Delaware | 001-35651 | 13-2614959 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
One Wall Street New York, New York (Address of principal executive offices) | 10286 (Zip code) |
Exhibit | |||
Number | Description | ||
99.1 | The Bank of New York Mellon Corporation Earnings Release dated July 21, 2015, announcing financial results for the second quarter of 2015. | ||
99.2 | The Bank of New York Mellon Corporation Quarterly Financial Trends dated July 21, 2015, for the second quarter of 2015. | ||
99.3 | Key Facts – Second Quarter 2015 dated July 21, 2015. | ||
99.4 | Second Quarter 2015 Financial Highlights Presentation dated July 21, 2015. |
The Bank of New York Mellon Corporation (Registrant) | |
Date: July 21, 2015 | By: /s/ Craig T. Beazer |
Name: Craig T. Beazer Title: Secretary |
Number | Description | Method of Filing |
99.1 | Earnings Release dated July 21, 2015. | Furnished herewith |
99.2 | Quarterly Financial Trends dated July 21, 2015. | Furnished herewith |
99.3 | Key Facts – Second Quarter 2015 dated July 21, 2015. | Furnished herewith |
99.4 | Second Quarter 2015 Financial Highlights Presentation dated July 21, 2015. | Furnished herewith |
BNY Mellon 2Q15 Earnings Release |
Contacts: MEDIA: | ANALYSTS: |
Kevin Heine | Valerie Haertel |
(212) 635-1590 | (212) 635-8529 |
kevin.heine@bnymellon.com | valerie.haertel@bnymellon.com |
• | $0.03 per common share related to previously announced litigation expense and restructuring charges |
• | Earnings per common share up 24% year-over-year on an adjusted basis (a) |
• | Increased 3% on an adjusted basis (a) |
• | Decreased 1% on an adjusted basis (a) |
• | Repurchased 19.4 million common shares for $834 million in the second quarter of 2015 |
• | Return on tangible common equity of 22% in the second quarter of 2015 (b) |
(a) | See pages 3-4 for the Non-GAAP adjustments. |
(b) | See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 25 for the reconciliation of these Non-GAAP measures. |
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BNY Mellon 2Q15 Earnings Release |
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BNY Mellon 2Q15 Earnings Release |
Earnings per share | Net income applicable to common shareholders of The Bank of New York Mellon Corporation | ||||||||||||||||||||
(in millions, except per share amounts) | 2Q14 | 2Q15 | Inc | 2Q14 | 2Q15 | Inc | |||||||||||||||
GAAP results | $ | 0.48 | $ | 0.73 | $ | 554 | $ | 830 | |||||||||||||
Add: Litigation and restructuring charges | 0.06 | 0.03 | 76 | 38 | |||||||||||||||||
Charge related to investment management funds, net of incentives | 0.07 | N/A | 85 | N/A | |||||||||||||||||
Non-GAAP results | $ | 0.62 | (a) | $ | 0.77 | (a) | 24 | % | $ | 715 | $ | 868 | 21 | % |
(a) | Does not foot due to rounding. |
• | Total revenue was $3.9 billion, an increase of 4%. |
• | The provision for credit losses was a credit of $6 million. |
• | Noninterest expense was $2.7 billion, a decrease of 7% reflecting lower expenses in all categories, except incentives and business development expense. The decrease primarily reflects the favorable impact of a stronger U.S. dollar and the benefit of the business improvement process which focuses on reducing structural costs. |
• | Effective tax rate of 23.7%; rate is 1.4% lower due to the income statement presentation of consolidated investment management funds and a benefit related to the separately disclosed litigation expense. |
