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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) – October 17, 2023
THE BANK OF NEW YORK MELLON CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware | 001-35651 | 13-2614959 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
240 Greenwich Street
New York, New York 10286
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code – (212) 495-1784
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class | Trading symbol(s) | Name of each exchange on which registered |
Common Stock, $0.01 par value | BK | New York Stock Exchange |
| | |
6.244% Fixed-to-Floating Rate Normal Preferred Capital Securities of Mellon Capital IV | BK/P | New York Stock Exchange |
(fully and unconditionally guaranteed by The Bank of New York Mellon Corporation) | | |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 under the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On October 17, 2023, The Bank of New York Mellon Corporation (“BNY Mellon”) released information on its financial results for the third quarter ended Sept. 30, 2023. Copies of the Earnings Release and the Financial Supplement are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and are incorporated herein by reference.
ITEM 7.01. REGULATION FD DISCLOSURE.
On October 17, 2023, BNY Mellon will hold a conference call and webcast to discuss its financial results for the third quarter ended Sept. 30, 2023 and outlook. A copy of the Financial Highlights presentation for the conference call and webcast is attached hereto as Exhibit 99.3.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) EXHIBITS.
| | | | | | | | |
Exhibit | | |
Number | | Description |
| | |
99.1 | | | |
| | The quotation in Exhibit 99.1 (the “Excluded Section”) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (“Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of BNY Mellon under the Securities Act of 1933 or the Exchange Act. The information included in Exhibit 99.1, other than in the Excluded Section, shall be deemed “filed” for purposes of the Exchange Act. |
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99.2 | | | |
| | The information included in Exhibit 99.2 shall be deemed “filed” for purposes of the Exchange Act. |
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99.3 | | | |
| | The information included in Exhibit 99.3 shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of BNY Mellon under the Securities Act of 1933 or the Exchange Act. |
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104 | | | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| The Bank of New York Mellon Corporation (Registrant)
|
Date: October 17, 2023 | By: /s/ James J. Killerlane III |
| Name: James J. Killerlane III Title: Secretary |
BNY MELLON REPORTS THIRD QUARTER 2023 EARNINGS OF
$1.0 BILLION OR $1.22 PER COMMON SHARE
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Revenue up 2% | | EPS up 213% Adj. EPS up 5%(a) | | ROE 11% ROTCE 20%(b) | | CET1 11.4% Tier 1 leverage 6.1% |
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(a) Excluding the net impact of notable items, primarily the 3Q22 goodwill impairment. See (b) below.
NEW YORK, October 17, 2023 – The Bank of New York Mellon Corporation (“BNY Mellon”) (NYSE: BK) today reported:
| | | | | | | | | | | | | | | | | |
| 3Q23 vs. |
| 3Q23 | 2Q23 | 3Q22 | 2Q23 | 3Q22 |
Net income applicable to common shareholders (in millions) | $ | 956 | | $ | 1,031 | | $ | 319 | | (7) | % | 200 | % |
Adjusted net income applicable to common shareholders – Non-GAAP (in millions) (b) | $ | 992 | | $ | 1,087 | | $ | 983 | | (9) | % | 1 | % |
Diluted earnings per common share | $ | 1.22 | | $ | 1.30 | | $ | 0.39 | | (6) | % | 213 | % |
Adjusted diluted earnings per common share – Non-GAAP (b) | $ | 1.27 | | $ | 1.38 | | $ | 1.21 | | (8) | % | 5 | % |
Total revenue of $4.4 billion, increased 2%
•Net interest revenue increased 10%
•Fee revenue was flat
Total noninterest expense of $3.1 billion, decreased 16%, or
increased 3% excluding notable items (b)
AUC/A of $45.7 trillion, increased 8%
AUM of $1.8 trillion, increased 3%
Securities Services
•Total revenue increased 1%
•Income before taxes decreased 7%
•Pre-tax operating margin of 23%
Market and Wealth Services
•Total revenue increased 6%
•Income before taxes was flat
•Pre-tax operating margin of 44%
Investment and Wealth Management
•Total revenue decreased 4%
•Income before taxes increased to $164 million from $(497) million (c)
•Pre-tax operating margin of 20%; Adjusted pre-tax operating margin of 22% (b)
Capital
•Returned $783 million to common shareholders, including $450 million of common share repurchases
Robin Vince, President and Chief Executive Officer, commented, “BNY Mellon delivered solid financial performance and continued progress on the steady transformation of our company. We generated a return on tangible common equity of 20% on $4.4 billion of revenue, up 2% year-over-year, and a pre-tax margin of 29% in the third quarter.”
“Our financial results once again highlight the efficacy of our prudent and proactive asset- and liability-management. Amid a rapidly evolving operating environment, we continued to deliver attractive profitability and capital returns to our shareholders while further strengthening our regulatory capital and liquidity ratios,” Mr. Vince added.
“We committed to drive higher underlying growth and enhanced operational efficiency. While it is still early on our journey, we are starting to see the signs of progress inside the company. We are innovating and pushing forward on our multi-year growth investments all while remaining disciplined to deliver positive operating leverage and pre-tax margin expansion,” Mr. Vince further noted.
“I am proud and appreciative of our employees’ dedication through all of the work required to unlock BNY Mellon’s potential. Together, we will be more for our clients, run our company better, and power our culture to create value for clients, shareholders and employees alike,” Mr. Vince concluded.
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Media Relations: Garrett Marquis (949) 683-1503 | Investor Relations: Marius Merz (212) 298-1480 |
|
(b) For information on this Non-GAAP measure, see “Explanation of GAAP and Non-GAAP financial measures” beginning on page 9. |
(c) The percentage change is not meaningful. |
Note: Above comparisons are 3Q23 vs. 3Q22, unless otherwise noted. |
| | |
BNY Mellon 3Q23 Earnings Release |
CONSOLIDATED FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | |
(in millions, except per share amounts and unless otherwise noted; not meaningful - N/M) | | | | 3Q23 vs. |
3Q23 | 2Q23 | 3Q22 | 2Q23 | 3Q22 |
Fee revenue | $ | 3,245 | | $ | 3,257 | | $ | 3,236 | | — | % | — | % |
Investment and other revenue | 113 | | 97 | | 117 | | N/M | N/M |
Total fee and other revenue | 3,358 | | 3,354 | | 3,353 | | — | | — | |
Net interest revenue | 1,016 | | 1,100 | | 926 | | (8) | | 10 | |
Total revenue | 4,374 | | 4,454 | | 4,279 | | (2) | | 2 | |
Provision for credit losses | 3 | | 5 | | (30) | | N/M | N/M |
Noninterest expense | 3,089 | | 3,111 | | 3,679 | | (1) | | (16) | |
Income before taxes | 1,282 | | 1,338 | | 630 | | (4) | | 103 | |
Provision for income taxes | 241 | | 270 | | 242 | | (11) | | — | |
Net income | $ | 1,041 | | $ | 1,068 | | $ | 388 | | (3)% | 168 | % |
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 956 | | $ | 1,031 | | $ | 319 | | (7)% | 200 | % |
Operating leverage (a) | | | | (109) | bps | N/M |
Diluted earnings per common share (b) | $ | 1.22 | | $ | 1.30 | | $ | 0.39 | | (6)% | 213 | % |
Average common shares and equivalents outstanding - diluted (in thousands) | 781,781 | | 790,725 | | 814,516 | | | |
Pre-tax operating margin | 29 | % | 30 | % | 15 | % | | |
| | | | | |
Metrics: | | | | | |
Average loans | $ | 63,962 | | $ | 63,459 | | $ | 68,082 | | 1 | % | (6) | % |
Average deposits | 262,108 | | 277,209 | | 288,463 | | (5) | | (9) | |
AUC/A at period end (in trillions) (current period is preliminary) | 45.7 | | 46.9 | | 42.2 | | (3) | | 8 | |
AUM (in trillions) (current period is preliminary) | 1.82 | | 1.91 | | 1.78 | | (4) | | 3 | |
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(a) Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense.
(b) Includes impact of notable items of $(0.05) per share in 3Q23, $(0.07) per share in 2Q23 and $(0.81) per share in 3Q22.
bps – basis points.
KEY DRIVERS (comparisons are 3Q23 vs. 3Q22, unless otherwise stated)
•Total revenue increased 2%, primarily reflecting:
•Fee revenue was flat, primarily reflecting higher market values, net new business and the favorable impact of a weaker U.S. dollar, partially offset by the impact of the Alcentra divestiture, the mix of cumulative AUM flows and lower foreign exchange volatility and volumes.
•Net interest revenue increased 10%, primarily reflecting higher interest rates, partially offset by changes in balance sheet size and mix.
•Provision for credit losses was $3 million, compared with a benefit of $30 million.
•Noninterest expense decreased 16%, primarily related to the 3Q22 goodwill impairment associated with the Investment Management reporting unit. Excluding notable items (c), noninterest expense increased 3% primarily reflecting higher investments and revenue-related expenses, and the unfavorable impact of a weaker U.S. dollar, as well as the impact of inflation, partially offset by the favorable impact of efficiency savings and the impact of the Alcentra divestiture.
•Effective tax rate of 18.8%.
Assets under custody and/or administration (“AUC/A”) and Assets under management (“AUM”)
•AUC/A increased 8%, primarily reflecting higher market values, client inflows, the favorable impact of a weaker U.S. dollar and net new business.
•AUM increased 3%, primarily reflecting the favorable impact of a weaker U.S. dollar and higher market values, partially offset by the divestiture of Alcentra.
Capital and liquidity
•$333 million of dividends to common shareholders (d).
•$450 million of common share repurchases.
•Return on common equity (“ROE”) – 11%; Return on tangible common equity (“ROTCE”) – 20% (c).
•Common Equity Tier 1 (“CET1”) ratio – 11.4%.
•Tier 1 leverage ratio – 6.1%.
•Average liquidity coverage ratio (“LCR”) – 121%; Average net stable funding ratio (“NSFR”) – 136%.
•Total Loss Absorbing Capacity (“TLAC”) ratios exceed minimum requirements.
(c) See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 9 for additional information. (d) Including dividend-equivalents on share-based awards.
Note: Throughout this document, sequential growth rates are unannualized.
| | |
BNY Mellon 3Q23 Earnings Release |
SECURITIES SERVICES BUSINESS SEGMENT HIGHLIGHTS
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(dollars in millions, unless otherwise noted; not meaningful - N/M) | | | | | | | 3Q23 vs. |
3Q23 | | 2Q23 | | 3Q22 | | 2Q23 | 3Q22 |
Investment services fees: | | | | | | | | |
Asset Servicing | $ | 984 | | | $ | 991 | | | $ | 953 | | | (1) | % | 3 | % |
Issuer Services | 281 | | | 319 | | | 288 | | | (12) | | (2) | |
Total investment services fees | 1,265 | | | 1,310 | | | 1,241 | | | (3) | | 2 | |
Foreign exchange revenue | 107 | | | 124 | | | 132 | | | (14) | | (19) | |
Other fees (a) | 52 | | | 54 | | | 52 | | | (4) | | — | |
Total fee revenue | 1,424 | | | 1,488 | | | 1,425 | | | (4) | | — | |
Investment and other revenue | 65 | | | 84 | | | 111 | | | N/M | N/M |
Total fee and other revenue | 1,489 | | | 1,572 | | | 1,536 | | | (5) | | (3) | |
Net interest revenue | 600 | | | 668 | | | 538 | | | (10) | | 12 | |
Total revenue | 2,089 | | | 2,240 | | | 2,074 | | | (7) | | 1 | |
Provision for credit losses | 19 | | | 16 | | | (6) | | | N/M | N/M |
Noninterest expense | 1,585 | | | 1,582 | | | 1,557 | | | — | | 2 | |
Income before taxes | $ | 485 | | | $ | 642 | | | $ | 523 | | | (24) | % | (7) | % |
| | | | | | | | |
Total revenue by line of business: | | | | | | | | |
Asset Servicing | $ | 1,593 | | | $ | 1,706 | | | $ | 1,596 | | | (7) | % | — | % |
Issuer Services | 496 | | | 534 | | | 478 | | | (7) | | 4 | |
Total revenue by line of business | $ | 2,089 | | | $ | 2,240 | | | $ | 2,074 | | | (7) | % | 1 | % |
| | | | | | | | |
Pre-tax operating margin | 23 | % | | 29 | % | | 25 | % | | | |
| | | | | | | | |
Securities lending revenue (b) | $ | 46 | | | $ | 47 | | | $ | 48 | | | (2) | % | (4) | % |
| | | | | | | | |
Metrics: | | | | | | | | |
Average loans | $ | 11,236 | | | $ | 11,283 | | | $ | 11,573 | | | — | % | (3) | % |
Average deposits | $ | 162,509 | | | $ | 172,863 | | | $ | 176,328 | | | (6) | % | (8) | % |
| | | | | | | | |
AUC/A at period end (in trillions) (current period is preliminary) (c) | $ | 32.3 | | | $ | 33.2 | | | $ | 30.0 | | | (3) | % | 8 | % |
Market value of securities on loan at period end (in billions) (d) | $ | 406 | | | $ | 415 | | | $ | 435 | | | (2) | % | (7) | % |
(a) Other fees primarily include financing-related fees.
(b) Included in investment services fees reported in the Asset Servicing line of business.
(c) Consists of AUC/A primarily from the Asset Servicing line of business and, to a lesser extent, the Issuer Services line of business. Includes the AUC/A of CIBC Mellon Global Securities Services Company (“CIBC Mellon”), a joint venture with the Canadian Imperial Bank of Commerce, of $1.5 trillion at Sept. 30, 2023, $1.6 trillion at June 30, 2023 and $1.4 trillion at Sept. 30, 2022.
(d) Represents the total amount of securities on loan in our agency securities lending program. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $63 billion at Sept. 30, 2023, $66 billion at June 30, 2023 and $75 billion at Sept. 30, 2022.
KEY DRIVERS
•The drivers of the total revenue variances by line of business are indicated below.
•Asset Servicing – Year-over-year was flat, primarily reflecting a 3Q22 disposal gain, lower foreign exchange revenue and a strategic equity investment loss, partially offset by higher net interest revenue and market values and net new business. The sequential decrease primarily reflects lower net interest revenue, lower foreign exchange revenue and a strategic equity investment loss.
•Issuer Services – The year-over-year increase primarily reflects higher net interest revenue. The sequential decrease primarily reflects lower Depositary Receipts revenue.
•Noninterest expense increased year-over-year, primarily reflecting higher investments and the impact of inflation, partially offset by the favorable impact of efficiency savings.
| | |
BNY Mellon 3Q23 Earnings Release |
MARKET AND WEALTH SERVICES BUSINESS SEGMENT HIGHLIGHTS
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(dollars in millions, unless otherwise noted; not meaningful - N/M) | | | | 3Q23 vs. |
3Q23 | 2Q23 | 3Q22 | 2Q23 | 3Q22 |
Investment services fees: | | | | | |
Pershing | $ | 506 | | $ | 496 | | $ | 494 | | 2 | % | 2 | % |
Treasury Services | 172 | | 172 | | 173 | | — | | (1) | |
Clearance and Collateral Management | 277 | | 265 | | 239 | | 5 | | 16 | |
Total investment services fees | 955 | | 933 | | 906 | | 2 | | 5 | |
Foreign exchange revenue | 21 | | 21 | | 20 | | — | | 5 | |
Other fees (a) | 51 | | 55 | | 49 | | (7) | | 4 | |
Total fee revenue | 1,027 | | 1,009 | | 975 | | 2 | | 5 | |
Investment and other revenue | 16 | | 16 | | 14 | | N/M | N/M |
Total fee and other revenue | 1,043 | | 1,025 | | 989 | | 2 | | 5 | |
Net interest revenue | 402 | | 420 | | 378 | | (4) | | 6 | |
Total revenue | 1,445 | | 1,445 | | 1,367 | | — | | 6 | |
Provision for credit losses | 6 | | 7 | | (1) | | N/M | N/M |
Noninterest expense | 808 | | 781 | | 737 | | 3 | | 10 | |
Income before taxes | $ | 631 | | $ | 657 | | $ | 631 | | (4) | % | — | % |
| | | | | |
Total revenue by line of business: | | | | | |
Pershing | $ | 699 | | $ | 686 | | $ | 658 | | 2 | % | 6 | % |
Treasury Services | 389 | | 402 | | 390 | | (3) | | — | |
Clearance and Collateral Management | 357 | | 357 | | 319 | | — | | 12 | |
Total revenue by line of business | $ | 1,445 | | $ | 1,445 | | $ | 1,367 | | — | % | 6 | % |
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Pre-tax operating margin | 44 | % | 46 | % | 46 | % | | |
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Metrics: | | | | | |
Average loans | $ | 37,496 | | $ | 36,432 | | $ | 40,882 | | 3 | % | (8) | % |
Average deposits | $ | 84,000 | | $ | 85,407 | | $ | 90,612 | | (2) | % | (7) | % |
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AUC/A at period end (in trillions) (current period is preliminary) (b) | $ | 13.1 | | $ | 13.4 | | $ | 12.0 | | (2) | % | 9 | % |
(a) Other fees primarily include financing-related fees.
(b) Consists of AUC/A from the Clearance and Collateral Management and Pershing lines of business.
KEY DRIVERS
•The drivers of the total revenue variances by line of business are indicated below.
•Pershing – The year-over-year increase primarily reflects higher net interest revenue and higher fees on sweep balances, partially offset by lost business. The sequential increase primarily reflects higher fees on sweep balances.
•Treasury Services – The sequential decrease primarily reflects lower net interest revenue.
•Clearance and Collateral Management – The year-over-year increase primarily reflects higher clearance volumes and collateral management balances. Sequentially, higher clearance volumes and collateral management balances were offset by lower net interest revenue.
