BNY Mellon Gains on Q3 Earnings Beat, Revenues & AUM Rise Y/Y

The Bank of New York Mellon Corporation’s BK third-quarter 2024 adjusted earnings of $1.52 per share surpassed the Zacks Consensus Estimate of $1.41. Also, the bottom line reflects a rise of 19.7% from the prior-year quarter.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.BK shares have gained 1.3% in the pre-market trading on better-than-expected results.Results have been primarily aided by a rise in fee revenues and net interest income (NII). The assets under custody and/or administration (AUC/A) and assets under management (AUM) balances grew on a solid market rally. However, a rise in non-interest expenses and provisions hurt the results to some extent.Net income applicable to common shareholders (GAAP basis) was $1.11 billion or $1.50 per share, up from $958 million or $1.22 per share in the year-ago quarter. We had projected a net income applicable to common shareholders of $986.3 million.BK’s Revenues Improve, Expenses RiseTotal revenues increased 5.2% year over year to $4.65 billion. The top line surpassed the Zacks Consensus Estimate of $4.52 billion.NII was $1.05 billion, up 3.1% year over year. The rise reflected improved investment securities portfolio yields and balance sheet growth, partly offset by changes in the deposit mix. Our estimate for the metric was $898.3 million.The net interest margin (NIM) contracted 2 basis points (bps) to 1.16%. Our estimate for NIM was 1.10%.Total fee and other revenues increased 5.8% year over year to $3.6 billion. The rise was primarily driven by an increase in investment services fees, foreign exchange revenues, investment management and performance fees, financing-related fees, and investment and other revenues. Our estimate for the same was $3.59 billion.Total non-interest expenses (GAAP basis) were $3.1 billion, up marginally from the prior-year quarter. The rise was due to a fall in costs related to software and equipment charges, professional, legal and other purchased services, distribution and servicing costs, business development costs, and other costs. We had projected non-interest expenses of $3.07 billion.BNY Mellon’s Asset Balances ImproveAs of Sept. 30, 2024, AUM was $2.14 trillion, up 17.7% year over year. The rise reflected higher market values and the favorable impact of a weaker U.S. dollar. Our estimate for AUM was $2.06 trillion.AUC/A of $52.1 trillion increased 14% year over year, primarily reflecting higher market values, client inflows and net new business.BK’s Credit Quality DeterioratesThe allowance for loan losses, as a percentage of total loans, was 0.43%, up 11 bps from the prior-year quarter. As of Sept. 30, 2024, non-performing assets were $211 million, up significantly from $48 million in the year-ago quarter.In the reported quarter, the company recorded $23 million of provision for credit losses. In the prior-year quarter, provisions were $3 million. We had expected the metric to be $6.6 million.BNY Mellon Capital Position: Mixed BagAs of Sept. 30, 2024, the common equity Tier 1 ratio was 11.9%, the same as of the Sept. 30, 2023 level. Tier 1 leverage ratio was 6%, down from 6.1% as of Sept. 30, 2023.BK’s Share Repurchase UpdateIn the reported quarter, BNY Mellon repurchased shares worth $725 million.Our Take on BNY MellonHigh interest rates, BK’s global expansion efforts, and a strong balance sheet position are likely to keep supporting its top-line growth. Also, robust AUM balance is another positive. However, concentration risk due to the company’s higher dependence on fee-based revenues, higher funding costs, and elevated expenses are worrisome.The Bank of New York Mellon Corporation Price, Consensus and EPS Surprise The Bank of New York Mellon Corporation price-consensus-eps-surprise-chart | The Bank of New York Mellon Corporation QuoteCurrently, BNY Mellon carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Earnings Release Dates of Other Major BanksBankUnited, Inc. BKU is scheduled to report quarterly results on Oct. 22. The Zacks Consensus Estimate for BKU’s third-quarter earnings has been unchanged over the past seven days. Currently, BKU carries a Zacks Rank of 3 (Hold).Truist Financial Corporation TFC is slated to report quarterly results on Oct. 17. The Zacks Consensus Estimate for TFC’s third-quarter earnings has been unchanged over the past seven days. TFC also carries a Zacks Rank of 3 at present.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Bank of New York Mellon Corporation (BK): Free Stock Analysis Report BankUnited, Inc. (BKU): Free Stock Analysis Report Truist Financial Corporation (TFC): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks