,695
|
|
38,559
|
|
38,037
|
|
|
Nonredeemable
noncontrolling interests of consolidated investment management
funds
|
500
|
|
566
|
|
738
|
|
|
Total permanent
equity
|
40,195
|
|
39,125
|
|
38,775
|
|
|
Total liabilities,
temporary equity and permanent equity
|
$
|
374,114
|
|
$
|
372,351
|
|
$
|
393,780
|
|
|
SUPPLEMENTAL INFORMATION – EXPLANATION OF GAAP AND NON-GAAP
FINANCIAL MEASURES
BNY Mellon has included in this Earnings Release certain
Non-GAAP financial measures based on fully phased-in CET1 and other
risk-based capital ratios, the fully phased-in SLR and tangible
common shareholders' equity. BNY Mellon believes that the
Basel III CET1 and other risk-based capital ratios on a fully
phased-in basis, the SLR on a fully phased-in basis and the ratio
of tangible common shareholders' equity to tangible assets of
operations are measures of capital strength that provide additional
useful information to investors, supplementing the capital ratios
which are, or were, required by regulatory authorities. The
tangible common shareholders' equity ratio, which excludes goodwill
and intangible assets net of deferred tax liabilities, includes
changes in investment securities valuations which are reflected in
total shareholders' equity. In addition, this ratio is
expressed as a percentage of the actual book value of assets, as
opposed to a percentage of a risk-based reduced value established
in accordance with regulatory requirements, although BNY Mellon in
its reconciliation has excluded certain assets which are given a
zero percent risk-weighting for regulatory purposes and the assets
of consolidated investment management funds to which BNY Mellon has
limited economic exposure. Further, BNY Mellon believes that
the return on tangible common equity measure, which excludes
goodwill and intangible assets net of deferred tax liabilities, is
a useful additional measure for investors because it presents a
measure of those assets that can generate income. BNY Mellon
has provided a measure of tangible book value per common share,
which it believes provides additional useful information as to the
level of tangible assets in relation to shares of common stock
outstanding.
BNY Mellon has presented revenue measures which exclude the
effect of noncontrolling interests related to consolidated
investment management funds, and expense measures which exclude
M&I, litigation and restructuring charges and amortization of
intangible assets. Earnings per share, return on equity,
operating leverage and operating margin measures, which exclude
some or all of these items, as well as the (recovery) impairment
charge related to Sentinel, are also presented. Operating
margin measures may also exclude the provision for credit losses
and the net negative impact of money market fee waivers, net of
distribution and servicing expense. BNY Mellon believes that
these measures are useful to investors because they permit a focus
on period-to-period comparisons, which relate to the ability of BNY
Mellon to enhance revenues and limit expenses in circumstances
where such matters are within BNY Mellon's control. M&I
expenses primarily relate to acquisitions and generally continue
for approximately three years after the transaction.
Litigation charges represent accruals for loss contingencies that
are both probable and reasonably estimable, but exclude standard
business-related legal fees. Restructuring charges relate to
our streamlining actions, Operational Excellence Initiatives and
migrating positions to Global Delivery Centers. Excluding
these charges mentioned above permits investors to view expenses on
a basis consistent with how management views the business.
The presentation of income (loss) from consolidated investment
management funds, net of net income (loss) attributable to
noncontrolling interests related to the consolidation of certain
investment management funds permits investors to view revenue on a
basis consistent with how management views the business. BNY
Mellon believes that these presentations, as a supplement to GAAP
information, give investors a clearer picture of the results of its
primary businesses.
Each of these measures as described above is used by management
to monitor financial performance, both on a company-wide and on a
business-level basis.
The following table presents the reconciliation of diluted
earnings per common share and the net income applicable to common
shareholders of The Bank of New York Mellon Corporation.
Reconciliation of
net income and diluted EPS – GAAP
to
Non-GAAP
(in millions,
except per common share amounts)
|
3Q16
|
|
2Q16
|
|
3Q15
|
|
Net
income
|
|
Diluted
EPS
|
|
|
Net
income
|
|
Diluted
EPS
|
|
|
Net
income
|
|
Diluted
EPS
|
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon Corporation
– GAAP
|
$
|
974
|
|
$
|
0.90
|
|
|
$
|
825
|
|
$
|
0.75
|
|
|
$
|
820
|
|
$
|
0.74
|
|
|
Add: M&I,
litigation and restructuring charges
|
18
|
|
|
|
7
|
|
|
|
11
|
|
|
|
Tax impact of
the recovery related to Sentinel
|
5
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
Less: Recovery
related to Sentinel
|
13
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
Tax impact of
M&I, litigation and restructuring charges
|
5
|
|
|
|
2
|
|
|
|
3
|
|
|
|
Non-GAAP adjustments
– after-tax
|
5
|
|
—
|
|
|
5
|
|
—
|
|
|
8
|
|
0.01
|
|
|
Non-GAAP
results
|
$
|
979
|
|
$
|
0.90
|
|
|
$
|
830
|
|
$
|
0.76
|
|
(a)
|
$
|
828
|
|
$
|
0.74
|
|
(a)
|
(a)
Does not foot due to rounding.
|
N/A - Not
applicable.
|
The following table presents the reconciliation of the pre-tax
operating margin ratio.
Reconciliation of
income before income taxes – pre-tax operating
margin
|
|
|
|
|
|
(dollars in
millions)
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q15
|
Income before income
taxes – GAAP
|
$
|
1,317
|
|
$
|
1,165
|
|
$
|
1,091
|
|
$
|
871
|
|
$
|
1,109
|
|
Less: Net
income (loss) attributable to noncontrolling
interests of
consolidated
investment management funds
|
9
|
|
4
|
|
(7)
|
|
5
|
|
(5)
|
|
Add:
Amortization of intangible assets
|
61
|
|
59
|
|
57
|
|
64
|
|
66
|
|
M&I, litigation
and restructuring charges
|
18
|
|
7
|
|
17
|
|
18
|
|
11
|
|
(Recovery) impairment
charge related to Sentinel
|
(13)
|
|
—
|
|
—
|
|
170
|
|
—
|
|
Income before income
taxes, as adjusted – Non-GAAP (a)
|
$
|
1,374
|
|
$
|
1,227
|
|
$
|
1,172
|
|
$
|
1,118
|
|
$
|
1,191
|
|
|
|
|
|
|
|
Fee and other revenue
– GAAP
|
$
|
3,150
|
|
$
|
2,999
|
|
$
|
2,970
|
|
$
|
2,950
|
|
$
|
3,053
|
|
Income (loss) from
consolidated investment management funds – GAAP
|
17
|
|
10
|
|
(6)
|
|
16
|
|
(22)
|
|
Net interest revenue
– GAAP
|
774
|
|
767
|
|
766
|
|
760
|
|
759
|
|
Total revenue –
GAAP
|
3,941
|
|
3,776
|
|
3,730
|
|
3,726
|
|
3,790
|
|
Less: Net
income (loss) attributable to noncontrolling interests of
consolidated
investment management funds
|
9
|
|
4
|
|
(7)
|
|
5
|
|
(5)
|
|
Total revenue, as
adjusted – Non-GAAP (a)
|
$
|
3,932
|
|
$
|
3,772
|
|
$
|
3,737
|
|
$
|
3,721
|
|
$
|
3,795
|
|
|
|
|
|
|
|
Pre-tax operating
margin – GAAP (b)(c)
|
33
|
%
|
31
|
%
|
29
|
%
|
23
|
%
|
29
|
%
|
Adjusted pre-tax
operating margin – Non-GAAP (a)(b)(c)
|
35
|
%
|
33
|
%
|
31
|
%
|
30
|
%
|
31
|
%
|
(a)
|
Non-GAAP
information for all periods presented excludes net income (loss)
attributable to noncontrolling interests of consolidated investment
management funds, amortization of intangible assets and M&I,
litigation and restructuring charges. Non-GAAP
information for 3Q16 also excludes a recovery of the
previously impaired Sentinel loan and 4Q15 also excludes the
impairment charge related to a court decision regarding
Sentinel.