•Noninterest expense increased year-over-year and sequentially, primarily reflecting higher investments and higher revenue-related expense, as well as the impact of inflation, partially offset by the favorable impact of efficiency savings.
| | |
BNY Mellon 3Q23 Earnings Release |
INVESTMENT AND WEALTH MANAGEMENT BUSINESS SEGMENT HIGHLIGHTS
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(dollars in millions, unless otherwise noted; not meaningful - N/M) | | | | | | | 3Q23 vs. | |
3Q23 | | 2Q23 | | 3Q22 | | 2Q23 | | 3Q22 | |
Investment management fees | $ | 746 | | | $ | 750 | | | $ | 788 | | | (1) | % | | (5) | % | |
Performance fees | 30 | | | 10 | | | 10 | | | N/M | | N/M | |
Investment management and performance fees | 776 | | | 760 | | | 798 | | | 2 | | | (3) | | |
Distribution and servicing fees | 62 | | | 58 | | | 55 | | | 7 | | | 13 | | |
Other fees (a) | (50) | | | (56) | | | (45) | | | N/M | | N/M | |
Total fee revenue | 788 | | | 762 | | | 808 | | | 3 | | | (2) | | |
Investment and other revenue (b) | 1 | | | 12 | | | (3) | | | N/M | | N/M | |
Total fee and other revenue (b) | 789 | | | 774 | | | 805 | | | 2 | | | (2) | | |
Net interest revenue | 38 | | | 39 | | | 57 | | | (3) | | | (33) | | |
Total revenue | 827 | | | 813 | | | 862 | | | 2 | | | (4) | | |
Provision for credit losses | (9) | | | 7 | | | 3 | | | N/M | | N/M | |
Noninterest expense | 672 | | | 677 | | | 1,356 | | | (1) | | | (50) | | |
Income (loss) before taxes | $ | 164 | | | $ | 129 | | | $ | (497) | | | 27 | % | | N/M | (c) |
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Total revenue by line of business: | | | | | | | | | | |
Investment Management | $ | 557 | | | $ | 546 | | | $ | 579 | | | 2 | % | | (4) | % | |
Wealth Management | 270 | | | 267 | | | 283 | | | 1 | | | (5) | | |
Total revenue by line of business | $ | 827 | | | $ | 813 | | | $ | 862 | | | 2 | % | | (4) | % | |
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Pre-tax operating margin | 20 | % | | 16 | % | | (57) | % | | | | | |
Adjusted pre-tax operating margin – Non-GAAP (d) | 22 | % | | 18 | % | | (64) | % | (c) | | | | |
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Metrics: | | | | | | | | | | |
Average loans | $ | 13,519 | | | $ | 13,995 | | | $ | 14,482 | | | (3) | % | | (7) | % | |
Average deposits | $ | 13,578 | | | $ | 15,410 | | | $ | 17,225 | | | (12) | % | | (21) | % | |
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AUM (in billions) (current period is preliminary) (e) | $ | 1,821 | | | $ | 1,906 | | | $ | 1,776 | | | (4) | % | | 3 | % | |
Wealth Management client assets (in billions) (current period is preliminary) (f) | $ | 292 | | | $ | 286 | | | $ | 256 | | | 2 | % | | 14 | % | |
(a) Other fees primarily include investment services fees.
(b) Investment and other revenue and total fee and other revenue are net of income (loss) attributable to noncontrolling interests related to consolidated investment management funds.
(c) Excluding notable items, income before taxes decreased 7% (Non-GAAP) compared with 3Q22. Excluding notable items and net of distribution and servicing expense, the adjusted pre-tax operating margin was 24% (Non-GAAP) for 3Q22. See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 9 for information on these Non-GAAP measures. (d) Net of distribution and servicing expense. See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 9 for information on this Non-GAAP measure. (e) Excludes assets managed outside of the Investment and Wealth Management business segment.
(f) Includes AUM and AUC/A in the Wealth Management line of business.
KEY DRIVERS
•The drivers of the total revenue variances by line of business are indicated below.
•Investment Management – The year-over-year decrease primarily reflects the impact of the Alcentra divestiture and the mix of cumulative AUM flows, partially offset by higher performance fees and market values, and the favorable impact of a weaker U.S. dollar. The sequential increase primarily reflects the timing of performance fees.
•Wealth Management – The year-over-year decrease primarily reflects lower net interest revenue and changes in product mix, partially offset by higher market values. The sequential increase primarily reflects higher market values.
•Noninterest expense decreased year-over-year, primarily reflecting the 3Q22 goodwill impairment in the Investment Management reporting unit and the impact of the Alcentra divestiture, partially offset by higher investments and the unfavorable impact of a weaker U.S. dollar.
| | |
BNY Mellon 3Q23 Earnings Release |
OTHER SEGMENT primarily includes the leasing portfolio, corporate treasury activities, including our securities portfolio, derivatives and other trading activity, renewable energy and other corporate investments, certain business exits and other corporate revenue and expense items.
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(in millions) | 3Q23 | 2Q23 | 3Q22 |
Fee revenue | $ | 6 | | $ | (2) | | $ | 28 | |
Investment and other revenue | 28 | | (16) | | (5) | |
Total fee and other revenue | 34 | | (18) | | 23 | |
Net interest (expense) | (24) | | (27) | | (47) | |
Total revenue | 10 | | (45) | | (24) | |
Provision for credit losses | (13) | | (25) | | (26) | |
Noninterest expense | 24 | | 71 | | 29 | |
(Loss) before taxes | $ | (1) | | $ | (91) | | $ | (27) | |
KEY DRIVERS
•Total revenue includes corporate treasury and other investment activity, including hedging activity which has an offsetting impact between fee and other revenue and net interest expense. The year-over-year increase in total revenue primarily reflects debt extinguishment gains, partially offset by net securities losses.
•Provision for credit losses was a benefit of $13 million, primarily reflecting a reduction in reserves related to financial institutions.
•Noninterest expense decreased sequentially, primarily driven by lower litigation reserves.
| | |
BNY Mellon 3Q23 Earnings Release |
CAPITAL AND LIQUIDITY
| | | | | | | | | | | | | | | |
Capital and liquidity ratios | | Sept. 30, 2023 | June 30, 2023 | Dec. 31, 2022 | |
Consolidated regulatory capital ratios: (a) | | | | | |
CET1 ratio | | 11.4 | % | 11.1 | % | 11.2 | % | |
Tier 1 capital ratio | | 14.4 | | 14.0 | | 14.1 | | |
Total capital ratio | | 15.2 | | 14.8 | | 14.9 | | |
Tier 1 leverage ratio (a) | | 6.1 | | 5.7 | | 5.8 | | |
Supplementary leverage ratio (a) | | 7.2 | | 7.0 | | 6.8 | | |
BNY Mellon shareholders’ equity to total assets ratio | | 10.1 | % | 9.5 | % | 10.0 | % | |
BNY Mellon common shareholders’ equity to total assets ratio | | 8.9 | % | 8.4 | % | 8.8 | % | |
| | | | | |
Average LCR (a) | | 121 | % | 120 | % | 118 | % | |
Average NSFR (a) | | 136 | % | 136 | % | N/A | (b) |
| | | | | |
Book value per common share | | $ | 46.98 | | $ | 46.35 | | $ | 44.40 | | |
Tangible book value per common share – Non-GAAP (c) | | $ | 24.66 | | $ | 24.17 | | $ | 23.11 | | |
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| | | | | |
| | | | | |
| | | | | |
Common shares outstanding (in thousands) | | 769,073 | | 778,782 | | 808,445 | | |
(a) Regulatory capital and liquidity ratios for Sept. 30, 2023 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, which for Sept. 30, 2023, June 30, 2023 and Dec. 31, 2022 was the Advanced Approaches.
(b) The reporting requirement for the average NSFR became effective in 2Q23.
(c) Tangible book value per common share – Non-GAAP excludes goodwill and intangible assets, net of deferred tax liabilities. See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 9 for information on this Non-GAAP measure.
•CET1 capital totaled $18.3 billion and Tier 1 capital totaled $23.1 billion at Sept. 30, 2023, both increasing compared with June 30, 2023. The increases primarily reflect capital generated through earnings, partially offset by capital deployed through common stock repurchases and dividends. The Tier 1 leverage ratio increased compared with June 30, 2023 reflecting lower average assets.
NET INTEREST REVENUE
| | | | | | | | | | | | | | | | | |
Net interest revenue | | | | 3Q23 vs. |
(dollars in millions; not meaningful - N/M) | 3Q23 | 2Q23 | 3Q22 | 2Q23 | 3Q22 |
Net interest revenue | $ | 1,016 | | $ | 1,100 | | $ | 926 | | (8)% | 10% |
Add: Tax equivalent adjustment | — | | 1 | | 3 | | N/M | N/M |
Net interest revenue, on a fully taxable equivalent (“FTE”) basis – Non-GAAP (a) | $ | 1,016 | | $ | 1,101 | | $ | 929 | | (8)% | 9% |
| | | | | |
Net interest margin | 1.18 | % | 1.20 | % | 1.05 | % | (2) | bps | 13 | bps |
Net interest margin (FTE) – Non-GAAP (a) | 1.18 | % | 1.20 | % | 1.05 | % | (2) | bps | 13 | bps |
(a) Net interest revenue (FTE) – Non-GAAP and net interest margin (FTE) – Non-GAAP include the tax equivalent adjustments on tax-exempt income. See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 9 for information on this Non-GAAP measure. bps – basis points.
•Net interest revenue increased year-over-year primarily reflecting higher interest rates, partially offset by changes in balance sheet size and mix.
•The sequential decrease in net interest revenue primarily reflects the changes in balance sheet size and mix, partially offset by higher interest rates.
| | |
BNY Mellon 3Q23 Earnings Release |
THE BANK OF NEW YORK MELLON CORPORATION
Condensed Consolidated Income Statement
| | | | | | | | | | | | | | | | | | | | |
(in millions) | Quarter ended | | Year-to-date |
Sept. 30, 2023 | June 30, 2023 | Sept. 30, 2022 | | Sept. 30, 2023 | Sept. 30, 2022 |
|
Fee and other revenue | | | | | | |
Investment services fees | $ | 2,230 | | $ | 2,252 | | $ | 2,157 | | | $ | 6,601 | | $ | 6,356 | |
Investment management and performance fees | 777 | | 762 | | 800 | | | 2,315 | | 2,516 | |
Foreign exchange revenue | 154 | | 158 | | 203 | | | 488 | | 632 | |
Financing-related fees | 45 | | 50 | | 43 | | | 147 | | 132 | |
Distribution and servicing fees | 39 | | 35 | | 33 | | | 107 | | 97 | |
Total fee revenue | 3,245 | | 3,257 | | 3,236 | | | 9,658 | | 9,733 | |
Investment and other revenue | 113 | | 97 | | 117 | | | 289 | | 278 | |
Total fee and other revenue | 3,358 | | 3,354 | | 3,353 | | | 9,947 | | 10,011 | |
Net interest revenue | | | | | | |
Interest revenue | 5,519 | | 5,224 | | 1,984 | | | 14,685 | | 3,921 | |
Interest expense | 4,503 | | 4,124 | | 1,058 | | | 11,441 | | 1,473 | |
Net interest revenue | 1,016 | | 1,100 | | 926 | | | 3,244 | | 2,448 | |
Total revenue | 4,374 | | 4,454 | | 4,279 | | | 13,191 | | 12,459 | |
Provision for credit losses | 3 | | 5 | | (30) | | | 35 | | 19 | |
Noninterest expense | | | | | | |
Staff | 1,755 | | 1,718 | | 1,673 | | | 5,264 | | 4,998 | |
Software and equipment | 452 | | 450 | | 421 | | | 1,331 | | 1,225 | |
Professional, legal and other purchased services | 368 | | 378 | | 363 | | | 1,121 | | 1,112 | |
Net occupancy | 140 | | 121 | | 124 | | | 380 | | 371 | |
Sub-custodian and clearing | 121 | | 119 | | 124 | | | 358 | | 373 | |
Distribution and servicing | 87 | | 93 | | 88 | | | 265 | | 257 | |
Business development | 36 | | 47 | | 34 | | | 122 | | 107 | |
Bank assessment charges | 37 | | 41 | | 35 | | | 118 | | 107 | |
Goodwill impairment | — | | — | | 680 | | | — | | 680 | |
Amortization of intangible assets | 15 | | 14 | | 17 | | | 43 | | 51 | |
Other | 78 | | 130 | | 120 | | | 298 | | 516 | |
Total noninterest expense | 3,089 | | 3,111 | | 3,679 | | | 9,300 | | 9,797 | |
Income | | | | | | |
Income before taxes | 1,282 | | 1,338 | | 630 | | | 3,856 | | 2,643 | |
Provision for income taxes | 241 | | 270 | | 242 | | | 771 | | 626 | |
Net income | 1,041 | | 1,068 | | 388 | | | 3,085 | | 2,017 | |
Net (income) loss attributable to noncontrolling interests related to consolidated investment management funds | (3) | | (1) | | — | | | (4) | | 13 | |
Net income applicable to shareholders of The Bank of New York Mellon Corporation | 1,038 | | 1,067 | | 388 | | | 3,081 | | 2,030 | |
Preferred stock dividends | (82) | | (36) | | (69) | | | (189) | | (177) | |
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 956 | | $ | 1,031 | | $ | 319 | | | $ | 2,892 | | $ | 1,853 | |
| | | | | | | | | | | | | | | | | | | | |
Earnings per share applicable to the common shareholders of The Bank of New York Mellon Corporation | Quarter ended | | Year-to-date |
Sept. 30, 2023 | June 30, 2023 | Sept. 30, 2022 | | Sept. 30, 2023 | Sept. 30, 2022 |
(in dollars) |
Basic | $ | 1.23 | | $ | 1.31 | | $ | 0.39 | | | $ | 3.66 | | $ | 2.29 | |
Diluted | $ | 1.22 | | $ | 1.30 | | $ | 0.39 | | | $ | 3.65 | | $ | 2.28 | |
| | |
BNY Mellon 3Q23 Earnings Release |
EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
BNY Mellon has included in this Earnings Release certain Non-GAAP financial measures on a tangible basis as a supplement to GAAP information, which exclude goodwill and intangible assets, net of deferred tax liabilities. We believe that the return on tangible common equity – Non-GAAP is additional useful information for investors because it presents a measure of those assets that can generate income, and the tangible book value per common share – Non-GAAP is additional useful information because it presents the level of tangible assets in relation to shares of common stock outstanding.
Net interest revenue, on a fully taxable equivalent (“FTE”) basis – Non-GAAP and net interest margin (FTE) – Non-GAAP and other FTE measures include the tax equivalent adjustments on tax-exempt income which allows for the comparison of amounts arising from both taxable and tax-exempt sources and is consistent with industry practice. The adjustment to an FTE basis has no impact on net income.
BNY Mellon has included the adjusted pre-tax operating margin – Non-GAAP, which is the pre-tax operating margin for the Investment and Wealth Management business segment, net of distribution and servicing expense that was passed to third parties who distribute or service our managed funds. We believe that this measure is useful when evaluating the performance of the Investment and Wealth Management business segment relative to industry competitors.
See “Explanation of GAAP and Non-GAAP Financial Measures” in the Financial Supplement available at www.bnymellon.com for additional reconciliations of Non-GAAP measures.
BNY Mellon has also included revenue measures excluding notable items, including disposal gains. Expense measures, excluding notable items, including goodwill impairment, severance expense and litigation reserves, are also presented. Litigation reserves represent accruals for loss contingencies that are both probable and reasonably estimable, but exclude standard business-related legal fees. Net income applicable to common shareholders of The Bank of New York Mellon Corporation and diluted earnings per share, excluding the notable items mentioned above, are also provided. These measures are provided to permit investors to view the financial measures on a basis consistent with how management views the businesses.
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Reconciliation of Non-GAAP measures, excluding notable items | | | | | | | 3Q23 vs. |
(dollars in millions) | 3Q23 | | 2Q23 | | 3Q22 | | 2Q23 | 3Q22 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Total revenue – GAAP | $ | 4,374 | | | $ | 4,454 | | | $ | 4,279 | | | (2) | % | 2 | % |
Less: Disposal gain (loss) (reflected in investment and other revenue) | 2 | | | (1) | | | 37 | | | | |
Adjusted total revenue – Non-GAAP | $ | 4,372 | | | $ | 4,455 | | | $ | 4,242 | | | (2) | % | 3 | % |
| | | | | | | | |
Noninterest expense – GAAP | $ | 3,089 | | | $ | 3,111 | | | $ | 3,679 | | | (1) | % | (16) | % |
Less: Severance | 41 | | | 26 | | | 32 | | | | |
Litigation reserves | 5 | | | 36 | | | 2 | | | | |
Goodwill impairment | — | | | — | | | 680 | | | | |
Adjusted noninterest expense – Non-GAAP | $ | 3,043 | | | $ | 3,049 | | | $ | 2,965 | | | — | % | 3 | % |
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Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | $ | 956 | | | $ | 1,031 | | | $ | 319 | | | (7) | % | 200 | % |
Less: Disposal gain (loss) (reflected in investment and other revenue) | — | | | — | | | 28 | | | | |
Less: Severance | (32) | | | (20) | | | (25) | | | | |
Litigation reserves | (4) | | | (36) | | | (2) | | | | |
Goodwill impairment | — | | | — | | | (665) | | | | |
Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation – Non-GAAP | $ | 992 | | | $ | 1,087 | | | $ | 983 | | | (9) | % | 1 | % |
| | | | | | | | |
Diluted earnings per common share | $ | 1.22 | | | $ | 1.30 | | | $ | 0.39 | | | (6) | % | 213 | % |
Less: Disposal gain (loss) (reflected in investment and other revenue) | — | | | — | | | 0.03 | | | | |
Less: Severance | (0.04) | | | (0.02) | | | (0.03) | | | | |
Litigation reserves | (0.01) | | | (0.05) | | | — | | | | |
Goodwill impairment | — | | | — | | | (0.82) | | | | |
Total diluted earnings per share common share impact of notable items | (0.05) | | | (0.07) | | | (0.81) | | (a) | | |
Adjusted diluted earnings per common share – Non-GAAP | $ | 1.27 | | | $ | 1.38 | | (a) | $ | 1.21 | | | (8) | % | 5 | % |
(a) Does not foot due to rounding.
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BNY Mellon 3Q23 Earnings Release |
BNY Mellon has presented noninterest expense, income before taxes and pre-tax operating margin, excluding notable items for the Investment and Wealth Management business segment. These measures are provided to permit investors to view the financial measures on a basis consistent with how management views the businesses.