• | Assets under custody and/or administration (“AUC/A”) and Assets under management (“AUM”) |
(a) | See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 25 for the reconciliation of Non-GAAP measures. Non-GAAP excludes the gains on the sales of our investment in Wing Hang Bank and the One Wall Street building, net income attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets, M&I, litigation and restructuring charges, a charge related to investment management funds, net of incentives, and the benefit primarily related to a tax carryback claim, if applicable. |
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BNY Mellon 2Q15 Earnings Release |
(dollars in millions, except per share amounts; common shares in thousands) | 2Q15 vs. | ||||||||||||||||||
2Q14 | 3Q14 | 4Q14 | 1Q15 | 2Q15 | 2Q14 | 1Q15 | |||||||||||||
Revenue: | |||||||||||||||||||
Fee and other revenue (a) | $ | 2,980 | $ | 3,851 | $ | 2,935 | $ | 3,012 | $ | 3,067 | 3 | % | 2 | % | |||||
Income from consolidated investment management funds (a) | 46 | 39 | 42 | 52 | 40 | ||||||||||||||
Net interest revenue | 719 | 721 | 712 | 728 | 779 | 8 | 7 | ||||||||||||
Total revenue – GAAP (a) | 3,745 | 4,611 | 3,689 | 3,792 | 3,886 | 4 | 2 | ||||||||||||
Less: Net income attributable to noncontrolling interests related to consolidated investment management funds (a) | 17 | 23 | 24 | 31 | 37 | ||||||||||||||
Gain on the sale of our investment in Wing Hang | — | 490 | — | — | — | ||||||||||||||
Gain on the sale of the One Wall Street building | — | 346 | — | — | — | ||||||||||||||
Total revenue – Non-GAAP (a) | 3,728 | 3,752 | 3,665 | 3,761 | 3,849 | 3 | 2 | ||||||||||||
Provision for credit losses | (12 | ) | (19 | ) | 1 | 2 | (6 | ) | |||||||||||
Expense: | |||||||||||||||||||
Noninterest expense – GAAP | 2,946 | 2,968 | 3,524 | 2,700 | 2,727 | (7 | ) | 1 | |||||||||||
Less: Amortization of intangible assets | 75 | 75 | 73 | 66 | 65 | ||||||||||||||
M&I, litigation and restructuring charges | 122 | 220 | 800 | (3 | ) | 59 | |||||||||||||
Charge related to investment management funds, net of incentives | 109 | — | — | — | — | ||||||||||||||
Total noninterest expense – Non-GAAP | 2,640 | 2,673 | 2,651 | 2,637 | 2,603 | (1 | ) | (1 | ) | ||||||||||
Income: | |||||||||||||||||||
Income before income taxes (a) | 811 | 1,662 | 164 | 1,090 | 1,165 | 44 | % | 7 | % | ||||||||||
Provision (benefit) for income taxes | 217 | 556 | (93 | ) | 280 | 276 | |||||||||||||
Net income (a) | $ | 594 | $ | 1,106 | $ | 257 | $ | 810 | $ | 889 | |||||||||
Net (income) attributable to noncontrolling interests (a)(b) | (17 | ) | (23 | ) | (24 | ) | (31 | ) | (36 | ) | |||||||||
Net income applicable to shareholders of The Bank of New York Mellon Corporation | 577 | 1,083 | 233 | 779 | 853 | ||||||||||||||
Preferred stock dividends | (23 | ) | (13 | ) | (24 | ) | (13 | ) | (23 | ) | |||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 554 | $ | 1,070 | $ | 209 | $ | 766 | $ | 830 | |||||||||
Key Metrics: | |||||||||||||||||||
Pre-tax operating margin (a)(c) | 22 | % | 36 | % | 4 | % | 29 | % | 30 | % | |||||||||
Non-GAAP (c) | 30 | % | 29 | % | 28 | % | 30 | % | 33 | % | |||||||||
Return on common equity (annualized) (c) | 6.1 | % | 11.6 | % | 2.2 | % | 8.8 | % | 9.4 | % | |||||||||