|
(b)
|
Income before
taxes divided by total revenue.
|
(c)
|
Our GAAP earnings
include tax-advantaged investments such as low income housing,
renewable energy, bank-owned life insurance and tax-exempt
securities. The benefits of these investments are primarily
reflected in tax expense. If reported on a tax-equivalent
basis, these investments would increase revenue and income before
taxes by $74 million for 3Q16, $74 million for 2Q16, $77 million
for 1Q16, $73 million for 4Q15 and $53 million for 3Q15 and would
increase our pre-tax operating margin by approximately 1.2% for
3Q16, 1.3% for 2Q16, 1.4% for 1Q16, 1.5% for 4Q15 and 1.0% for
3Q15.
|
The following table presents the reconciliation of the operating
leverage.
Operating
leverage
|
|
|
|
3Q16
vs.
|
(dollars in
millions)
|
3Q16
|
2Q16
|
3Q15
|
2Q16
|
3Q15
|
Total revenue
– GAAP
|
$
|
3,941
|
|
$
|
3,776
|
|
$
|
3,790
|
|
4.37
|
%
|
3.98
|
%
|
Less: Net
income (loss) attributable to noncontrolling interests of
consolidated investment management funds
|
9
|
|
4
|
|
(5)
|
|
|
|
Total revenue, as
adjusted – Non-GAAP
|
$
|
3,932
|
|
$
|
3,772
|
|
$
|
3,795
|
|
4.24
|
%
|
3.61
|
%
|
|
|
|
|
|
|
Total noninterest
expense – GAAP
|
$
|
2,643
|
|
$
|
2,620
|
|
$
|
2,680
|
|
0.88
|
%
|
(1.38)
|
%
|
Less:
Amortization of intangible assets
|
61
|
|
59
|
|
66
|
|
|
|
M&I, litigation
and restructuring charges
|
18
|
|
7
|
|
11
|
|
|
|
Total noninterest
expense, as adjusted – Non-GAAP
|
$
|
2,564
|
|
$
|
2,554
|
|
$
|
2,603
|
|
0.39
|
%
|
(1.50)
|
%
|
|
|
|
|
|
|
Operating leverage
– GAAP (a)
|
|
|
|
349
|
bps
|
536
|
bps
|
Adjusted operating
leverage – Non-GAAP (a)(b)
|
|
|
|
385
|
bps
|
511
|
bps
|
(a)
|
Operating leverage
is the rate of increase (decrease) in total revenue less the rate
of increase (decrease) in total noninterest expense.
|
(b)
|
Non-GAAP operating
leverage for all periods presented excludes net income (loss)
attributable to noncontrolling interests of consolidated investment
management funds, amortization of intangible assets and M&I,
litigation and restructuring charges.
|
bps - basis
points.
|
The following table presents the reconciliation of the returns
on common equity and tangible common equity.
Return on common
equity and tangible common equity
|
|
|
|
|
|
(dollars in
millions)
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q15
|
Net income applicable
to common shareholders of The Bank of New York Mellon Corporation –
GAAP
|
$
|
974
|
|
$
|
825
|
|
$
|
804
|
|
$
|
637
|
|
$
|
820
|
|
Add:
Amortization of intangible assets
|
61
|
|
59
|
|
57
|
|
64
|
|
66
|
|
Less: Tax
impact of amortization of intangible assets
|
21
|
|
21
|
|
20
|
|
22
|
|
23
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon Corporation
excluding amortization of intangible assets – Non-GAAP
|
1,014
|
|
863
|
|
841
|
|
679
|
|
863
|
|
Add: M&I,
litigation and restructuring charges
|
18
|
|
7
|
|
17
|
|
18
|
|
11
|
|
(Recovery)
impairment charge related to Sentinel
|
(13)
|
|
—
|
|
—
|
|
170
|
|
—
|
|
Less: Tax
impact of M&I, litigation and restructuring charges
|
5
|
|
2
|
|
6
|
|
6
|
|
3
|
|
Tax impact of
(recovery) impairment charge related to Sentinel
|
(5)
|
|
—
|
|
—
|
|
64
|
|
—
|
|
Net income applicable
to common shareholders of The Bank of New York Mellon Corporation,
as adjusted – Non-GAAP (a)
|
$
|
1,019
|
|
$
|
868
|
|
$
|
852
|
|
$
|
797
|
|
$
|
871
|
|
|
|
|
|
|
|
Average common
shareholders' equity
|
$
|
35,767
|
|
$
|
35,827
|
|
$
|
35,252
|
|
$
|
35,664
|
|
$
|
35,588
|
|
Less: Average
goodwill
|
17,463
|
|
17,622
|
|
17,562
|
|
17,673
|
|
17,742
|
|
Average intangible
assets
|
3,711
|
|
3,789
|
|
3,812
|
|
3,887
|
|
3,962
|
|
Add: Deferred
tax liability – tax deductible goodwill (b)
|
1,477
|
|
1,452
|
|
1,428
|
|
1,401
|
|
1,379
|
|
Deferred tax liability
– intangible assets (b)
|
1,116
|
|
1,129
|
|
1,140
|
|
1,148
|
|
1,164
|
|
Average tangible
common shareholders' equity – Non-GAAP
|
$
|
17,186
|
|
$
|
16,997
|
|
$
|
16,446
|
|
$
|
16,653
|
|
$
|
16,427
|
|
|
|
|
|
|
|
Return on common
equity – GAAP (c)
|
10.8
|
%
|
9.3
|
%
|
9.2
|
%
|
7.1
|
%
|
9.1
|
%
|
Adjusted return on
common equity – Non-GAAP (a)(c)
|
11.3
|
%
|
9.7
|
%
|
9.7
|
%
|
8.9
|
%
|
9.7
|
%
|
|
|
|
|
|
|
Return on tangible
common equity – Non-GAAP (c)
|
23.5
|
%
|
20.4
|
%
|
20.6
|
%
|
16.2
|
%
|
20.8
|
%
|
Adjusted return on
tangible common equity – Non-GAAP (a)(c)
|
23.6
|
%
|
20.5
|
%
|
20.8
|
%
|
19.0
|
%
|
21.0
|
%
|
(a)
|
Non-GAAP
information for all periods presented excludes amortization of
intangible assets and M&I, litigation and restructuring
charges. Non-GAAP information for 3Q16 also excludes a
recovery of the previously impaired Sentinel loan and 4Q15 also
excludes the impairment charge related to a court decision
regarding Sentinel.
|
(b)
|
Deferred tax
liabilities are based on fully phased-in Basel III
rules.
|
(c)
|
Annualized.
|
The following table presents the reconciliation of the equity to
assets ratio and book value per common share.