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Reconciliation of Non-GAAP measures, excluding notable items - Investment and Wealth Management | | | | | 3Q23 vs. |
(dollars in millions) | 3Q23 | | 3Q22 | | 3Q22 |
| | | | | |
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| | | | | |
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Income (loss) income before taxes – GAAP | $ | 164 | | | $ | (497) | | | N/M |
Less: Severance | (5) | | | 1 | | | |
Goodwill impairment | — | | | (680) | | | |
Adjusted income before taxes – Non-GAAP | $ | 169 | | | $ | 182 | | | (7) | % |
| | | | | |
Total revenue – GAAP | | | $ | 862 | | | |
Less: Distribution and servicing expense | | | 88 | | | |
Adjusted total revenue – Non-GAAP | | | $ | 774 | | | |
| | | | | |
Pre-tax operating margin – GAAP (a) | | | (57) | % | | |
Adjusted pre-tax operating margin, net of distribution and servicing expense (a) | | | (64) | % | | |
Adjusted pre-tax operating margin, net of distribution and servicing expense and excluding notable items – Non-GAAP (a) | | | 24 | % | | |
(a) Income before taxes divided by total revenue.
CAUTIONARY STATEMENT
A number of statements (i) in this Earnings Release, (ii) in our Financial Supplement, (iii) in our presentations and (iv) in the responses to questions on our conference call discussing our quarterly results and other public events may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about our capital plans including repurchases, strategic priorities, financial goals, organic growth, performance, organizational quality and efficiency, investments, including in technology and product development, capabilities, resiliency, risk profile, revenue, net interest revenue, fees, expenses, cost discipline, sustainable growth, currency fluctuations, innovation in products and services, client experience, company management, human capital management (including related ambitions, objectives, aims and goals), deposits, interest rates and yield curves, securities portfolio, taxes, business opportunities, divestments, volatility, preliminary business metrics and regulatory capital ratios and statements regarding our aspirations, as well as our overall plans, strategies, goals, objectives, expectations, outlooks, estimates, intentions, targets, opportunities, focus and initiatives. 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,” “would,” “may,” “might,” “will,” “strategy,” “synergies,” “opportunities,” “trends,” “ambition,” “objective,” “aim,” “future,” “potentially,” “outlook” and words of similar meaning may signify forward-looking statements. These statements and other forward-looking statements contained in other public disclosures of BNY Mellon 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 a number of factors, 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, 2022 and BNY Mellon’s other filings with the Securities and Exchange Commission. Statements about the effects of the current and near-term market and macroeconomic outlook on BNY Mellon, including on its business, operations, financial performance and prospects, may constitute forward-looking statements. Preliminary business metrics and regulatory capital ratios are subject to change, possibly materially, as BNY Mellon completes its Quarterly Report on Form 10-Q for the quarter ended Sept. 30, 2023. You should not place undue reliance on any forward-looking statement. All forward-looking statements in this Earnings Release speak only as of Oct. 17, 2023, 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.
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BNY Mellon 3Q23 Earnings Release |
ABOUT BNY MELLON
Established in 1784, BNY Mellon is America’s oldest bank and the first company listed on the New York Stock Exchange (NYSE: BK). Today, BNY Mellon powers capital markets around the world through comprehensive solutions that help clients manage and service their financial assets throughout the investment life cycle. BNY Mellon had $45.7 trillion in assets under custody and/or administration and $1.8 trillion in assets under management as of Sept. 30, 2023. BNY Mellon has been named among Fortune’s World’s Most Admired Companies and Fast Company’s Best Workplaces for Innovators. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation. Additional information is available on www.bnymellon.com. Follow us on LinkedIn or visit our Newsroom for the latest company news.
CONFERENCE CALL INFORMATION
Robin Vince, President and Chief Executive Officer, and Dermot McDonogh, Chief Financial Officer, will host a conference call and simultaneous live audio webcast at 10:30 a.m. ET on Oct. 17, 2023. 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 (800) 390-5696 (U.S.) or (720) 452-9082 (International), and using the passcode: 200200, or by logging onto www.bnymellon.com/investorrelations. Earnings materials will be available at www.bnymellon.com/investorrelations beginning at approximately 6:30 a.m. ET on Oct. 17, 2023. An archived version of the third quarter conference call and audio webcast will be available beginning on Oct. 17, 2023 at approximately 2:00 p.m. ET through Nov. 17, 2023 at www.bnymellon.com/investorrelations.
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The Bank of New York Mellon Corporation |
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Financial Supplement |
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Third Quarter 2023 |
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Table of Contents | |
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Consolidated Results | | Page |
Consolidated Financial Highlights | | |
Condensed Consolidated Income Statement | | |
Condensed Consolidated Balance Sheet | | |
Fee and Other Revenue | | |
Average Balances and Interest Rates | | |
Capital and Liquidity | | |
| | |
Business Segment Results | | |
Securities Services Business Segment | | |
Market and Wealth Services Business Segment | | |
Investment and Wealth Management Business Segment | | |
AUM by Product Type, Changes in AUM and Wealth Management Client Assets | | |
Other Segment | | |
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Other | | |
Securities Portfolio | | |
Allowance for Credit Losses and Nonperforming Assets | | |
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Supplemental Information | | |
Explanation of GAAP and Non-GAAP Financial Measures | | |
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THE BANK OF NEW YORK MELLON CORPORATION | | | | | |
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CONSOLIDATED FINANCIAL HIGHLIGHTS | | | | | | | | | |
(dollars in millions, except per common share amounts, or unless otherwise noted) | | | | | | | | | | | | 3Q23 vs. | | | | | | YTD23 vs. |
| 3Q23 | | 2Q23 | | 1Q23 | | 4Q22 | | 3Q22 | | 2Q23 | | 3Q22 | | YTD23 | | YTD22 | | YTD22 |
Selected income statement data | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Fee and other revenue | | $ | 3,358 | | | $ | 3,354 | | | $ | 3,235 | | | $ | 2,862 | | | $ | 3,353 | | | — | % | | — | % | | $ | 9,947 | | | $ | 10,011 | | | (1) | % |
Net interest revenue | | 1,016 | | | 1,100 | | | 1,128 | | | 1,056 | | | 926 | | | (8) | | | 10 | | | 3,244 | | | 2,448 | | | 33 | |
Total revenue | | 4,374 | | | 4,454 | | | 4,363 | | | 3,918 | | | 4,279 | | | (2) | | | 2 | | | 13,191 | | | 12,459 | | | 6 | |
Provision for credit losses | | 3 | | | 5 | | | 27 | | | 20 | | | (30) | | | N/M | | N/M | | 35 | | | 19 | | | N/M |
Noninterest expense | | 3,089 | | | 3,111 | | | 3,100 | | | 3,213 | | | 3,679 | | | (1) | | | (16) | | | 9,300 | | | 9,797 | | | (5) | |
Income before income taxes | | 1,282 | | | 1,338 | | | 1,236 | | | 685 | | | 630 | | | (4) | | | 103 | | | 3,856 | | | 2,643 | | | 46 | |
Provision for income taxes | | 241 | | | 270 | | | 260 | | | 142 | | | 242 | | | (11) | | | — | | | 771 | | | 626 | | | 23 | |
Net income | | $ | 1,041 | | | $ | 1,068 | | | $ | 976 | | | $ | 543 | | | $ | 388 | | | (3) | % | | 168 | % | | $ | 3,085 | | | $ | 2,017 | | | 53 | % |
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | | $ | 956 | | | $ | 1,031 | | | $ | 905 | | | $ | 509 | | | $ | 319 | | | (7) | % | | 200 | % | | $ | 2,892 | | | $ | 1,853 | | | 56 | % |
Diluted earnings per common share | | $ | 1.22 | | | $ | 1.30 | | | $ | 1.12 | | | $ | 0.62 | | | $ | 0.39 | | | (6) | % | | 213 | % | | $ | 3.65 | | | $ | 2.28 | | | 60 | % |
Average common shares and equivalents outstanding – diluted (in thousands) | | 781,781 | | | 790,725 | | | 807,718 | | | 815,846 | | | 814,516 | | | (1) | % | | (4) | % | | 793,364 | | | 814,214 | | | (3) | % |
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Financial ratios (Returns are annualized) | | | | | | | | | | | | | | | | | | | | |
Pre-tax operating margin | | 29 | % | | 30 | % | | 28 | % | | 17 | % | | 15 | % | | | | | | 29 | % | | 21 | % | | |
Return on common equity | | 10.5 | % | | 11.6 | % | | 10.3 | % | | 5.7 | % | | 3.5 | % | | | | | | 10.8 | % | | 6.8 | % | | |
Return on tangible common equity – Non-GAAP (a) | | 20.5 | % | | 22.6 | % | | 20.2 | % | | 11.5 | % | | 7.5 | % | | | | | | 21.1 | % | | 14.0 | % | | |
Non-U.S. revenue as a percentage of total revenue | | 36 | % | | 37 | % | | 35 | % | | 39 | % | | 35 | % | | | | | | 36 | % | | 35 | % | | |
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Period end | | | | | | | | | | | | | | | | | | | | |
Assets under custody and/or administration (“AUC/A”) (in trillions) (b) | | $ | 45.7 | | | $ | 46.9 | | | $ | 46.6 | | | $ | 44.3 | | | $ | 42.2 | | | (3) | % | | 8 | % | | | | | | |
Assets under management (“AUM”) (in trillions) | | $ | 1.82 | | | $ | 1.91 | | | $ | 1.91 | | | $ | 1.84 | | | $ | 1.78 | | | (4) | % | | 3 | % | | | | | | |
Full-time employees | | 53,600 | | | 53,200 | | | 51,600 | | | 51,700 | | | 51,100 | | | 1 | % | | 5 | % | | | | | | |
Book value per common share | | $ | 46.98 | | | $ | 46.35 | | | $ | 45.36 | | | $ | 44.40 | | | $ | 43.18 | | | | | | | | | | | |
Tangible book value per common share – Non-GAAP (a) | | $ | 24.66 | | | $ | 24.17 | | | $ | 23.52 | | | $ | 23.11 | | | $ | 21.55 | | | | | | | | | | | |
Cash dividends per common share | | $ | 0.42 | | | $ | 0.37 | | | $ | 0.37 | | | $ | 0.37 | | | $ | 0.37 | | | | | | | | | | | |
Common dividend payout ratio | | 35 | % | | 29 | % | | 34 | % | | 60 | % | | 95 | % | | | | | | | | | | |
Closing stock price per common share | | $ | 42.65 | | | $ | 44.52 | | | $ | 45.44 | | | $ | 45.52 | | | $ | 38.52 | | | | | | | | | | | |
Market capitalization | | $ | 32,801 | | | $ | 34,671 | | | $ | 35,858 | | | $ | 36,800 | | | $ | 31,135 | | | | | | | | | | | |
Common shares outstanding (in thousands) | | 769,073 | | | 778,782 | | | 789,134 | | | 808,445 | | | 808,280 | | | | | | | | | | | |
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Capital ratios at period end (c) | | | | | | | | | | | | | | | | | | | | |
Common Equity Tier 1 ("CET1") ratio | | 11.4 | % | | 11.1 | % | | 11.0 | % | | 11.2 | % | | 10.0 | % | | | | | | | | | | |
Tier 1 capital ratio | | 14.4 | % | | 14.0 | % | | 13.9 | % | | 14.1 | % | | 12.8 | % | | | | | | | | | | |
Total capital ratio | | 15.2 | % | | 14.8 | % | | 14.7 | % | | 14.9 | % | | 13.7 | % | | | | | | | | | | |
Tier 1 leverage ratio | | 6.1 | % | | 5.7 | % | | 5.8 | % | | 5.8 | % | | 5.4 | % | | | | | | | | | | |
Supplementary leverage ratio ("SLR") | | 7.2 | % | | 7.0 | % | | 6.9 | % | | 6.8 | % | | 6.3 | % | | | | | | | | | | |
(a) Non-GAAP information, for all periods presented, excludes goodwill and intangible assets, net of deferred tax liabilities. See "Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of Non-GAAP measures. |
(b) Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.5 trillion at Sept. 30, 2023, $1.6 trillion at June 30, 2023, $1.5 trillion at March 31, 2023 and Dec. 31, 2022 and $1.4 trillion at Sep. 30, 2022. |
(c) Regulatory capital ratios for Sept. 30, 2023 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, which for Sept. 30, 2023, June 30, 2023, March 31, 2023 and Dec. 31, 2022 was the Advanced Approaches, and for Sept. 30, 2022 was the Standardized Approach for the CET1 and Tier 1 capital ratios and the Advanced Approaches for the Total capital ratio. |
N/M – Not meaningful. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
THE BANK OF NEW YORK MELLON CORPORATION | | | | | | | | | | |
CONDENSED CONSOLIDATED INCOME STATEMENT | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
(dollars in millions, except per share amounts; common shares in thousands) | | | | | | | | | | | | 3Q23 vs. | | | | | | YTD23 vs. |
| 3Q23 | | 2Q23 | | 1Q23 | | 4Q22 | | 3Q22 | | 2Q23 | | 3Q22 | | YTD23 | | YTD22 | | YTD22 |
Revenue | | | | | | | | | | | | | | | | | | | | |
Investment services fees | | $ | 2,230 | | | $ | 2,252 | | | $ | 2,119 | | | $ | 2,173 | | | $ | 2,157 | | | (1) | % | | 3 | % | | $ | 6,601 | | | $ | 6,356 | | | 4 | % |
Investment management and performance fees | | 777 | | | 762 | | | 776 | | | 783 | | | 800 | | | 2 | | | (3) | | | 2,315 | | | 2,516 | | | (8) | |
Foreign exchange revenue | | 154 | | | 158 | | | 176 | | | 190 | | | 203 | | | (3) | | | (24) | | | 488 | | | 632 | | | (23) | |
Financing-related fees | | 45 | | | 50 | | | 52 | | | 43 | | | 43 | | | (10) | | | 5 | | | 147 | | | 132 | | | 11 | |
Distribution and servicing fees | | 39 | | | 35 | | | 33 | | | 33 | | | 33 | | | 11 | | | 18 | | | 107 | | | 97 | | | 10 | |
Total fee revenue | | 3,245 | | | 3,257 | | | 3,156 | | | 3,222 | | | 3,236 | | | — | | | — | | | 9,658 | | | 9,733 | | | (1) | |
Investment and other revenue | | 113 | | | 97 | | | 79 | | | (360) | | | 117 | | | N/M | | N/M | | 289 | | | 278 | | | N/M |
Total fee and other revenue | | 3,358 | | | 3,354 | | | 3,235 | | | 2,862 | | | 3,353 | | | — | | | — | | | 9,947 | | | 10,011 | | | (1) | |
Net interest revenue | | 1,016 | | | 1,100 | | | 1,128 | | | 1,056 | | | 926 | | | (8) | | | 10 | | | 3,244 | | | 2,448 | | | 33 | |
Total revenue | | 4,374 | | | 4,454 | | | 4,363 | | | 3,918 | | | 4,279 | | | (2) | | | 2 | | | 13,191 | | | 12,459 | | | 6 | |
Provision for credit losses | | 3 | | | 5 | | | 27 | | | 20 | | | (30) | | | N/M | | N/M | | 35 | | | 19 | | | N/M |
Noninterest expense | | | | | | | | | | | | | | | | | | | | |
Staff | | 1,755 | | | 1,718 | | | 1,791 | | | 1,802 | | | 1,673 | | | 2 | | | 5 | | | 5,264 | | | 4,998 | | | 5 | |
Software and equipment | | 452 | | | 450 | | | 429 | | | 432 | | | 421 | | | — | | | 7 | | | 1,331 | | | 1,225 | | | 9 | |
Professional, legal and other purchased services | | 368 | | | 378 | | | 375 | | | 415 | | | 363 | | | (3) | | | 1 | | | 1,121 | | | 1,112 | | | 1 | |
Net occupancy | | 140 | | | 121 | | | 119 | | | 143 | | | 124 | | | 16 | | | 13 | | | 380 | | | 371 | | | 2 | |
Sub-custodian and clearing | | 121 | | | 119 | | | 118 | | | 112 | | | 124 | | | 2 | | | (2) | | | 358 | | | 373 | | | (4) | |
Distribution and servicing | | 87 | | | 93 | | | 85 | | | 86 | | | 88 | | | (6) | | | (1) | | | 265 | | | 257 | | | 3 | |