Equity to assets
and book value per common share
|
Sept. 30,
2016
|
June 30,
2016
|
March 31,
2016
|
Dec. 31,
2015
|
Sept. 30,
2015
|
(dollars in
millions, unless otherwise noted)
|
BNY Mellon
shareholders' equity at period end – GAAP
|
$
|
39,695
|
|
$
|
38,559
|
|
$
|
38,459
|
|
$
|
38,037
|
|
$
|
38,170
|
|
Less: Preferred
stock
|
3,542
|
|
2,552
|
|
2,552
|
|
2,552
|
|
2,552
|
|
BNY Mellon common
shareholders' equity at period end – GAAP
|
36,153
|
|
36,007
|
|
35,907
|
|
35,485
|
|
35,618
|
|
Less:
Goodwill
|
17,449
|
|
17,501
|
|
17,604
|
|
17,618
|
|
17,679
|
|
Intangible
assets
|
3,671
|
|
3,738
|
|
3,781
|
|
3,842
|
|
3,914
|
|
Add: Deferred
tax liability – tax deductible goodwill (a)
|
1,477
|
|
1,452
|
|
1,428
|
|
1,401
|
|
1,379
|
|
Deferred tax liability
– intangible assets (a)
|
1,116
|
|
1,129
|
|
1,140
|
|
1,148
|
|
1,164
|
|
BNY Mellon tangible
common shareholders' equity at period end – Non-GAAP
|
$
|
17,626
|
|
$
|
17,349
|
|
$
|
17,090
|
|
$
|
16,574
|
|
$
|
16,568
|
|
|
|
|
|
|
|
Total assets at
period end – GAAP
|
$
|
374,114
|
|
$
|
372,351
|
|
$
|
372,870
|
|
$
|
393,780
|
|
$
|
377,371
|
|
Less: Assets of
consolidated investment management funds
|
1,009
|
|
1,083
|
|
1,300
|
|
1,401
|
|
2,297
|
|
Subtotal assets of
operations – Non-GAAP
|
373,105
|
|
371,268
|
|
371,570
|
|
392,379
|
|
375,074
|
|
Less:
Goodwill
|
17,449
|
|
17,501
|
|
17,604
|
|
17,618
|
|
17,679
|
|
Intangible
assets
|
3,671
|
|
3,738
|
|
3,781
|
|
3,842
|
|
3,914
|
|
Cash on deposit with
the Federal Reserve and other central banks (b)
|
80,362
|
|
88,080
|
|
96,421
|
|
116,211
|
|
86,426
|
|
Tangible total assets
of operations at period end – Non-GAAP
|
$
|
271,623
|
|
$
|
261,949
|
|
$
|
253,764
|
|
$
|
254,708
|
|
$
|
267,055
|
|
|
|
|
|
|
|
BNY Mellon
shareholders' equity to total assets ratio – GAAP
|
10.6
|
%
|
10.4
|
%
|
10.3
|
%
|
9.7
|
%
|
10.1
|
%
|
BNY Mellon common
shareholders' equity to total assets ratio – GAAP
|
9.7
|
%
|
9.7
|
%
|
9.6
|
%
|
9.0
|
%
|
9.4
|
%
|
BNY Mellon tangible
common shareholders' equity to tangible assets of operations ratio
– Non-GAAP
|
6.5
|
%
|
6.6
|
%
|
6.7
|
%
|
6.5
|
%
|
6.2
|
%
|
|
|
|
|
|
|
Period-end common
shares outstanding (in thousands)
|
1,057,337
|
|
1,067,674
|
|
1,077,083
|
|
1,085,343
|
|
1,092,953
|
|
|
|
|
|
|
|
Book value per common
share – GAAP
|
$
|
34.19
|
|
$
|
33.72
|
|
$
|
33.34
|
|
$
|
32.69
|
|
$
|
32.59
|
|
Tangible book value
per common share – Non-GAAP
|
$
|
16.67
|
|
$
|
16.25
|
|
$
|
15.87
|
|
$
|
15.27
|
|
$
|
15.16
|
|
(a)
|
Deferred tax
liabilities are based on fully phased-in Basel III
rules.
|
(b)
|
Assigned a zero
percent risk-weighting by the regulators.
|
The following table presents income from consolidated investment
management funds, net of noncontrolling interests.