Business development | | 36 | | | 47 | | | 39 | | | 45 | | | 34 | | | (23) | | | 6 | | | 122 | | | 107 | | | 14 | |
Bank assessment charges | | 37 | | | 41 | | | 40 | | | 19 | | | 35 | | | (10) | | | 6 | | | 118 | | | 107 | | | 10 | |
Goodwill impairment | | — | | | — | | | — | | | — | | | 680 | | | N/M | | N/M | | — | | | 680 | | | N/M |
Amortization of intangible assets | | 15 | | | 14 | | | 14 | | | 16 | | | 17 | | | 7 | | | (12) | | | 43 | | | 51 | | | (16) | |
Other | | 78 | | | 130 | | | 90 | | | 143 | | | 120 | | | (40) | | | (35) | | | 298 | | | 516 | | | (42) | |
Total noninterest expense | | 3,089 | | | 3,111 | | | 3,100 | | | 3,213 | | | 3,679 | | | (1) | | | (16) | | | 9,300 | | | 9,797 | | | (5) | |
Income before income taxes | | 1,282 | | | 1,338 | | | 1,236 | | | 685 | | | 630 | | | (4) | | | 103 | | | 3,856 | | | 2,643 | | | 46 | |
Provision for income taxes | | 241 | | | 270 | | | 260 | | | 142 | | | 242 | | | (11) | | | — | | | 771 | | | 626 | | | 23 | |
Net income | | 1,041 | | | 1,068 | | | 976 | | | 543 | | | 388 | | | (3) | | | 168 | | | 3,085 | | | 2,017 | | | 53 | |
Net (income) loss attributable to noncontrolling interests | | (3) | | | (1) | | | — | | | — | | | — | | | N/M | | N/M | | (4) | | | 13 | | | N/M |
Preferred stock dividends | | (82) | | | (36) | | | (71) | | | (34) | | | (69) | | | N/M | | N/M | | (189) | | | (177) | | | N/M |
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | | $ | 956 | | | $ | 1,031 | | | $ | 905 | | | $ | 509 | | | $ | 319 | | | (7) | % | | 200 | % | | $ | 2,892 | | | $ | 1,853 | | | 56 | % |
| | | | | | | | | | | | | | | | | | | | |
Average common shares and equivalents outstanding: Basic | | 777,813 | | | 787,718 | | | 803,340 | | | 811,669 | | | 811,304 | | | (1) | % | | (4) | % | | 789,609 | | | 810,703 | | | (3) | % |
Diluted | | 781,781 | | | 790,725 | | | 807,718 | | | 815,846 | | | 814,516 | | | (1) | % | | (4) | % | | 793,364 | | | 814,214 | | | (3) | % |
| | | | | | | | | | | | | | | | | | | | |
Earnings per common share: Basic | | $ | 1.23 | | | $ | 1.31 | | | $ | 1.13 | | | $ | 0.63 | | | $ | 0.39 | | | (6) | % | | 215 | % | | $ | 3.66 | | | $ | 2.29 | | | 60 | % |
Diluted | | $ | 1.22 | | | $ | 1.30 | | | $ | 1.12 | | | $ | 0.62 | | | $ | 0.39 | | | (6) | % | | 213 | % | | $ | 3.65 | | | $ | 2.28 | | | 60 | % |
N/M – Not meaningful. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
THE BANK OF NEW YORK MELLON CORPORATION | | | | | | |
CONDENSED CONSOLIDATED BALANCE SHEET | | | | | |
| | | | | | | | |
| | 2023 | | 2022 |
(in millions) | | Sept. 30 | | June 30 | | March 31 | | Dec. 31 | | Sept. 30 |
Assets | | | | | | | | | | |
Cash and due from banks | | $ | 4,904 | | | $ | 5,720 | | | $ | 5,564 | | | $ | 5,030 | | | $ | 4,707 | |
Interest-bearing deposits with the Federal Reserve and other central banks | | 107,419 | | | 118,908 | | | 117,042 | | | 91,655 | | | 107,427 | |
Interest-bearing deposits with banks | | 12,999 | | | 12,316 | | | 15,114 | | | 17,169 | | | 13,890 | |
Federal funds sold and securities purchased under resale agreements | | 26,299 | | | 35,378 | | | 26,894 | | | 24,298 | | | 23,483 | |
Securities | | 128,225 | | | 134,233 | | | 138,678 | | | 142,816 | | | 144,181 | |
Trading assets | | 10,699 | | | 10,562 | | | 9,024 | | | 9,908 | | | 12,650 | |
Loans | | 66,290 | | | 64,469 | | | 62,323 | | | 66,063 | | | 69,829 | |
Allowance for loan losses | | (211) | | | (191) | | | (170) | | | (176) | | | (164) | |
Net loans | | 66,079 | | | 64,278 | | | 62,153 | | | 65,887 | | | 69,665 | |
Premises and equipment | | 3,234 | | | 3,241 | | | 3,248 | | | 3,256 | | | 3,311 | |
Accrued interest receivable | | 1,141 | | | 963 | | | 978 | | | 858 | | | 723 | |
Goodwill | | 16,159 | | | 16,246 | | | 16,192 | | | 16,150 | | | 16,412 | |
Intangible assets | | 2,859 | | | 2,881 | | | 2,890 | | | 2,901 | | | 2,902 | |
Other assets | | 25,231 | | | 25,656 | | | 27,335 | | | 25,855 | | | 28,602 | |
Total assets | | $ | 405,248 | | | $ | 430,382 | | | $ | 425,112 | | | $ | 405,783 | | | $ | 427,953 | |
Liabilities | | | | | | | | | | |
Deposits | | $ | 277,467 | | | $ | 292,045 | | | $ | 281,294 | | | $ | 278,970 | | | $ | 301,989 | |
Federal funds purchased and securities sold under repurchase agreements | | 14,771 | | | 21,285 | | | 26,540 | | | 12,335 | | | 11,339 | |
Trading liabilities | | 7,358 | | | 6,319 | | | 5,705 | | | 5,385 | | | 7,494 | |
Payables to customers and broker-dealers | | 17,441 | | | 21,084 | | | 22,598 | | | 23,435 | | | 23,741 | |
| | | | | | | | | | |
Other borrowed funds | | 728 | | | 1,371 | | | 2,538 | | | 397 | | | 357 | |
Accrued taxes and other expenses | | 5,389 | | | 5,160 | | | 4,732 | | | 5,410 | | | 5,316 | |
Other liabilities | | 11,758 | | | 9,553 | | | 10,414 | | | 8,543 | | | 10,001 | |
Long-term debt | | 29,205 | | | 32,463 | | | 30,489 | | | 30,458 | | | 27,820 | |
Total liabilities | | 364,117 | | | 389,280 | | | 384,310 | | | 364,933 | | | 388,057 | |
Temporary equity | | | | | | | | | | |
Redeemable noncontrolling interests | | 109 | | | 104 | | | 96 | | | 109 | | | 152 | |
Permanent equity | | | | | | | | | | |
Preferred stock | | 4,838 | | | 4,838 | | | 4,838 | | | 4,838 | | | 4,838 | |
Common stock | | 14 | | | 14 | | | 14 | | | 14 | | | 14 | |
Additional paid-in capital | | 28,793 | | | 28,726 | | | 28,650 | | | 28,508 | | | 28,374 | |
Retained earnings | | 39,822 | | | 39,199 | | | 38,465 | | | 37,864 | | | 37,660 | |
Accumulated other comprehensive loss, net of tax | | (5,805) | | | (5,602) | | | (5,543) | | | (5,966) | | | (6,627) | |
Less: Treasury stock, at cost | | (26,696) | | | (26,242) | | | (25,790) | | | (24,524) | | | (24,522) | |
Total The Bank of New York Mellon Corporation shareholders’ equity | | 40,966 | | | 40,933 | | | 40,634 | | | 40,734 | | | 39,737 | |
Nonredeemable noncontrolling interests of consolidated investment management funds | | 56 | | | 65 | | | 72 | | | 7 | | | 7 | |
Total permanent equity | | 41,022 | | | 40,998 | | | 40,706 | | | 40,741 | | | 39,744 | |
Total liabilities, temporary equity and permanent equity | | $ | 405,248 | | | $ | 430,382 | | | $ | 425,112 | | | $ | 405,783 | | | $ | 427,953 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
THE BANK OF NEW YORK MELLON CORPORATION | | | | | | | | | | |
FEE AND OTHER REVENUE | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | 3Q23 vs. | | | | | | YTD23 vs. |
(dollars in millions) | | 3Q23 | | 2Q23 | | 1Q23 | | 4Q22 | | 3Q22 | | 2Q23 | | 3Q22 | | YTD23 | | YTD22 | | YTD22 |
Investment services fees | | $ | 2,230 | | | $ | 2,252 | | | $ | 2,119 | | | $ | 2,173 | | | $ | 2,157 | | | (1) | % | | 3 | % | | $ | 6,601 | | | $ | 6,356 | | | 4 | % |
Investment management and performance fees: | | | | | | | | | | | | | | | | | | | | |
Investment management fees (a) | | 747 | | | 752 | | | 754 | | | 757 | | | 790 | | | (1) | | | (5) | | | 2,253 | | | 2,467 | | | (9) | |
Performance fees | | 30 | | | 10 | | | 22 | | | 26 | | | 10 | | | N/M | | N/M | | 62 | | | 49 | | | 27 | |
Total investment management and performance fees (b) | | 777 | | | 762 | | | 776 | | | 783 | | | 800 | | | 2 | | | (3) | | | 2,315 | | | 2,516 | | | (8) | |
Foreign exchange revenue | | 154 | | | 158 | | | 176 | | | 190 | | | 203 | | | (3) | | | (24) | | | 488 | | | 632 | | | (23) | |
Financing-related fees | | 45 | | | 50 | | | 52 | | | 43 | | | 43 | | | (10) | | | 5 | | | 147 | | | 132 | | | 11 | |
Distribution and servicing fees | | 39 | | | 35 | | | 33 | | | 33 | | | 33 | | | 11 | | | 18 | | | 107 | | | 97 | | | 10 | |
Total fee revenue | | 3,245 | | | 3,257 | | | 3,156 | | | 3,222 | | | 3,236 | | | — | | | — | | | 9,658 | | | 9,733 | | | (1) | |
Investment and other revenue: | | | | | | | | | | | | | | | | | | | | |
(Loss) income from consolidated investment management funds | | (11) | | | 10 | | | 5 | | | 9 | | | (7) | | | N/M | | N/M | | 4 | | | (51) | | | N/M |
Seed capital (losses) gains (c) | | (4) | | | 7 | | | 8 | | | 6 | | | (11) | | | N/M | | N/M | | 11 | | | (43) | | | N/M |
Other trading revenue | | 86 | | | 53 | | | 45 | | | 34 | | | 65 | | | N/M | | N/M | | 184 | | | 115 | | | N/M |
Renewable energy investment (losses) | | (45) | | | (45) | | | (32) | | | (32) | | | (44) | | | N/M | | N/M | | (122) | | | (132) | | | N/M |
Corporate/bank-owned life insurance | | 29 | | | 23 | | | 27 | | | 35 | | | 32 | | | N/M | | N/M | | 79 | | | 93 | | | N/M |
Other investments (losses) gains (d) | | (9) | | | 10 | | | (9) | | | 7 | | | 13 | | | N/M | | N/M | | (8) | | | 152 | | | N/M |
Disposal gains (losses) | | 2 | | | (1) | | | (1) | | | (11) | | | 37 | | | N/M | | N/M | | — | | | 37 | | | N/M |
Expense reimbursements from joint venture | | 29 | | | 31 | | | 29 | | | 28 | | | 27 | | | N/M | | N/M | | 89 | | | 80 | | | N/M |
Other income | | 55 | | | 9 | | | 8 | | | 12 | | | 4 | | | N/M | | N/M | | 72 | | | 22 | | | N/M |
Net securities (losses) gains | | (19) | | | — | | | (1) | | | (448) | | | 1 | | | N/M | | N/M | | (20) | | | 5 | | | N/M |
Total investment and other revenue | | 113 | | | 97 | | | 79 | | | (360) | | | 117 | | | N/M | | N/M | | 289 | | | 278 | | | N/M |
Total fee and other revenue | | $ | 3,358 | | | $ | 3,354 | | | $ | 3,235 | | | $ | 2,862 | | | $ | 3,353 | | | — | % | | — | % | | $ | 9,947 | | | $ | 10,011 | | | (1) | % |
(a) Excludes seed capital gains (losses) related to consolidated investment management funds. |
(b) On a constant currency basis (Non-GAAP), investment management and performance fees decreased 5% compared with 3Q22. See "Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of this Non-GAAP measure. |
(c) Includes gains (losses) on investments in BNY Mellon funds which hedge deferred incentive awards. |
(d) Includes strategic equity, private equity and other investments. |
N/M – Not meaningful. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
THE BANK OF NEW YORK MELLON CORPORATION | | | | | | | | | | | | | | |
AVERAGE BALANCES AND INTEREST RATES | | | | | | | | | | | | | |
| | 3Q23 | | 2Q23 | | 1Q23 | | 4Q22 | | 3Q22 |
| | Average balance | Average rate | | | Average balance | Average rate | | | Average balance | Average rate | | | Average balance | Average rate | | | Average balance | Average rate | |
(dollars in millions; average rates are annualized) | | | | | | | | | | |
Assets | | | | | | | | | | | | | | | | | | | | |
Interest-earning assets: | | | | | | | | | | | | | | | | | | | | |
Interest-bearing deposits with the Federal Reserve and other central banks | | $ | 98,767 | | 4.57 | % | | | $ | 114,578 | | 4.29 | % | | | $ | 94,899 | | 3.59 | % | | | $ | 94,868 | | 2.60 | % | | | $ | 91,836 | | 1.23 | % | |
Interest-bearing deposits with banks | | 12,287 | | 4.04 | | | | 13,919 | | 3.68 | | | | 16,225 | | 3.51 | | | | 15,750 | | 2.70 | | | | 16,298 | | 1.62 | | |
Federal funds sold and securities purchased under resale agreements | | 26,915 | | 30.47 | | (a) | | 26,989 | | 26.38 | | (a) | | 24,631 | | 16.32 | | (a) | | 25,657 | | 11.22 | | (a) | | 22,971 | | 5.55 | | (a) |
Loans | | 63,962 | | 6.39 | | | | 63,459 | | 6.05 | | | | 63,261 | | 5.54 | | | | 67,364 | | 4.65 | | | | 68,082 | | 3.39 | | |
Securities: | | | | | | | | | | | | | | | | | | | | |
U.S. government obligations | | 32,224 | | 3.08 | | | | 34,147 | | 2.90 | | | | 38,852 | | 2.89 | | | | 39,382 | | 2.46 | | | | 40,829 | | 1.75 | | |
U.S. government agency obligations | | 59,481 | | 2.87 | | | | 61,565 | | 2.78 | | | | 62,280 | | 2.60 | | | | 61,426 | | 2.30 | | | | 62,819 | | 1.91 | | |
State and political subdivisions (b) | | 13 | | 4.42 | | | | 13 | | 4.45 | | | | 23 | | 7.07 | | | | 1,178 | | 2.77 | | | | 1,982 | | 2.39 | | |
Other securities (b) | | 39,861 | | 3.93 | | | | 40,976 | | 3.59 | | | | 42,429 | | 3.21 | | | | 41,732 | | 2.66 | | | | 42,642 | | 1.90 | | |
Total investment securities (b) | | 131,579 | | 3.24 | | | | 136,701 | | 3.05 | | | | 143,584 | | 2.86 | | | | 143,718 | | 2.45 | | | | 148,272 | | 1.87 | | |
Trading securities (b) | | 5,534 | | 5.49 | | | | 6,403 | | 5.02 | | | | 5,778 | | 4.97 | | | | 5,630 | | 4.51 | | | | 4,603 | | 3.06 | | |
Total securities (b) | | 137,113 | | 3.33 | | | | 143,104 | | 3.14 | | | | 149,362 | | 2.94 | | | | 149,348 | | 2.53 | | | | 152,875 | | 1.91 | | |
Total interest-earning assets (b) | | $ | 339,044 | | 6.45 | % | | | $ | 362,049 | | 5.77 | % | | | $ | 348,378 | | 4.56 | % | | | $ | 352,987 | | 3.59 | % | | | $ | 352,062 | | 2.24 | % | |
Noninterest-earning assets | | 58,448 | | | | | 59,125 | | | | | 59,123 | | | | | 61,532 | | | | | 63,608 | | | |
Total assets | | $ | 397,492 | | | | | $ | 421,174 | | | | | $ | 407,501 | | | | | $ | 414,519 | | | | | $ | 415,670 | | | |
| | | | | | | | | | | | | | | | | | | | |
Liabilities and equity | | | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | |
Interest-bearing deposits | | $ | 209,641 | | 3.62 | % | | | $ | 215,057 | | 3.24 | % | | | $ | 204,114 | | 2.71 | % | | | $ | 207,875 | | 2.00 | % | | | $ | 203,659 | | 0.95 | % | |
Federal funds purchased and securities sold under repurchase agreements | | 21,512 | | 36.07 | | (a) | | 26,282 | | 26.39 | | (a) | | 18,316 | | 19.75 | | (a) | | 13,985 | | 16.88 | | (a) | | 12,297 | | 8.05 | | (a) |
Trading liabilities | | 3,959 | | 4.80 | | | | 3,893 | | 4.46 | | | | 3,025 | | 4.05 | | | | 3,572 | | 3.45 | | | | 3,550 | | 2.52 | | |
Other borrowed funds | | 540 | | 4.47 | | | | 2,702 | | 4.60 | | | | 711 | | 1.75 | | | | 619 | | 1.69 | | | | 504 | | 1.15 | | |
Commercial paper | | 7 | | 4.13 | | | | 5 | | 5.11 | | | | — | | — | | | | 6 | | 3.87 | | | | 5 | | 2.34 | | |
Payables to customers and broker-dealers | | 13,515 | | 4.30 | | | | 14,801 | | 3.85 | | | | 16,954 | | 3.08 | | | | 17,147 | | 2.27 | | | | 18,030 | | 1.07 | | |
Long-term debt | | 31,161 | | 5.52 | | | | 31,970 | | 5.45 | | | | 30,246 | | 5.22 | | | | 29,508 | | 4.90 | | | | 28,449 | | 3.43 | | |
Total interest-bearing liabilities | | $ | 280,335 | | 6.37 | % | | | $ | 294,710 | | 5.61 | % | | | $ | 273,366 | | 4.17 | % | | | $ | 272,712 | | 3.11 | % | | | $ | 266,494 | | 1.57 | % | |
Total noninterest-bearing deposits | | 52,467 | | | | | 62,152 | | | | | 69,886 | | | | | 75,862 | | | | | 84,804 | | | |
Other noninterest-bearing liabilities | | 23,790 | | | | | 23,625 | | | | | 23,789 | | | | | 25,810 | | | | | 23,547 | | | |
Total The Bank of New York Mellon Corporation shareholders’ equity | | 40,821 | | | | | 40,607 | | | | | 40,442 | | | | | 40,097 | | | | | 40,780 | | | |
Noncontrolling interests | | 79 | | | | | 80 | | | | | 18 | | | | | 38 | | | | | 45 | | | |
Total liabilities and equity | | $ | 397,492 | | | | | $ | 421,174 | | | | | $ | 407,501 | | | | | $ | 414,519 | | | | | $ | 415,670 | | | |
Net interest margin | | | 1.18 | % | | | | 1.20 | % | | | | 1.29 | % | | | | 1.19 | % | | | | 1.05 | % | |
Net interest margin (FTE) – Non-GAAP (c) | | | 1.18 | % | | | | 1.20 | % | | | | 1.29 | % | | | | 1.19 | % | | | | 1.05 | % | |
(a) Includes the average impact of offsetting under enforceable netting agreements of approximately $126 billion for 3Q23, $113 billion for 2Q23, $62 billion for 1Q23, $51 billion for 4Q22 and $35 billion for 3Q22. On a Non-GAAP basis, excluding the impact of offsetting, the yield on federal funds sold and securities purchased under resale agreements would have been 5.36% for 3Q23, 5.10% for 2Q23, 4.62% for 1Q23, 3.76% for 4Q22 and 2.21% for 3Q22. On a Non-GAAP basis, excluding the impact of offsetting, the rate on federal funds purchased and securities sold under repurchase agreements would have been 5.26% for 3Q23, 4.99% for 2Q23, 4.49% for 1Q23, 3.63% for 4Q22 and 2.11% for 3Q22. We believe providing the rates excluding the impact of netting is useful to investors as it is more reflective of the actual rates earned and paid. |
(b) Average rates were calculated on an FTE basis, at tax rates of approximately 21%. |
(c) See "Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of this Non-GAAP measure. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
THE BANK OF NEW YORK MELLON CORPORATION | | | | | | |
CAPITAL AND LIQUIDITY | | | | | |
| | | | | | | | | | | | | |
| | 2023 | | | 2022 |
(dollars in millions) | | Sept. 30 | | June 30 | | March 31 | | | Dec. 31 | | | Sept. 30 | |
Consolidated regulatory capital ratios (a) | | | | | | | | | | | | | |
Standardized Approach: | | | | | | | | | | | | | |
CET1 capital | | $ | 18,264 | | | $ | 18,127 | | | $ | 17,876 | | | | $ | 18,032 | | | | $ | 16,726 | | |
Tier 1 capital | | 23,093 | | | 22,957 | | | 22,710 | | | | 22,856 | | | | 21,495 | | |
Total capital | | 24,660 | | | 24,522 | | | 24,276 | | | | 24,384 | | | | 23,008 | | |
Risk-weighted assets | | 152,251 | | | 153,359 | | | 157,399 | | | | 159,096 | | | | 167,457 | | |
| | | | | | | | | | | | | |
CET1 ratio | | 12.0 | % | | 11.8 | % | | 11.4 | % | | | 11.3 | % | | | 10.0 | % | |
Tier 1 capital ratio | | 15.2 | | | 15.0 | | | 14.4 | | | | 14.4 | | | | 12.8 | | |
Total capital ratio | | 16.2 | | | 16.0 | | | 15.4 | | | | 15.3 | | | | 13.7 | | |
| | | | | | | | | | | | | |
Advanced Approaches: | | | | | | | | | | | | | |
CET1 capital | | $ | 18,264 | | | $ | 18,127 | | | $ | 17,876 | | | | $ | 18,032 | | | | $ | 16,726 | | |
Tier 1 capital | | 23,093 | | | 22,957 | | | 22,710 | | | | 22,856 | | | | 21,495 | | |
Total capital | | 24,412 | | | 24,260 | | | 24,005 | | | | 24,143 | | | | 22,762 | | |
Risk-weighted assets | | 160,464 | | | 163,536 | | | 162,905 | | | | 161,672 | | | | 165,893 | | |
| | | | | | | | | | | | | |
CET1 ratio | | 11.4 | % | | 11.1 | % | | 11.0 | % | | | 11.2 | % | | | 10.1 | % | |
Tier 1 capital ratio | | 14.4 | | | 14.0 | | | 13.9 | | | | 14.1 | | | | 13.0 | | |
Total capital ratio | | 15.2 | | | 14.8 | | | 14.7 | | | | 14.9 | | | | 13.7 | | |
| | | | | | | | | | | | | |
Tier 1 leverage ratio (a): | | | | | | | | | | | | | |
Average assets for Tier 1 leverage ratio | | $ | 379,630 | | | $ | 403,206 | | | $ | 389,581 | | | | $ | 396,643 | | | | $ | 397,428 | | |
Tier 1 leverage ratio | | 6.1 | % | | 5.7 | % | | 5.8 | % | | | 5.8 | % | | | 5.4 | % | |
| | | | | | | | | | | | | |
SLR (a): | | | | | | | | | | | | | |
Leverage exposure | | $ | 320,060 | | | $ | 326,215 | | | $ | 330,501 | | | | $ | 336,049 | | | | $ | 340,055 | | |
SLR | | 7.2 | % | | 7.0 | % | | 6.9 | % | | | 6.8 | % | | | 6.3 | % | |
| | | | | | | | | | | | | |
Average liquidity coverage ratio (a) | | 121 | % | | 120 | % | | 118 | % | | | 118 | % | | | 116 | % | |
Average net stable funding ratio (a) | | 136 | % | | 136 | % | | 132 | % | | | N/A | (b) | | N/A | (b) |
(a) Regulatory capital and liquidity ratios for Sept. 30, 2023 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, which for Sept. 30, 2023, June 30, 2023, March 31, 2023 and Dec. 31, 2022 was the Advanced Approaches, and for Sept. 30, 2022 was the Standardized Approach for the CET1 and Tier 1 capital ratios and the Advanced Approaches for the Total capital ratio. |
(b) The reporting requirement for the average net stable funding ratio became effective in 2Q23, inclusive of reporting the average 1Q23 ratio. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
THE BANK OF NEW YORK MELLON CORPORATION | | | | | | | | | | |
SECURITIES SERVICES BUSINESS SEGMENT | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | 3Q23 vs. | | | | | | YTD23 vs. |
(dollars in millions) | | 3Q23 | | 2Q23 | | 1Q23 | | 4Q22 | | 3Q22 | | 2Q23 | | 3Q22 | | YTD23 | | YTD22 | | YTD22 |
Revenue: | | | | | | | | | | | | | | | | | | | | |
Investment services fees: | | | | | | | | | | | | | | | | | | | | |
Asset Servicing | | $ | 984 | | | $ | 991 | | | $ | 948 | | | $ | 971 | | | $ | 953 | | | (1) | % | | 3 | % | | $ | 2,923 | | | $ | 2,947 | | | (1) | % |
Issuer Services | | 281 | | | 319 | | | 236 | | | 271 | | | 288 | | | (12) | | | (2) | | | 836 | | | 738 | | | 13 | |
Total investment services fees | | 1,265 | | | 1,310 | | | 1,184 | | | 1,242 | | | 1,241 | | | (3) | | | 2 | | | 3,759 | | | 3,685 | | | 2 | |
Foreign exchange revenue | | 107 | | | 124 | | | 139 | | | 149 | | | 132 | | | (14) | | | (19) | | | 370 | | | 435 | | | (15) | |
Other fees (a) | | 52 | | | 54 | | | 55 | | | 55 | | | 52 | | | (4) | | | — | | | 161 | | | 147 | | | 10 | |
Total fee revenue | | 1,424 | | | 1,488 | | | 1,378 | | | 1,446 | | | 1,425 | | | (4) | | | — | | | 4,290 | | | 4,267 | | | 1 | |
Investment and other revenue | | 65 | | | 84 | | | 72 | | | 70 | | | 111 | | | N/M | | N/M | | 221 | | | 221 | | | N/M |
Total fee and other revenue | | 1,489 | | | 1,572 | | | 1,450 | | | 1,516 | | | 1,536 | | | (5) | | | (3) | | | 4,511 | | | 4,488 | | | 1 | |
Net interest revenue | | 600 | | | 668 | | | 666 | | | 656 | | | 538 | | | (10) | | | 12 | | | 1,934 | | | 1,372 | | | 41 | |
Total revenue | | 2,089 | | | 2,240 | | | 2,116 | | | 2,172 | | | 2,074 | | | (7) | | | 1 | | | 6,445 | | | 5,860 | | | 10 | |
Provision for credit losses | | 19 | | | 16 | | | — | | | 11 | | | (6) | | | N/M | | N/M | | 35 | | | (3) | | | N/M |
Noninterest expense (ex. amortization of intangible assets) | | 1,577 | | | 1,575 | | | 1,548 | | | 1,568 | | | 1,549 | | | — | | | 2 | | | 4,700 | | | 4,698 | | | — | |
Amortization of intangible assets | | 8 | | | 7 | | | 8 | | | 8 | | | 8 | | | 14 | | | — | | | 23 | | | 25 | | | (8) | |
Total noninterest expense | | 1,585 | | | 1,582 | | | 1,556 | | | 1,576 | | | 1,557 | | | — | | | 2 | | | 4,723 | | | 4,723 | | | — | |
Income before income taxes | | $ | 485 | | | $ | 642 | | | $ | 560 | | | $ | 585 | | | $ | 523 | | | (24) | % | | (7) | % | | $ | 1,687 | | | $ | 1,140 | | | 48 | % |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total revenue by line of business: | | | | | | | | | | | | | | | | | | | | |
Asset Servicing | | $ | 1,593 | | | $ | 1,706 | | | $ | 1,664 | | | $ | 1,681 | | | $ | 1,596 | | | (7) | % | | — | % | | $ | 4,963 | | | $ | 4,642 | | | 7 | % |
Issuer Services | | 496 | | | 534 | | | 452 | | | 491 | | | 478 | | | (7) | | | 4 | | | 1,482 | | | 1,218 | | | 22 | |
Total revenue by line of business | | $ | 2,089 | | | $ | 2,240 | | | $ | 2,116 | | | $ | 2,172 | | | $ | 2,074 | | | (7) | % | | 1 | % | | $ | 6,445 | | | $ | 5,860 | | | 10 | % |
| | | | | | | | | | | | | | | | | | | | |
Financial ratios: | | | | | | | | | | | | | | | | | | | | |
Pre-tax operating margin | | 23 | % | | 29 | % | | 26 | % | | 27 | % | | 25 | % | | | | | | 26 | % | | 19 | % | | |
| | | | | | | | | | | | | | | | | | | | |
Memo: Securities lending revenue (b) | | $ | 46 | | | $ | 47 | | | $ | 48 | | | $ | 50 | | | $ | 48 | | | (2) | % | | (4) | % | | $ | 141 | | | $ | 132 | | | 7 | % |
(a) Other fees primarily include financing-related fees. |
(b) Included in investment services fees reported in the Asset Servicing line of business. |
N/M – Not meaningful. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
THE BANK OF NEW YORK MELLON CORPORATION | | | | | | | | | | |
SECURITIES SERVICES BUSINESS SEGMENT | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | 3Q23 vs. | | | | | | YTD23 vs. |
(dollars in millions, unless otherwise noted) | | 3Q23 | | 2Q23 | | 1Q23 | | 4Q22 | | 3Q22 | | 2Q23 | | 3Q22 | | YTD23 | | YTD22 | | YTD22 |
Selected balance sheet data: | | | | | | | | | | | | | | | | | | | | |
Average loans | | $ | 11,236 | | | $ | 11,283 | | | $ | 10,939 | | | $ | 11,850 | | | $ | 11,573 | | | — | % | | (3) | % | | $ | 11,154 | | | $ | 11,042 | | | 1 | % |
Average assets (a) | | $ | 190,964 | | | $ | 202,207 | | | $ | 196,560 | | | $ | 206,810 | | | $ | 203,063 | | | (6) | % | | (6) | % | | $ | 196,556 | | | $ | 214,518 | | | (8) | % |
Average deposits | | $ | 162,509 | | | $ | 172,863 | | | $ | 167,209 | | | $ | 176,541 | | | $ | 176,328 | | | (6) | % | | (8) | % | | $ | 167,510 | | | $ | 186,500 | | | (10) | % |
| | | | | | | | | | | | | | | | | | | | |
Selected metrics: | | | | | | | | | | | | | | | | | | | | |
AUC/A at period end (in trillions) (b)(c) | | $ | 32.3 | | | $ | 33.2 | | | $ | 32.6 | | | $ | 31.4 | | | $ | 30.0 | | | (3) | % | | 8 | % | | | | | | |
Market value of securities on loan at period end (in billions) (d) | | $ | 406 | | | $ | 415 | | | $ | 441 | | | $ | 449 | | | $ | 435 | | | (2) | % | | (7) | % | | | | | | |
(a) In business segments where average deposits are greater than average loans, average assets include an allocation of investment securities equal to the difference. |
(b) Sept. 30, 2023 information is preliminary. |
(c) Consists of AUC/A primarily from the Asset Servicing line of business and, to a lesser extent, the Issuer Services line of business. Includes the AUC/A of CIBC Mellon of $1.5 trillion at Sept. 30, 2023, $1.6 trillion at June 30, 2023, $1.5 trillion at March 31, 2023 and Dec. 31, 2022 and $1.4 trillion at Sept. 30, 2022. |
(d) Represents the total amount of securities on loan in our agency securities lending program. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $63 billion at Sept. 30, 2023, $66 billion at June 30, 2023, $69 billion at March 31, 2023, $68 billion at Dec. 31, 2022 and $75 billion at Sept. 30, 2022. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
THE BANK OF NEW YORK MELLON CORPORATION | | | | | | | | | | |
MARKET AND WEALTH SERVICES BUSINESS SEGMENT | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | 3Q23 vs. | | | | | | YTD23 vs. |
(dollars in millions) | | 3Q23 | | 2Q23 | | 1Q23 | | 4Q22 | | 3Q22 | | 2Q23 | | 3Q22 | | YTD23 | | YTD22 | | YTD22 |
Revenue: | | | | | | | | | | | | | | | | | | | | |
Investment services fees: | | | | | | | | | | | | | | | | | | | | |
Pershing | | $ | 506 | | | $ | 496 | | | $ | 499 | | | $ | 502 | | | $ | 494 | | | 2 | % | | 2 | % | | $ | 1,501 | | | $ | 1,406 | | | 7 | % |
Treasury Services | | 172 | | | 172 | | | 168 | | | 170 | | | 173 | | | — | | | (1) | | | 512 | | | 519 | | | (1) | |
Clearance and Collateral Management | | 277 | | | 265 | | | 260 | | | 249 | | | 239 | | | 5 | | | 16 | | | 802 | | | 722 | | | 11 | |
Total investment services fees | | 955 | | | 933 | | | 927 | | | 921 | | | 906 | | | 2 | | | 5 | | | 2,815 | | | 2,647 | | | 6 | |
Foreign exchange revenue | | 21 | | | 21 | | | 18 | | | 20 | | | 20 | | | — | | | 5 | | | 60 | | | 68 | | | (12) | |
Other fees (a) | | 51 | | | 55 | | | 54 | | | 47 | | | 49 | | | (7) | | | 4 | | | 160 | | | 129 | | | 24 | |
Total fee revenue | | 1,027 | | | 1,009 | | | 999 | | | 988 | | | 975 | | | 2 | | | 5 | | | 3,035 | | | 2,844 | | | 7 | |
Investment and other revenue | | 16 | | | 16 | | | 15 | | | 15 | | | 14 | | | N/M | | N/M | | 47 | | | 25 | | | N/M |
Total fee and other revenue | | 1,043 | | | 1,025 | | | 1,014 | | | 1,003 | | | 989 | | | 2 | | | 5 | | | 3,082 | | | 2,869 | | | 7 | |
Net interest revenue | | 402 | | | 420 | | | 453 | | | 396 | | | 378 | | | (4) | | | 6 | | | 1,275 | | | 1,014 | | | 26 | |
Total revenue | | 1,445 | | | 1,445 | | | 1,467 | | | 1,399 | | | 1,367 | | | — | | | 6 | | | 4,357 | | | 3,883 | | | 12 | |
Provision for credit losses | | 6 | | | 7 | | | — | | | 6 | | | (1) | | | N/M | | N/M | | 13 | | | 1 | | | N/M |
Noninterest expense (ex. amortization of intangible assets) | | 806 | | | 779 | | | 768 | | | 783 | | | 735 | | | 3 | | | 10 | | | 2,353 | | | 2,141 | | | 10 | |
Amortization of intangible assets | | 2 | | | 2 | | | 1 | | | 2 | | | 2 | | | — | | | — | | | 5 | | | 6 | | | (17) | |
Total noninterest expense | | 808 | | | 781 | | | 769 | | | 785 | | | 737 | | | 3 | | | 10 | | | 2,358 | | | 2,147 | | | 10 | |
Income before income taxes | | $ | 631 | | | $ | 657 | | | $ | 698 | | | $ | 608 | | | $ | 631 | | | (4) | % | | — | % | | $ | 1,986 | | | $ | 1,735 | | | 14 | % |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total revenue by line of business: | | | | | | | | | | | | | | | | | | | | |
Pershing | | $ | 699 | | | $ | 686 | | | $ | 693 | | | $ | 673 | | | $ | 658 | | | 2 | % | | 6 | % | | $ | 2,078 | | | $ | 1,864 | | | 11 | % |
Treasury Services | | 389 | | | 402 | | | 412 | | | 382 | | | 390 | | | (3) | | | — | | | 1,203 | | | 1,101 | | | 9 | |
Clearance and Collateral Management | | 357 | | | 357 | | | 362 | | | 344 | | | 319 | | | — | | | 12 | | | 1,076 | | | 918 | | | 17 | |
Total revenue by line of business | | $ | 1,445 | | | $ | 1,445 | | | $ | 1,467 | | | $ | 1,399 | | | $ | 1,367 | | | — | % | | 6 | % | | $ | 4,357 | | | $ | 3,883 | | | 12 | % |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Financial ratios: | | | | | | | | | | | | | | | | | | | | |
Pre-tax operating margin | | 44 | % | | 46 | % | | 48 | % | | 43 | % | | 46 | % | | | | | | 46 | % | | 45 | % | | |
(a) Other fees primarily include financing-related fees. |
N/M – Not meaningful. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
THE BANK OF NEW YORK MELLON CORPORATION | | | | | | | | |
MARKET AND WEALTH SERVICES BUSINESS SEGMENT | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | 3Q23 vs. | | | | | | YTD23 vs. |
(dollars in millions, unless otherwise noted) | | 3Q23 | | 2Q23 | | 1Q23 | | 4Q22 | | 3Q22 | | 2Q23 | | 3Q22 | | YTD23 | | YTD22 | | YTD22 |
Selected balance sheet data: | | | | | | | | | | | | | | | | | | | | |
Average loans | | $ | 37,496 | | | $ | 36,432 | | | $ | 36,854 | | | $ | 39,843 | | | $ | 40,882 | | | 3 | % | | (8) | % | | $ | 36,930 | | | $ | 41,791 | | | (12) | % |
Average assets (a) | | $ | 129,804 | | | $ | 131,657 | | | $ | 132,143 | | | $ | 132,306 | | | $ | 138,204 | | | (1) | % | | (6) | % | | $ | 131,193 | | | $ | 140,435 | | | (7) | % |
Average deposits | | $ | 84,000 | | | $ | 85,407 | | | $ | 86,040 | | | $ | 86,083 | | | $ | 90,612 | | | (2) | % | | (7) | % | | $ | 85,141 | | | $ | 93,658 | | | (9) | % |
| | | | | | | | | | | | | | | | | | | | |
Selected metrics: | | | | | | | | | | | | | | | | | | | | |
AUC/A at period end (in trillions) (b)(c) | | $ | 13.1 | | | $ | 13.4 | | | $ | 13.7 | | | $ | 12.7 | | | $ | 12.0 | | | (2) | % | | 9 | % | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Pershing | | | | | | | | | | | | | | | | | | | | |
AUC/A at period end (in trillions) (b) | | $ | 2.4 | | | $ | 2.4 | | | $ | 2.4 | | | $ | 2.3 | | | $ | 2.1 | | | — | % | | 14 | % | | | | | | |
Net new assets (U.S. platform) (in billions) (d) | | $ | 23 | | | $ | (34) | | | $ | 37 | | | $ | 42 | | | $ | 45 | | | N/M | | N/M | | | | | | |