Income (loss) from
consolidated investment management funds, net of noncontrolling
interests
|
(in
millions)
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q15
|
Income (loss) from
consolidated investment management funds
|
$
|
17
|
|
$
|
10
|
|
$
|
(6)
|
|
$
|
16
|
|
$
|
(22)
|
|
Less: Net
income (loss) attributable to noncontrolling interests of
consolidated investment management funds
|
9
|
|
4
|
|
(7)
|
|
5
|
|
(5)
|
|
Income (loss) from
consolidated investment management funds, net of noncontrolling
interests
|
$
|
8
|
|
$
|
6
|
|
$
|
1
|
|
$
|
11
|
|
$
|
(17)
|
|
The following table presents the revenue line items in the
Investment Management business impacted by the consolidated
investment management funds.
Income (loss) from
consolidated investment management funds, net of noncontrolling
interests - Investment Management business
|
|
|
|
|
|
(in
millions)
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q15
|
Investment management
fees
|
$
|
3
|
|
$
|
3
|
|
$
|
2
|
|
$
|
7
|
|
$
|
3
|
|
Other (Investment
income (loss))
|
6
|
|
3
|
|
(1)
|
|
4
|
|
(20)
|
|
Income (loss) from
consolidated investment management funds, net of noncontrolling
interests
|
$
|
9
|
|
$
|
6
|
|
$
|
1
|
|
$
|
11
|
|
$
|
(17)
|
|
The following table presents the reconciliation of the pre-tax
operating margin for the Investment Management business.
Pre-tax operating
margin - Investment Management business
|
|
|
|
|
|
(dollars in
millions)
|
3Q16
|
2Q16
|
1Q16
|
4Q15
|
3Q15
|
Income before income
taxes – GAAP
|
$
|
256
|
|
$
|
234
|
|
$
|
217
|
|
$
|
290
|
|
$
|
236
|
|
Add:
Amortization of intangible assets
|
22
|
|
19
|
|
19
|
|
24
|
|
24
|
|
Provision for credit
losses
|
—
|
|
1
|
|
(1)
|
|
(4)
|
|
1
|
|
Money market fee
waivers
|
11
|
|
11
|
|
9
|
|
23
|
|
28
|
|
Income before income
taxes excluding amortization of intangible assets, provision for
credit losses and money market fee waivers – Non-GAAP
|
$
|
289
|
|
$
|
265
|
|
$
|
244
|
|
$
|
333
|
|
$
|
289
|
|
|
|
|
|
|
|
Total revenue –
GAAP
|
$
|
958
|
|
$
|
938
|
|
$
|
895
|
|
$
|
999
|
|
$
|
926
|
|
Less:
Distribution and servicing expense
|
104
|
|
102
|
|
100
|
|
92
|
|
94
|
|
Money market fee
waivers benefiting distribution and servicing expense
|
15
|
|
15
|
|
23
|
|
27
|
|
35
|
|
Add: Money
market fee waivers impacting total revenue
|
26
|
|
26
|
|
32
|
|
50
|
|
63
|
|
Total revenue net of
distribution and servicing expense and excluding money market fee waivers –
Non-GAAP
|
$
|
865
|
|
$
|
847
|
|
$
|
804
|
|
$
|
930
|
|
$
|
860
|
|
|
|
|
|
|
|
Pre-tax operating
margin (a)
|
27
|
%
|
25
|
%
|
24
|
%
|
29
|
%
|
25
|
%
|
Pre-tax operating
margin excluding amortization of intangible assets, provision for
credit losses, money market fee waivers and net of distribution and
servicing expense – Non-GAAP (a)
|
33
|
%
|
31
|
%
|
30
|
%
|
36
|
%
|
34
|
%
|
(a)
Income before taxes divided by total revenue.
|
DIVIDENDS
Common – On Oct. 20, 2016,
The Bank of New York Mellon Corporation declared a quarterly common
stock dividend of $0.19 per common
share. This cash dividend is payable on Nov. 10, 2016 to shareholders of record as of the
close of business on Nov. 1,
2016.