Average active clearing accounts (in thousands) | | 7,979 | | | 7,946 | | | 7,849 | | | 7,603 | | | 7,466 | | | — | % | | 7 | % | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Treasury Services | | | | | | | | | | | | | | | | | | | | |
Average daily U.S. dollar payment volumes | | 233,620 | | | 233,931 | | | 236,322 | | | 246,189 | | | 234,468 | | | — | % | | — | % | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Clearance and Collateral Management | | | | | | | | | | | | | | | | | | | | |
Average tri-party collateral management balances (in billions) | | $ | 5,706 | | | $ | 6,044 | | | $ | 5,626 | | | $ | 5,451 | | | $ | 5,457 | | | (6) | % | | 5 | % | | | | | | |
(a) In business segments where average deposits are greater than average loans, average assets include an allocation of investment securities equal to the difference. |
(b) Sept. 30, 2023 information is preliminary. |
(c) Consists of AUC/A from the Clearance and Collateral Management and Pershing lines of business. |
(d) Net new assets represent net flows of assets (e.g., net cash deposits and net securities transfers, including dividends and interest) in customer accounts in Pershing LLC, a U.S. broker-dealer. |
N/M – Not meaningful. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
THE BANK OF NEW YORK MELLON CORPORATION | | | | | | | | |
INVESTMENT AND WEALTH MANAGEMENT BUSINESS SEGMENT | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | 3Q23 vs. | | | | | | YTD23 vs. |
(dollars in millions) | | 3Q23 | | 2Q23 | | 1Q23 | | 4Q22 | | 3Q22 | | 2Q23 | | 3Q22 | | YTD23 | | YTD22 | | YTD22 |
Revenue: | | | | | | | | | | | | | | | | | | | | |
Investment management fees | | $ | 746 | | | $ | 750 | | | $ | 752 | | | $ | 754 | | | $ | 788 | | | (1) | % | | (5) | % | | $ | 2,248 | | | $ | 2,461 | | | (9) | % |
Performance fees | | 30 | | | 10 | | | 22 | | | 26 | | | 10 | | | N/M | | N/M | | 62 | | | 49 | | | 27 | |
Investment management and performance fees (a) | | 776 | | | 760 | | | 774 | | | 780 | | | 798 | | | 2 | | | (3) | | | 2,310 | | | 2,510 | | | (8) | |
Distribution and servicing fees | | 62 | | | 58 | | | 55 | | | 54 | | | 55 | | | 7 | | | 13 | | | 175 | | | 138 | | | 27 | |
Other fees (b) | | (50) | | | (56) | | | (53) | | | (58) | | | (45) | | | N/M | | N/M | | (159) | | | (75) | | | N/M |
Total fee revenue | | 788 | | | 762 | | | 776 | | | 776 | | | 808 | | | 3 | | | (2) | | | 2,326 | | | 2,573 | | | (10) | |
Investment and other revenue (c) | | 1 | | | 12 | | | 6 | | | (3) | | | (3) | | | N/M | | N/M | | 19 | | | (24) | | | N/M |
Total fee and other revenue (c) | | 789 | | | 774 | | | 782 | | | 773 | | | 805 | | | 2 | | | (2) | | | 2,345 | | | 2,549 | | | (8) | |
Net interest revenue | | 38 | | | 39 | | | 45 | | | 52 | | | 57 | | | (3) | | | (33) | | | 122 | | | 176 | | | (31) | |
Total revenue | | 827 | | | 813 | | | 827 | | | 825 | | | 862 | | | 2 | | | (4) | | | 2,467 | | | 2,725 | | | (9) | |
Provision for credit losses | | (9) | | | 7 | | | — | | | 1 | | | 3 | | | N/M | | N/M | | (2) | | | — | | | N/M |
Noninterest expense (ex. goodwill impairment and amortization of intangible assets) | | 667 | | | 672 | | | 729 | | | 693 | | | 669 | | | (1) | | | — | | | 2,068 | | | 2,102 | | | (2) | |
Goodwill impairment | | — | | | — | | | — | | | — | | | 680 | | | N/M | | N/M | | — | | | 680 | | | N/M |
Amortization of intangible assets | | 5 | | | 5 | | | 5 | | | 6 | | | 7 | | | — | | (29) | | 15 | | | 20 | | | (25) |
Total noninterest expense | | 672 | | | 677 | | | 734 | | | 699 | | | 1,356 | | | (1) | | | (50) | | | 2,083 | | | 2,802 | | | (26) | |
Income (loss) before income taxes | | $ | 164 | | | $ | 129 | | | $ | 93 | | | $ | 125 | | | $ | (497) | | | 27 | % | | N/M | | $ | 386 | | | $ | (77) | | | N/M |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total revenue by line of business: | | | | | | | | | | | | | | | | | | | | |
Investment Management | | $ | 557 | | | $ | 546 | | | $ | 557 | | | $ | 550 | | | $ | 579 | | | 2 | % | | (4) | % | | $ | 1,660 | | | $ | 1,840 | | | (10) | % |
Wealth Management | | 270 | | | 267 | | | 270 | | | 275 | | | 283 | | | 1 | | | (5) | | | 807 | | | 885 | | | (9) | |
Total revenue by line of business | | $ | 827 | | | $ | 813 | | | $ | 827 | | | $ | 825 | | | $ | 862 | | | 2 | % | | (4) | % | | $ | 2,467 | | | $ | 2,725 | | | (9) | % |
| | | | | | | | | | | | | | | | | | | | |
Financial ratios: | | | | | | | | | | | | | | | | | | | | |
Pre-tax operating margin | | 20 | % | | 16 | % | | 11 | % | | 15 | % | | (57) | % | | | | | | 16 | % | | (3) | % | | |
Adjusted pre-tax operating margin – Non-GAAP (d) | | 22 | % | | 18 | % | | 13 | % | | 17 | % | | (64) | % | | | | | | 18 | % | | (3) | % | | |
| | | | | | | | | | | | | | | | | | | | |
Selected balance sheet data: | | | | | | | | | | | | | | | | | | | | |
Average loans | | $ | 13,519 | | | $ | 13,995 | | | $ | 13,960 | | | $ | 14,404 | | | $ | 14,482 | | | (3) | % | | (7) | % | | $ | 13,823 | | | $ | 13,937 | | | (1) | % |
Average assets (e) | | $ | 26,531 | | | $ | 27,260 | | | $ | 28,232 | | | $ | 28,488 | | | $ | 29,996 | | | (3) | % | | (12) | % | | $ | 26,968 | | | $ | 33,077 | | | (18) | % |
Average deposits | | $ | 13,578 | | | $ | 15,410 | | | $ | 16,144 | | | $ | 16,416 | | | $ | 17,225 | | | (12) | % | | (21) | % | | $ | 15,035 | | | $ | 20,157 | | | (25) | % |
(a) On a constant currency basis, investment management and performance fees decreased 5% (Non-GAAP) compared with 3Q22. See "Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of this Non-GAAP measure. |
(b) Other fees primarily include investment services fees. |
(c) Investment and other revenue and total fee and other revenue are net of income (loss) attributable to noncontrolling interests related to consolidated investment management funds. |
(d) Net of distribution and servicing expense. See "Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of this Non-GAAP measure. |
(e) In business segments where average deposits are greater than average loans, average assets include an allocation of investment securities equal to the difference. |
N/M – Not meaningful. |
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THE BANK OF NEW YORK MELLON CORPORATION | | | | | | | | |
AUM BY PRODUCT TYPE, CHANGES IN AUM AND WEALTH MANAGEMENT CLIENT ASSETS | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | 3Q23 vs. | | | | | | YTD23 vs. |
(dollars in billions) | | 3Q23 | | 2Q23 | | 1Q23 | | 4Q22 | | 3Q22 | | 2Q23 | | 3Q22 | | YTD23 | | YTD22 | | YTD22 |
AUM by product type (a)(b): | | | | | | | | | | | | | | | | | | | | |
Equity | | $ | 133 | | | $ | 145 | | | $ | 142 | | | $ | 135 | | | $ | 125 | | | (8) | % | | 6 | % | | | | | | |
Fixed income | | 190 | | | 203 | | | 207 | | | 198 | | | 205 | | | (6) | | | (7) | | | | | | | |
Index | | 425 | | | 440 | | | 408 | | | 395 | | | 366 | | | (3) | | | 16 | | | | | | | |
Liability-driven investments | | 534 | | | 579 | | | 604 | | | 570 | | | 546 | | | (8) | | | (2) | | | | | | | |
Multi-asset and alternative investments | | 156 | | | 162 | | | 161 | | | 153 | | | 181 | | | (4) | | | (14) | | | | | | | |
Cash | | 383 | | | 377 | | | 386 | | | 385 | | | 353 | | | 2 | | | 8 | | | | | | | |
Total AUM | | $ | 1,821 | | | $ | 1,906 | | | $ | 1,908 | | | $ | 1,836 | | | $ | 1,776 | | | (4) | % | | 3 | % | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Changes in AUM (a)(b): | | | | | | | | | | | | | | | | | | | | |
Beginning balance of AUM | | $ | 1,906 | | | $ | 1,908 | | | $ | 1,836 | | | $ | 1,776 | | | $ | 1,937 | | | | | | | $ | 1,836 | | | $ | 2,434 | | | |
Net inflows (outflows): | | | | | | | | | | | | | | | | | | | | |
Long-term strategies: | | | | | | | | | | | | | | | | | | | | |
Equity | | (3) | | | (3) | | | (4) | | | (5) | | | (5) | | | | | | | (10) | | | (13) | | | |
Fixed income | | (7) | | | (4) | | | 4 | | | (12) | | | (3) | | | | | | | (7) | | | (9) | | | |
Liability-driven investments | | 1 | | | (3) | | | 10 | | | 19 | | | 30 | | | | | | | 8 | | | 59 | | | |
Multi-asset and alternative investments | | (4) | | | (1) | | | (3) | | | (4) | | | 2 | | | | | | | (8) | | | (7) | | | |
Total long-term active strategies (outflows) inflows | | (13) | | | (11) | | | 7 | | | (2) | | | 24 | | | | | | | (17) | | | 30 | | | |
Index | | (2) | | | 2 | | | (2) | | | (4) | | | (1) | | | | | | | (2) | | | 6 | | | |
Total long-term strategies (outflows) inflows | | (15) | | | (9) | | | 5 | | | (6) | | | 23 | | | | | | | (19) | | | 36 | | | |
Short-term strategies: | | | | | | | | | | | | | | | | | | | | |
Cash | | 7 | | | (9) | | | — | | | 27 | | | (2) | | | | | | | (2) | | | (39) | | | |
Total net (outflows) inflows | | (8) | | | (18) | | | 5 | | | 21 | | | 21 | | | | | | | (21) | | | (3) | | | |
Net market impact | | (50) | | | (3) | | | 52 | | | 18 | | | (118) | | | | | | | (1) | | | (489) | | | |
Net currency impact | | (27) | | | 19 | | | 15 | | | 53 | | | (64) | | | | | | | 7 | | | (166) | | | |
Divestiture | | — | | | — | | | — | | | (32) | | | — | | | | | | | — | | | — | | | |
Ending balance of AUM | | $ | 1,821 | | | $ | 1,906 | | | $ | 1,908 | | | $ | 1,836 | | | $ | 1,776 | | | (4) | % | | 3 | % | | $ | 1,821 | | | $ | 1,776 | | | 3 | % |
| | | | | | | | | | | | | | | | | | | | |
Wealth Management client assets (a)(c) | | $ | 292 | | | $ | 286 | | | $ | 279 | | | $ | 269 | | | $ | 256 | | | 2 | % | | 14 | % | | | | | | |
(a) Sept. 30, 2023 information is preliminary. |
(b) Excludes assets managed outside of the Investment and Wealth Management business segment. |
(c) Includes AUM and AUC/A in the Wealth Management line of business. |
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THE BANK OF NEW YORK MELLON CORPORATION | | | | | | |
OTHER SEGMENT | | | | | |
| | | | | | | | | | | | | | |
(in millions) | | 3Q23 | | 2Q23 | | 1Q23 | | 4Q22 | | 3Q22 | | YTD23 | | YTD22 |
Revenue: | | | | | | | | | | | | | | |
Fee revenue | | $ | 6 | | | $ | (2) | | | $ | 3 | | | $ | 12 | | | $ | 28 | | | $ | 7 | | | $ | 49 | |
Investment and other revenue | | 28 | | | (16) | | | (14) | | | (442) | | | (5) | | | (2) | | | 69 | |
Total fee and other revenue | | 34 | | | (18) | | | (11) | | | (430) | | | 23 | | | 5 | | | 118 | |
Net interest (expense) | | (24) | | | (27) | | | (36) | | | (48) | | | (47) | | | (87) | | | (114) | |
Total revenue | | 10 | | | (45) | | | (47) | | | (478) | | | (24) | | | (82) | | | 4 | |
Provision for credit losses | | (13) | | | (25) | | | 27 | | | 2 | | | (26) | | | (11) | | | 21 | |
Noninterest expense | | 24 | | | 71 | | | 41 | | | 153 | | | 29 | | | 136 | | | 125 | |
(Loss) before income taxes | | $ | (1) | | | $ | (91) | | | $ | (115) | | | $ | (633) | | | $ | (27) | | | $ | (207) | | | $ | (142) | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Selected balance sheet data: | | | | | | | | | | | | | | |
Average loans and leases | | $ | 1,711 | | | $ | 1,749 | | | $ | 1,508 | | | $ | 1,267 | | | $ | 1,145 | | | $ | 1,656 | | | $ | 1,210 | |
Average assets | | $ | 50,193 | | | $ | 60,050 | | | $ | 50,566 | | | $ | 46,915 | | | $ | 44,407 | | | $ | 53,968 | | | $ | 43,044 | |
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THE BANK OF NEW YORK MELLON CORPORATION | | | | | | | |
SECURITIES PORTFOLIO | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
(dollars in millions) | June 30, 2023 | | 3Q23 change in unrealized gain (loss) | Sept. 30, 2023 | | Fair value as a % of amortized cost (a) | Unrealized gain (loss) | | % Floating rate (b) | | Ratings (c) |
Amortized cost (a) | Fair value | | | | AAA/ AA- | A+/ A- | BBB+/ BBB- | BB+ and lower | | Not rated |
Fair value | | | |
Agency RMBS | $ | 38,052 | | | $ | (961) | | $ | 41,341 | | $ | 35,850 | | | 87 | % | $ | (5,491) | | | 18 | % | | 100 | % | — | % | — | % | — | % | | — | % |
U.S. Treasury | 33,818 | | | 18 | | 32,689 | | 31,439 | | | 96 | | (1,250) | | | 59 | | | 100 | | — | | — | | — | | | — | |
Agency commercial MBS | 11,441 | | | (64) | | 11,739 | | 10,927 | | | 93 | | (812) | | | 45 | | | 100 | | — | | — | | — | | | — | |
Sovereign debt/sovereign guaranteed | 10,662 | | | 75 | | 10,648 | | 10,168 | | | 95 | | (480) | | | 28 | | | 90 | | 5 | | 4 | | 1 | | | — | |
Supranational | 8,742 | | | 24 | | 8,498 | | 8,239 | | | 97 | | (259) | | | 65 | | | 100 | | — | | — | | — | | | — | |
CLOs | 6,765 | | | 48 | | 6,948 | | 6,908 | | | 99 | | (40) | | | 100 | | | 100 | | — | | — | | — | | | — | |
U.S. government agencies | 6,745 | | | (66) | | 7,213 | | 6,630 | | | 92 | | (583) | | | 43 | | | 100 | | — | | — | | — | | | — | |
Foreign covered bonds | 6,133 | | | 22 | | 6,364 | | 6,137 | | | 96 | | (227) | | | 59 | | | 100 | | — | | — | | — | | | — | |
Non-agency commercial MBS | 3,031 | | | (6) | | 3,315 | | 3,012 | | | 91 | | (303) | | | 55 | | | 100 | | — | | — | | — | | | — | |
Foreign government agencies/ local government | 2,380 | | | 29 | | 2,334 | | 2,243 | | | 96 | | (91) | | | 40 | | | 92 | | 8 | | — | | — | | | — | |
Non-agency RMBS | 1,895 | | | (27) | | 1,953 | | 1,763 | | | 90 | | (190) | | | 47 | | | 85 | | 3 | | — | | 6 | | | 6 | |
Other asset-backed securities | 1,043 | | | 6 | | 1,026 | | 922 | | | 90 | | (104) | | | 14 | | | 100 | | — | | — | | — | | | — | |
State and political subdivisions | 11 | | | (1) | | 12 | | 10 | | | 85 | | (2) | | | — | | | — | | — | | 3 | | — | | | 97 | |
| | | | | | | | | | | | | | | | | |
Other | 1 | | | — | | 1 | | 1 | | | 100 | | — | | | — | | | — | | — | | — | | — | | | 100 | |
Total securities | $ | 130,719 | | (d) | $ | (903) | | $ | 134,081 | | $ | 124,249 | | (d)(e) | 93 | % | $ | (9,832) | | (d)(f) | 44 | % | | 99 | % | 1 | % | — | % | — | % | | — | % |
(a) Amortized cost reflects historical impairments, and is net of allowance for credit losses. |
(b) Includes the impact of hedges. |
(c) Represents ratings by S&P, or the equivalent. |
(d) Includes net unrealized gains on derivatives hedging securities available-for-sale (including terminated hedges) of $2,406 million at June 30, 2023 and $2,820 million at Sept. 30, 2023. |
(e) The fair value of available-for-sale securities totaled $80,038 million at Sept. 30, 2023, net of hedges, or 64% of the fair value of the securities portfolio, net of hedges. The fair value of the held-to-maturity securities totaled $44,211 million at Sept. 30, 2023, or 36% of the fair value of the securities portfolio, net of hedges. |
(f) At Sept. 30, 2023, includes pre-tax net unrealized losses of $3,036 million related to available-for-sale securities, net of hedges, and $6,796 million related to held-to-maturity securities. The after-tax unrealized losses, net of hedges, related to available-for-sale securities was $2,293 million and the after-tax equivalent related to held-to-maturity securities was $5,182 million. |
Note: The amortizable purchase premium (net of discount) relating to securities was $973 million at Sept. 30, 2023 and the amortization of that net purchase premium was $45 million in 3Q23. |
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THE BANK OF NEW YORK MELLON CORPORATION | | | | | | |
ALLOWANCE FOR CREDIT LOSSES AND NONPERFORMING ASSETS | | | | | |
| | | | | | | | |
| | 2023 | | 2022 |
(dollars in millions) | | Sept. 30 | | June 30 | | March 31 | | Dec. 31 | | Sept. 30 |
Allowance for credit losses – beginning of period: | | | | | | | | | | |
Allowance for loan losses | | $ | 191 | | | $ | 170 | | | $ | 176 | | | $ | 164 | | | $ | 181 | |
Allowance for lending-related commitments | | 91 | | | 83 | | | 78 | | | 72 | | | 62 | |
Allowance for other financial instruments (a) | | 41 | | | 67 | | | 38 | | | 44 | | | 67 | |
Allowance for credit losses – beginning of period | | $ | 323 | | | $ | 320 | | | $ | 292 | | | $ | 280 | | | $ | 310 | |
| | | | | | | | | | |
Net (charge-offs) recoveries: | | | | | | | | | | |
Charge-offs | | (1) | | | (4) | | | — | | | (9) | | | (1) | |
Recoveries | | — | | | 2 | | | 1 | | | 1 | | | 1 | |
Total net (charge-offs) recoveries | | (1) | | | (2) | | | 1 | | | (8) | | | — | |
Provision for credit losses (b) | | 3 | | | 5 | | | 27 | | | 20 | | | (30) | |
Allowance for credit losses – end of period | | $ | 325 | | | $ | 323 | | | $ | 320 | | | $ | 292 | | | $ | 280 | |
| | | | | | | | | | |
Allowance for credit losses – end of period: | | | | | | | | | | |
Allowance for loan losses | | $ | 211 | | | $ | 191 | | | $ | 170 | | | $ | 176 | | | $ | 164 | |
Allowance for lending-related commitments | | 85 | | | 91 | | | 83 | | | 78 | | | 72 | |
Allowance for other financial instruments (a) | | 29 | | | 41 | | | 67 | | | 38 | | | 44 | |
Allowance for credit losses – end of period | | $ | 325 | | | $ | 323 | | | $ | 320 | | | $ | 292 | | | $ | 280 | |
| | | | | | | | | | |
Allowance for loan losses as a percentage of total loans | | 0.32 | % | | 0.30 | % | | 0.27 | % | | 0.27 | % | | 0.23 | % |
| | | | | | | | | | |
Nonperforming assets | | $ | 48 | | | $ | 88 | | | $ | 105 | | | $ | 109 | | | $ | 107 | |
(a) Includes allowance for credit losses on federal funds sold and securities purchased under resale agreements, available-for-sale securities, held-to-maturity securities, accounts receivable, cash and due from banks and interest-bearing deposits with banks. |
(b) Includes all other instruments within the scope of ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. |
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THE BANK OF NEW YORK MELLON CORPORATION | | | | | | |
EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES | |
| | | | | | | | |
BNY Mellon has included in this Financial Supplement certain Non-GAAP financial measures on a tangible basis as a supplement to GAAP information, which exclude goodwill and intangible assets, net of deferred tax liabilities. We believe that the return on tangible common equity – Non-GAAP is additional useful information for investors because it presents a measure of those assets that can generate income, and the tangible book value per common share – Non-GAAP is additional useful information because it presents the level of tangible assets in relation to shares of common stock outstanding. |
| | | | | | | | |
Net interest revenue, on a fully taxable equivalent ("FTE") basis – Non-GAAP and net interest margin (FTE) – Non-GAAP and other FTE measures include the tax equivalent adjustments on tax-exempt income which allows for the comparison of amounts arising from both taxable and tax-exempt sources and is consistent with industry practice. The adjustment to an FTE basis has no impact on net income. |
| | | | | | | | |
BNY Mellon has also included the adjusted pre-tax operating margin – Non-GAAP, which is the pre-tax operating margin for the Investment and Wealth Management business segment, net of distribution and servicing expense that was passed to third parties who distribute or service our managed funds. We believe that this measure is useful when evaluating the performance of the Investment and Wealth Management business segment relative to industry competitors. |
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The presentation of the growth rates of investment management and performance fees on a constant currency basis permits investors to assess the significance of changes in foreign currency exchange rates. Growth rates on a constant currency basis were determined by applying the current period foreign currency exchange rates to the prior period revenue. We believe that this presentation, as a supplement to GAAP information, gives investors a clearer picture of the related revenue results without the variability caused by fluctuations in foreign currency exchange rates. |
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Notes: | | | | | | | | |
|
| | | | | | | | |
Return on common and tangible common equity ratios are annualized. |
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Return on common equity and tangible common equity reconciliation | | | | | | | | | | | | | | |
(dollars in millions) | | 3Q23 | | 2Q23 | | 1Q23 | | 4Q22 | | 3Q22 | | YTD23 | | YTD22 |
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | | $ | 956 | | | $ | 1,031 | | | $ | 905 | | | $ | 509 | | | $ | 319 | | | $ | 2,892 | | | $ | 1,853 | |
Add: Amortization of intangible assets | | 15 | | | 14 | | | 14 | | | 16 | | | 17 | | | 43 | | | 51 | |
Less: Tax impact of amortization of intangible assets | | 3 | | | 4 | | | 3 | | | 4 | | | 4 | | | 10 | | | 12 | |
Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets – Non-GAAP | | $ | 968 | | | $ | 1,041 | | | $ | 916 | | | $ | 521 | | | $ | 332 | | | $ | 2,925 | | | $ | 1,892 | |
| | | | | | | | | | | | | | |
Average common shareholders’ equity | | $ | 35,983 | | | $ | 35,769 | | | $ | 35,604 | | | $ | 35,259 | | | $ | 35,942 | | | $ | 35,787 | | | $ | 36,483 | |
Less: Average goodwill | | 16,237 | | | 16,219 | | | 16,160 | | | 16,229 | | | 17,189 | | | 16,206 | | | 17,341 | |
Average intangible assets | | 2,875 | | | 2,888 | | | 2,899 | | | 2,905 | | | 2,922 | | | 2,887 | | | 2,950 | |
Add: Deferred tax liability – tax deductible goodwill | | 1,197 | | | 1,193 | | | 1,187 | | | 1,181 | | | 1,175 | | | 1,197 | | | 1,175 | |
Deferred tax liability – intangible assets | | 657 | | | 660 | | | 660 | | | 660 | | | 660 | | | 657 | | | 660 | |
Average tangible common shareholders’ equity – Non-GAAP | | $ | 18,725 | | | $ | 18,515 | | | $ | 18,392 | | | $ | 17,966 | | | $ | 17,666 | | | $ | 18,548 | | | $ | 18,027 | |
| | | | | | | | | | | | | | |
Return on common equity – GAAP | | 10.5 | % | | 11.6 | % | | 10.3 | % | | 5.7 | % | | 3.5 | % | | 10.8 | % | | 6.8 | % |
Return on tangible common equity – Non-GAAP | | 20.5 | % | | 22.6 | % | | 20.2 | % | | 11.5 | % | | 7.5 | % | | 21.1 | % | | 14.0 | % |
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THE BANK OF NEW YORK MELLON CORPORATION | | | | | | |
EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
| | | |
Book value and tangible book value per common share reconciliation | | 2023 | | 2022 |
(dollars in millions, except common shares and unless otherwise noted) | | Sept. 30 | | June 30 | | March 31 | | Dec. 31 | | Sept. 30 |
BNY Mellon shareholders’ equity at period end – GAAP | | $ | 40,966 | | | $ | 40,933 | | | $ | 40,634 | | | $ | 40,734 | | | $ | 39,737 | |
Less: Preferred stock | | 4,838 | | | 4,838 | | | 4,838 | | | 4,838 | | | 4,838 | |
BNY Mellon common shareholders’ equity at period end – GAAP | | 36,128 | | | 36,095 | | | 35,796 | | | 35,896 | | | 34,899 | |
Less: Goodwill | | 16,159 | | | 16,246 | | | 16,192 | | | 16,150 | | | 16,412 | |
Intangible assets | | 2,859 | | | 2,881 | | | 2,890 | | | 2,901 | | | 2,902 | |
Add: Deferred tax liability – tax deductible goodwill | | 1,197 | | | 1,193 | | | 1,187 | | | 1,181 | | | 1,175 | |
Deferred tax liability – intangible assets | | 657 | | | 660 | | | 660 | | | 660 | | | 660 | |
BNY Mellon tangible common shareholders’ equity at period end – Non-GAAP | | $ | 18,964 | | | $ | 18,821 | | | $ | 18,561 | | | $ | 18,686 | | | $ | 17,420 | |
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Period-end common shares outstanding (in thousands) | | 769,073 | | | 778,782 | | | 789,134 | | | 808,445 | | | 808,280 | |
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Book value per common share – GAAP | | $ | 46.98 | | | $ | 46.35 | | | $ | 45.36 | | | $ | 44.40 | | | $ | 43.18 | |
Tangible book value per common share – Non-GAAP | | $ | 24.66 | | | $ | 24.17 | | | $ | 23.52 | | | $ | 23.11 | | | $ | 21.55 | |
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Net interest margin reconciliation | | | | | | | | | | |
(dollars in millions) | | 3Q23 | | 2Q23 | | 1Q23 | | 4Q22 | | 3Q22 |
Net interest revenue – GAAP | | $ | 1,016 | | | $ | 1,100 | | | $ | 1,128 | | | $ | 1,056 | | | $ | 926 | |
Add: Tax equivalent adjustment | | — | | | 1 | | | — | | | 2 | | | 3 | |
Net interest revenue (FTE) – Non-GAAP | | $ | 1,016 | | | $ | 1,101 | | | $ | 1,128 | | | $ | 1,058 | | | $ | 929 | |
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Average interest-earning assets | | $ | 339,044 | | | $ | 362,049 | | | $ | 348,378 | | | $ | 352,987 | | | $ | 352,062 | |
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Net interest margin – GAAP (a) | | 1.18 | % | | 1.20 | % | | 1.29 | % | | 1.19 | % | | 1.05 | % |
Net interest margin (FTE) – Non-GAAP (a) | | 1.18 | % | | 1.20 | % | | 1.29 | % | | 1.19 | % | | 1.05 | % |
(a) Net interest margin is annualized. |
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THE BANK OF NEW YORK MELLON CORPORATION | | | | | | |
EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES | |
Pre-tax operating margin reconciliation - Investment and Wealth Management business segment | | | | | | | | | | | | |
(dollars in millions) | | 3Q23 | | 2Q23 | | 1Q23 | | 4Q22 | | 3Q22 | | YTD23 | | YTD22 |
Income (loss) before income taxes – GAAP | | $ | 164 | | | $ | 129 | | | $ | 93 | | | $ | 125 | | | $ | (497) | | | $ | 386 | | | $ | (77) | |
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Total revenue – GAAP | | $ | 827 | | | $ | 813 | | | $ | 827 | | | $ | 825 | | | $ | 862 | | | $ | 2,467 | | | $ | 2,725 | |
Less: Distribution and servicing expense | | 87 | | | 93 | | | 86 | | | 87 | | | 88 | | | 266 | | | 258 | |
Adjusted total revenue, net of distribution and servicing expense – Non-GAAP | | $ | 740 | | | $ | 720 | | | $ | 741 | | | $ | 738 | | | $ | 774 | | | $ | 2,201 | | | $ | 2,467 | |
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Pre-tax operating margin – GAAP (a) | | 20 | % | | 16 | % | | 11 | % | | 15 | % | | (57) | % | | 16 | % | | (3) | % |
Adjusted pre-tax operating margin, net of distribution and servicing expense – Non-GAAP (a) | | 22 | % | | 18 | % | | 13 | % | | 17 | % | | (64) | % | | 18 | % | | (3) | % |
(a) Income before income taxes divided by total revenue. |
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Constant currency reconciliations | | | | | | 3Q23 vs. | | | | | | | | |
(dollars in millions) | | 3Q23 | | 3Q22 | | 3Q22 | | | | | | | | |
Consolidated: | | | | | | | | | | | | | | |
Investment management and performance fees – GAAP | | $ | 777 | | | $ | 800 | | | (3) | % | | | | | | | | |
Impact of changes in foreign currency exchange rates | | — | | | 15 | | | | | | | | | | | |
Adjusted investment management and performance fees – Non-GAAP | | $ | 777 | | | $ | 815 | | | (5) | % | | | | | | | | |
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Investment and Wealth Management business segment: | | | | | | | | | | | | | | |
Investment management and performance fees – GAAP | | $ | 776 | | | $ | 798 | | | (3) | % | | | | | | | | |
Impact of changes in foreign currency exchange rates | | — | | | 15 | | | | | | | | | | | |
Adjusted investment management and performance fees – Non-GAAP | | $ | 776 | | | $ | 813 | | | (5) | % | | | | | | | | |
3Q23 Financial Highlights O C T O B E R 1 7 , 2 0 2 3
2 • Revenue up 2% YoY – Fee revenue flat YoY – Net interest revenue up 10% YoY • Expense down 16% YoY, up 3%(b) excluding notable items • Provision for credit losses was $3mm • Average loans up 1% QoQ • Average deposits down 5% QoQ • Returned $0.8bn to common shareholders, including $450mm of common share repurchases ROE: 10.5% ROTCE: 20.5% Revenue Pre-tax income Pre-tax margin Returns Capital ratios T1L: 6.1% CET1: 11.4% EPS (a) $4.4bn 29% $1.22 $1.3bn (a) Represents a non-GAAP measure. See page 13 in the Appendix for the corresponding reconciliation of the non-GAAP measure of ROTCE. (b) Represents a non-GAAP measure. See page 13 in the Appendix for the corresponding reconciliation of the non-GAAP measure of expense growth excluding notable items. 3Q23 Financial Highlights
3 3Q23 vs. $mm, except per share data or unless otherwise noted 3Q23 2Q23 3Q22 2Q23 3Q22 Fee revenue $3,245 $3,257 $3,236 —% —% Investment and other revenue 113 97 117 N/M N/M Net interest revenue 1,016 1,100 926 (8) 10 Total revenue $4,374 $4,454 $4,279 (2)% 2% Provision for credit losses 3 5 (30) N/M N/M Noninterest expense 3,089 3,111 3,679 (1) (16) Income before income taxes $1,282 $1,338 $630 (4)% 103% Net income applicable to common shareholders $956 $1,031 $319 (7)% 200% EPS $1.22 $1.30 $0.39 (6)% 213% Avg. common shares and equivalents outstanding (mm) – diluted 782 791 815 (1)% (4)% Operating leverage(a) (109) bps N/M Pre-tax margin 29% 30% 15% ROE 10.5% 11.6% 3.5% ROTCE(b) 20.5% 22.6% 7.5% Increase / (decrease) Revenue Expense EPS 3Q23 2 46 $(0.05) Impact of severance, litigation reserves and a disposal gain 2Q23 (1) 62 $(0.07) Impact of litigation reserves, severance and a disposal loss 3Q22 37 714 $(0.81) Impact of goodwill impairment, a disposal gain, severance expense and litigation reserves (a) Note: See page 12 in the Appendix for corresponding footnotes. (b) Represents a non-GAAP measure. See page 13 in the Appendix for the corresponding reconciliation of the non-GAAP measure of ROTCE. (c) Represents a non-GAAP measure. See pages 13 and 14 in the Appendix for the corresponding reconciliation of the non-GAAP measures of expense growth, earnings per share growth, and operating leverage excluding notable items. N/M – not meaningful. 3Q23 Financial Results Notable items impacting the quarter Up 3%(c) excluding notable items Up 5%(c) excluding notable items +43 bps(c) excluding notable items
4 3Q23 2Q23 3Q22 Consolidated regulatory capital ratios:(a) Tier 1 leverage ratio 6.1% 5.7% 5.4% Supplementary leverage ratio ("SLR") 7.2 7.0 6.3 Common Equity Tier 1 ratio – Advanced Approaches 11.4 11.1 10.1 Common Equity Tier 1 ratio – Standardized Approach 12.0 11.8 10.0 Consolidated regulatory liquidity ratios:(a) Liquidity coverage ratio ("LCR") 121% 120% 116% Net stable funding ratio ("NSFR") 136 136 N/A(b) ROE 10.5% 11.6% 3.5% ROTCE(c) 20.5 22.6 7.5 Cash dividends per common share $0.42 $0.37 $0.37 Common stock dividends ($mm) $333 $297 $303 Common stock repurchases ($mm) 450 448 2 Book value per common share $46.98 $46.35 $43.18 Tangible book value per common share(d) 24.66 24.17 21.55 Common shares outstanding (mm) 769 779 808 Capital and Liquidity Note: See page 12 in the Appendix for corresponding footnotes. N/A – not applicable.