Preferred – On Oct. 20,
2016, The Bank of New York Mellon Corporation declared the
following dividends for the noncumulative perpetual preferred
stock, liquidation preference $100,000 per share, for the dividend period
ending in December 2016, in each case
payable on Dec. 20, 2016 to holders
of record as of the close of business on Dec. 5, 2016:
- $1,011.11 per share on the Series
A Preferred Stock (equivalent to $10.1111 per Normal Preferred Capital Security of
Mellon Capital IV, each representing a 1/100th interest in a share
of the Series A Preferred Stock);
- $1,300.00 per share on the Series
C Preferred Stock (equivalent to $0.3250 per depositary share, each representing a
1/4,000th interest in a share of the Series C Preferred
Stock);
- $2,250.00 per share on the Series
D Preferred Stock (equivalent to $22.5000 per depositary share, each representing
a 1/100th interest in a share of the Series D Preferred Stock);
and
- $2,475.00 per share on the Series
E Preferred Stock (equivalent to $24.7500 per depositary share, each representing
a 1/100th interest in a share of the Series E Preferred
Stock).
BNY Mellon is a global investments company dedicated to helping
its clients manage and service their financial assets throughout
the investment lifecycle. Whether providing financial
services for institutions, corporations or individual investors,
BNY Mellon delivers informed investment management and investment
services in 35 countries and more than 100 markets. As of
Sept. 30, 2016, BNY Mellon had
$30.5 trillion in assets under
custody and/or administration, and $1.7
trillion in assets under management. BNY Mellon can
act as a single point of contact for clients looking to create,
trade, hold, manage, service, distribute or restructure
investments. BNY Mellon is the corporate brand of The Bank of
New York Mellon Corporation (NYSE: BK). Additional
information is available on www.bnymellon.com. Follow us on
Twitter @BNYMellon or visit our newsroom at
www.bnymellon.com/newsroom for the latest company news.
CAUTIONARY STATEMENT
A number of statements (i) in this Earnings Release, (ii) in our
presentations and (iii) in the responses to questions on our
conference call discussing our quarterly results and other public
events may contain "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995 including
our estimated capital ratios and expectations relating to those
ratios, preliminary business metrics and statements regarding our
strategy, goals, revenue growth, shareholder returns, business
improvement process, technology, client enhancements, capital plans
and the resolution plan and expected effects of adopting a single
point of entry strategy. These statements may be expressed in
a variety of ways, including the use of future or present tense
language. Words such as "estimate," "forecast," "project,"
"anticipate," "likely," "target," "expect," "intend," "continue,"
"seek," "believe," "plan," "goal," "could," "should," "may,"
"will," "strategy," "opportunities," "trends" and words of similar
meaning signify forward-looking statements. These statements
and other forward-looking statements contained in other public
disclosures of The Bank of New York Mellon Corporation which make
reference to the cautionary factors described in this Earnings
Release are based upon current beliefs and expectations and are
subject to significant risks and uncertainties (some of which are
beyond BNY Mellon's control). Actual results may differ
materially from those expressed or implied as a result of these
risks and uncertainties, including, but not limited to, the risk
factors and other uncertainties set forth in BNY Mellon's Annual
Report on Form 10-K for the year ended Dec.
31, 2015, the Quarterly Report on Form 10-Q for the period
ended June 30, 2016 and BNY Mellon's
other filings with the Securities and Exchange Commission. In
addition, the actual effects of our adopting a single point of
entry resolution strategy may differ from those expressed or
implied in forward-looking statements as a result of changes to our
strategy and related assumptions. All forward-looking
statements in this Earnings Release speak only as of
October 20, 2016, and BNY Mellon undertakes no obligation to
update any forward-looking statement to reflect events or
circumstances after that date or to reflect the occurrence of
unanticipated events.
Contacts:
MEDIA:
Colleen Krieger
(212) 635-6491
ColleenAnne.Krieger@bnymellon.com
ANALYSTS:
Valerie Haertel
(212) 635-8529
Valerie.Haertel@bnymellon.com
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/bny-mellon-reports-third-quarter-earnings-of-974-million-or-090-per-common-share-300348334.html
SOURCE BNY Mellon