5 3Q23 vs. $bn, avg. 3Q23 2Q23 3Q22 Deposits: Noninterest-bearing $52 (16)% (38)% Interest-bearing 210 (3) 3 Total deposits $262 (5)% (9)% Interest-earning assets: Cash and reverse repo 138 (11)% 5% Loans 64 1 (6) Investment securities: HQLA 107 (4)% (11)% Non-HQLA 24 (1) (11) Total investment securities 132 (4)% (11)% Total interest-earning assets $339 (6)% (4)% Net Interest Revenue and Balance Sheet Trends N e t I n t e r e s t R e v e n u e ( $ m m ) (8)% +10% • Avg. deposits of $262bn down 5% QoQ, in-line with expectations – Noninterest-bearing deposits 20% of total deposits, in-line with expectations • Avg. interest-earning assets of $339bn down 6% QoQ 926 1,100 1,016 3Q22 2Q23 3Q23 • Net interest revenue of $1,016mm down 8% QoQ, primarily reflecting changes in balance sheet size and mix, partially offset by higher interest rates
6 3Q23 vs. $mm, unless otherwise noted 3Q23 2Q23 3Q22 Staff $1,755 2% 5% Software and equipment 452 — 7 Professional, legal and other purchased services 368 (3) 1 Net occupancy 140 16 13 Sub-custodian and clearing 121 2 (2) Distribution and servicing 87 (6) (1) Bank assessment charges 37 (10) 6 Business development 36 (23) 6 Amortization of intangible assets 15 7 (12) Goodwill impairment — N/M N/M Other 78 (40) (35) Total noninterest expense $3,089 (1)% (16)% Noninterest Expense • Noninterest expense down 16% YoY, primarily related to the 3Q22 goodwill impairment associated with the Investment Management reporting unit – Excluding notable items(a), noninterest expense up 3%, primarily reflecting higher investments and revenue-related expenses, and the unfavorable impact of a weaker U.S. dollar, as well as the impact of inflation, partially offset by the favorable impact of efficiency savings and the impact of the Alcentra divestiture • Noninterest expense down 1% QoQ (a) Represents a non-GAAP measure. See page 13 in the Appendix for the corresponding reconciliation of the non-GAAP measure of expense growth excluding notable items. Up 3%(a) excluding notable items
7 3Q23 vs. $mm, unless otherwise noted 3Q23 2Q23 3Q22 Total revenue by line of business: Asset Servicing $1,593 (7)% —% Issuer Services 496 (7) 4 Total revenue $2,089 (7)% 1% Provision for credit losses 19 N/M N/M Noninterest expense 1,585 — 2 Income before income taxes $485 (24)% (7)% Fee revenue 1,424 (4)% —% Net interest revenue 600 (10) 12 Foreign exchange revenue 107 (14) (19) Securities lending revenue(a) 46 (2) (4) Financial ratios, balance sheet data and metrics: Pre-tax margin 23% (542) bps (196) bps AUC/A ($trn, period end)(b)(c) $32.3 (3)% 8% Deposits ($bn, avg.) $163 (6)% (8)% Market value of securities on loan ($bn, period end)(d) $406 (2)% (7)% • Total revenue of $2,089mm up 1% YoY – Asset Servicing flat YoY, primarily reflecting a 3Q22 disposal gain, lower foreign exchange revenue and a strategic equity investment loss, partially offset by higher net interest revenue and market values and net new business – Issuer Services up 4% YoY, primarily reflecting higher net interest revenue • Noninterest expense of $1,585mm up 2% YoY, primarily reflecting higher investments and the impact of inflation, partially offset by the favorable impact of efficiency savings • Income before income taxes of $485mm down 7% YoY Securities Services Note: See page 12 in the Appendix for the corresponding footnotes. N/M – not meaningful.
8 3Q23 vs. $mm, unless otherwise noted 3Q23 2Q23 3Q22 Total revenue by line of business: Pershing $699 2% 6% Treasury Services 389 (3) — Clearance and Collateral Management 357 — 12 Total revenue $1,445 —% 6% Provision for credit losses 6 N/M N/M Noninterest expense 808 3 10 Income before income taxes $631 (4)% —% Fee revenue 1,027 2% 5% Net interest revenue 402 (4) 6 Financial ratios, balance sheet data and metrics: Pre-tax margin 44% (197) bps (256) bps AUC/A ($trn, end of period)(a)(b) $13.1 (2)% 9% Deposits ($bn, avg.) $84 (2)% (7)% Pershing: Net new assets (U.S. platform) ($bn)(c) $23 N/M N/M Avg. active clearing accounts ('000) 7,979 —% 7% Treasury Services: Avg. daily U.S. dollar payment volumes ('000) 234 —% —% Clearance and Collateral Management: Avg. tri-party collateral management balances ($bn) $5,706 (6)% 5% Market and Wealth Services Note: See page 12 in the Appendix for the corresponding footnotes. N/M – not meaningful. • Total revenue of $1,445mm up 6% YoY – Pershing up 6% YoY, primarily reflecting higher net interest revenue and higher fees on sweep balances, partially offset by lost business > Net new assets of $23bn > Avg. active clearing accounts up 7% YoY – Treasury Services flat YoY – Clearance and Collateral Management up 12% YoY, primarily reflecting higher clearance volumes and collateral management balances • Noninterest expense of $808mm up 10% YoY, primarily reflecting higher investments and higher revenue-related expense, as well as the impact of inflation, partially offset by the favorable impact of efficiency savings • Income before income taxes flat
9 3Q23 vs. $mm, unless otherwise noted 3Q23 2Q23 3Q22 Total revenue by line of business: Investment Management $557 2% (4)% Wealth Management 270 1 (5) Total revenue $827 2% (4)% Provision for credit losses (9) N/M N/M Noninterest expense 672 (1) (50) Income before income taxes $164 27% N/M Fee revenue 788 3% (2)% Net interest revenue 38 (3) (33) Financial ratios, balance sheet data and metrics: Pre-tax margin 20% 393 bps N/M Adjusted pre-tax operating margin – Non-GAAP(a) 22% 424 bps N/M AUM ($bn, end of period)(c) $1,821 (4)% 3% Loans ($bn, avg.) $14 (3)% (7)% Deposits ($bn, avg.) $14 (12)% (21)% Wealth Management: Client assets ($bn, end of period)(d) $292 2% 14% • Total revenue of $827mm down 4% YoY – Investment Management down 4% YoY, primarily reflecting the impact of the Alcentra divestiture and the mix of AUM flows, partially offset by higher performance fees and market values, and the favorable impact of a weaker U.S. dollar – Wealth Management down 5% YoY, primarily reflecting lower net interest revenue and changes in product mix, partially offset by higher market values • Noninterest expense of $672mm down 50% YoY, primarily reflecting the impact of the 3Q22 goodwill impairment in the Investment Management reporting unit. Excluding notable items, noninterest expense down 1%(b) YoY, reflecting the impact of the Alcentra divestiture, partially offset by higher investments and the unfavorable impact of a weaker U.S. dollar • Income before income taxes of $164mm • AUM of $1.8trn up 3% YoY, primarily reflecting the favorable impact of a weaker U.S. dollar and higher market values, partially offset by the divestiture of Alcentra • Wealth Management client assets of $292bn up 14% YoY, primarily reflecting higher market values and cumulative net inflows Investment and Wealth Management (a) Adjusted pre-tax operating margin – non-GAAP is net of distribution and servicing expense. See page 15 in the Appendix for the corresponding reconciliation of this non-GAAP measure. (b) Represents a non-GAAP measure. See page 16 in the Appendix for the corresponding reconciliation of the non-GAAP measure of expense growth excluding notable items. Note: See page 12 in the Appendix for the corresponding footnotes (c) and (d). N/M – not meaningful.
10 • Total revenue includes corporate treasury and other investment activity, including hedging activity which has an offsetting impact between fee and other revenue and net interest expense – YoY increase in total revenue primarily reflects debt extinguishment gains, partially offset by net securities losses • Provision for credit losses was a benefit of $13mm, primarily reflecting a reduction in reserves related to financial institutions • Noninterest expense decreased QoQ, primarily driven by lower litigation reserves $mm, unless otherwise noted 3Q23 2Q23 3Q22 Fee revenue $6 $(2) $28 Investment and other revenue 28 (16) (5) Net interest (expense) (24) (27) (47) Total revenue $10 $(45) $(24) Provision for credit losses (13) (25) (26) Noninterest expense 24 71 29 (Loss) before income taxes $(1) $(91) $(27) Other Segment
Appendix
12 Page 3 – 3Q23 Financial Results (a) Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense. Page 4 – Capital and Liquidity (a) Regulatory capital and liquidity ratios for September 30, 2023 are preliminary. For our CET1 ratio, our effective capital ratios under the U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches, which for September 30, 2023 and June 30, 2023 was the Advanced Approaches and for September 30, 2022 was the Standardized Approach. (b) The reporting requirement for the average NSFR became effective in 2Q23, inclusive of reporting the average 1Q23 ratio. (c) Represents a non-GAAP measure. See page 13 in the Appendix for the corresponding reconciliation of the non-GAAP measure of ROTCE. (d) Tangible book value per common share – Non-GAAP excludes goodwill and intangible assets, net of deferred tax liabilities. See page 15 in the Appendix for the corresponding reconciliation of this non-GAAP measure. Page 7 – Securities Services (a) Included in investment services fees reported in the Asset Servicing line of business. (b) September 30, 2023 information is preliminary. (c) Consists of AUC/A primarily from the Asset Servicing line of business and, to a lesser extent, the Issuer Services line of business. Includes the AUC/A of CIBC Mellon Global Securities Services Company (“CIBC Mellon”), a joint venture with the Canadian Imperial Bank of Commerce, of $1.5 trillion at Sept. 30, 2023, $1.6 trillion at June 30, 2023, and $1.4 trillion at Sept. 30, 2022. (d) Represents the total amount of securities on loan in our agency securities lending program. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $63 billion at Sept. 30, 2023, $66 billion at June 30, 2023 and $75 billion at Sept. 30, 2022. Page 8 – Market and Wealth Services (a) September 30, 2023 information is preliminary. (b) Consists of AUC/A from the Clearance and Collateral Management and Pershing lines of business. (c) Net new assets represent net flows of assets (e.g., net cash deposits and net securities transfers, including dividends and interest) in customer accounts in Pershing LLC, a U.S. broker-dealer. Page 9 – Investment and Wealth Management (c) September 30, 2023 information is preliminary. Excludes assets managed outside of the Investment and Wealth Management business segment. (d) September 30, 2023 information is preliminary. Includes AUM and AUC/A in the Wealth Management line of business. Footnotes
13 $mm 3Q23 2Q23 3Q22 Net income applicable to common shareholders of The Bank of New York Mellon Corporation — GAAP $ 956 $ 1,031 $ 319 Add: Amortization of intangible assets 15 14 17 Less: Tax impact of amortization of intangible assets 3 4 4 Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets — Non-GAAP $ 968 $ 1,041 $ 332 Average common shareholders’ equity $ 35,983 $ 35,769 $ 35,942 Less: Average goodwill 16,237 16,219 17,189 Average intangible assets 2,875 2,888 2,922 Add: Deferred tax liability — tax deductible goodwill 1,197 1,193 1,175 Deferred tax liability — intangible assets 657 660 660 Average tangible common shareholders’ equity — Non-GAAP $ 18,725 $ 18,515 $ 17,666 Return on common equity(a) — GAAP 10.5% 11.6% 3.5% Return on tangible common equity(a) — Non-GAAP 20.5% 22.6% 7.5% Return on Common Equity and Tangible Common Equity Reconciliation (a) Quarterly returns are annualized. Noninterest Expense Reconciliation – Impact of Notable Items 3Q23 vs. $mm 3Q23 3Q22 3Q22 Noninterest expense — GAAP $ 3,089 $ 3,679 (16) % Less: Severance 41 32 Litigation reserves 5 2 Goodwill Impairment — 680 Adjusted noninterest expense, ex-notables — Non-GAAP $ 3,043 $ 2,965 3%
14 3Q23 vs. 3Q23 3Q22 3Q22 Diluted earnings per common share — GAAP $ 1.22 $ 0.39 213% Less: Disposal gain (loss) (reflected in investment and other revenue) — 0.03 Less: Severance (0.04) (0.03) Litigation reserves (0.01) — Goodwill impairment — (0.82) Diluted earnings per common share, ex-notables — Non-GAAP $ 1.27 $ 1.21 5% Diluted Earnings per Share Reconciliation – Impact of Notable Items Operating Leverage Reconciliation – Impact of Notable Items 3Q23 vs. $mm 3Q23 3Q22 3Q22 Total revenue — GAAP $ 4,374 $ 4,279 2% Less: Disposal gain (loss) (reflected in investment and other revenue) 2 37 Adjusted total revenue — Non-GAAP $ 4,372 $ 4,242 3% Noninterest expense — GAAP $ 3,089 $ 3,679 (16) % Less: Severance 41 32 Litigation reserves 5 2 Goodwill impairment — 680 Adjusted noninterest expense, ex-notables — Non-GAAP $ 3,043 $ 2,965 3% Operating leverage — GAAP(a) N/M Operating leverage, ex. notables — Non-GAAP(a) 43 bps (a) Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense. N/M – not meaningful.
15 2023 2022 $mm, expect common shares and unless otherwise noted Sept. 30 June 30 Sept. 30 BNY Mellon shareholders’ equity at period end — GAAP $ 40,966 $ 40,933 $ 39,737 Less: Preferred stock 4,838 4,838 4,838 BNY Mellon common shareholders’ equity at period end — GAAP 36,128 36,095 34,899 Less: Goodwill 16,159 16,246 16,412 Intangible assets 2,859 2,881 2,902 Add: Deferred tax liability — tax deductible goodwill 1,197 1,193 1,175 Deferred tax liability — intangible assets 657 660 660 BNY Mellon tangible common shareholders’ equity at period end — Non-GAAP $ 18,964 $ 18,821 $ 17,420 Period-end common shares outstanding (in thousands) 769,073 778,782 808,280 Book value per common share — GAAP $ 46.98 $ 46.35 $ 43.18 Tangible book value per common share — Non-GAAP 24.66 24.17 21.55 Book Value and Tangible Book Value Per Common Share Reconciliation $mm 3Q23 2Q23 3Q22 Income before income taxes — GAAP $ 164 $ 129 $ (497) Total revenue — GAAP $ 827 $ 813 $ 862 Less: Distribution and servicing expense 87 93 88 Adjusted total revenue, net of distribution and servicing expense — Non-GAAP $ 740 $ 720 $ 774 Pre-tax operating margin — GAAP(a) 20% 16% (57) % Adjusted pre-tax operating margin, net of distribution and servicing expense — Non-GAAP(a) 22% 18% (64) % Pre-tax Operating Margin Reconciliation – Investment and Wealth Management Segment (a) Income before income taxes divided by total revenue.
16 (a) Noninterest expense in 2022 increased by 13% year-over-year and by 8% excluding the impact of notable items and currency translation. 2022 vs. $mm 2022 2021 2021 Noninterest expense — GAAP $ 13,010 $ 11,514 13% Less: Severance 216 31 Litigation reserves 134 98 Goodwill impairment 680 — Less: Impact of changes in foreign currency exchange rates — 292 Noninterest expense, ex. notables and currency adjustment — Non-GAAP $ 11,981 $ 11,093 8% Noninterest Expense Reconciliation – Impact of Notable Items and Impact of Changes in Foreign Currency Exchange Rates (a) Investment and Wealth Management Segment – Noninterest Expense Reconciliation – Impact of Notable Items 3Q23 vs. $mm 3Q23 3Q22 3Q22 Noninterest expense — GAAP $ 672 $ 1,356 (50) % Less: Severance 5 (1) Goodwill impairment — 680 Adjusted noninterest expense, ex-notables — Non-GAAP $ 667 $ 677 (1) %
17 A number of statements in The Bank of New York Mellon Corporation’s (the “Corporation”) presentations, the accompanying slides and the responses to your questions may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “estimate,” “forecast,” “project,” “anticipate,” “likely,” “target,” “expect,” “intend,” “continue,” “seek,” “believe,” “plan,” “goal,” “could,” “should,” “would,” “may,” “might,” “will,” “strategy,” “synergies,” “opportunities,” “trends,” “ambition,” “objective,” “aim,” “future,” “potentially,” “outlook” and words of similar meaning may signify forward-looking statements. These statements relate to, among other things, the Corporation’s expectations regarding: capital plans including repurchases, strategic priorities, financial goals, organic growth, performance, organizational quality and efficiency, investments, including in technology and product development, capabilities, resiliency, risk profile, revenue, net interest revenue, fees, expenses, cost discipline, sustainable growth, currency fluctuations, innovation in products and services, client experience, company management, human capital management (including related ambitions, objectives, aims and goals), deposits, interest rates and yield curves, securities portfolio, taxes, business opportunities, divestments, volatility, preliminary business metrics and regulatory capital ratios and statements regarding the Corporation’s aspirations, as well as the Corporation’s overall plans, strategies, goals, objectives, expectations, outlooks, estimates, intentions, targets, opportunities, focus and initiatives. These forward-looking statements are based on assumptions that involve risks and uncertainties and that are subject to change based on various important factors (some of which are beyond the Corporation’s control). Actual outcomes may differ materially from those expressed or implied as a result of a number of factors, including, but not limited to, those discussed in “Risk Factors” in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”) and in other filings of the Corporation with the Securities and Exchange Commission (the “SEC”). Statements about the effects of the current and near-term market and macroeconomic outlook on the Corporation, including on its business, operations, financial performance and prospects, may constitute forward-looking statements. The timing, manner and amount of repurchases is subject to various factors, including our capital position, capital deployment opportunities, prevailing market conditions, legal and regulatory considerations, and our outlook for the economic environment. Preliminary business metrics and regulatory capital ratios are subject to change, possibly materially, as the Corporation completes its Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. You should not place undue reliance on any forward-looking statement. All forward-looking statements speak only as of October 17, 2023, and the Corporation 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. For additional information regarding the Corporation, please refer to the Corporation's SEC filings available at www.bnymellon.com/investorrelations. Non-GAAP Measures: In this presentation we discuss certain non-GAAP measures in detailing the Corporation’s performance, which exclude certain items or otherwise include components that differ from GAAP. We believe these measures are useful to the investment community in analyzing the financial results and trends of ongoing operations. We believe they facilitate comparisons with prior periods and reflect the principal basis on which the Corporation’s management monitors financial performance. Additional disclosures relating to non-GAAP measures are contained in the Corporation’s reports filed with the SEC, including the 2022 Annual Report, the third quarter 2023 earnings release and the third quarter 2023 financial supplement, and are available at www.bnymellon.com/investorrelations. Cautionary Statement
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Bank of New York Mellon (NYSE:BK)
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