Non-GAAP (c) | 8.4 | % | 8.5 | % | 7.7 | % | 9.2 | % | 10.3 | % | |||||||||
Return on tangible common equity (annualized) – Non-GAAP (c) | 14.5 | % | 26.2 | % | 5.9 | % | 20.3 | % | 21.5 | % | |||||||||
Non-GAAP adjusted (c) | 18.4 | % | 18.4 | % | 16.3 | % | 20.2 | % | 22.5 | % | |||||||||
Fee revenue as a percentage of total revenue excluding net securities gains (a) | 79 | % | 83 | % | 79 | % | 79 | % | 79 | % | |||||||||
Percentage of non-U.S. total revenue (d) | 38 | % | 43 | % | 35 | % | 36 | % | 36 | % | |||||||||
Average common shares and equivalents outstanding: | |||||||||||||||||||
Basic | 1,133,556 | 1,126,946 | 1,120,672 | 1,118,602 | 1,113,790 | ||||||||||||||
Diluted | 1,139,800 | 1,134,871 | 1,129,040 | 1,126,306 | 1,122,135 | ||||||||||||||
Period end: | |||||||||||||||||||
Full-time employees | 51,100 | 50,900 | 50,300 | 50,500 | 50,700 | ||||||||||||||
Book value per common share – GAAP (c) | $ | 32.49 | $ | 32.77 | $ | 32.09 | $ | 31.89 | $ | 32.28 | |||||||||
Tangible book value per common share – Non-GAAP (c) | $ | 14.88 | $ | 15.30 | $ | 14.70 | $ | 14.82 | $ | 14.86 | |||||||||
Cash dividends per common share | $ | 0.17 | $ | 0.17 | $ | 0.17 | $ | 0.17 | $ | 0.17 | |||||||||
Common dividend payout ratio | 35 | % | 18 | % | 94 | % | 25 | % | 23 | % | |||||||||
Closing stock price per common share | $ | 37.48 | $ | 38.73 | $ | 40.57 | $ | 40.24 | $ | 41.97 | |||||||||
Market capitalization | $ | 42,412 | $ | 43,599 | $ | 45,366 | $ | 45,130 | $ | 46,441 | |||||||||
Common shares outstanding | 1,131,596 | 1,125,710 | 1,118,228 | 1,121,512 | 1,106,518 |
(a) | The first quarter of 2015 was restated to reflect the retrospective application of adopting new accounting guidance related to Consolidations (ASU 2015-02). See page 24 for additional information. |
(c) | Non-GAAP excludes the gains on the sales of our investment in Wing Hang Bank and the One Wall Street building, net income attributable to noncontrolling interests of consolidated investment management funds, amortization of intangible assets, M&I, litigation and restructuring charges, and a charge related to investment management funds, net of incentives. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 25 for the reconciliation of Non-GAAP measures. |
(d) | Includes fee revenue, net interest revenue and income from consolidated investment management funds, net of net income attributable to noncontrolling interests. |
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BNY Mellon 2Q15 Earnings Release |
Consolidated business metrics | 2Q15 vs. | |||||||||||||||||||
2Q14 | 3Q14 | 4Q14 | 1Q15 | 2Q15 | 2Q14 | 1Q15 | ||||||||||||||
Changes in AUM (in billions): (a) | ||||||||||||||||||||
Beginning balance of AUM | $ | 1,620 | $ | 1,636 | $ | 1,646 | $ | 1,710 | $ | 1,741 | ||||||||||
Net inflows (outflows): | ||||||||||||||||||||
Long-term: | ||||||||||||||||||||
Equity | (4 | ) | (2 | ) | (4 | ) | (6 | ) | (12 | ) | ||||||||||
Fixed income | (1 | ) | — | 4 | 4 | (2 | ) | |||||||||||||
Index | 7 | (3 | ) | 1 | 8 | (9 | ) | |||||||||||||
Liability-driven investments (b) | (17 | ) | 18 | 24 | 8 | 5 | ||||||||||||||
Alternative investments | 2 | — | 2 | 2 | 3 | |||||||||||||||
Total long-term inflows (outflows) | (13 | ) | 13 | 27 | 16 | (15 | ) | |||||||||||||
Short term: | ||||||||||||||||||||
Cash | (18 | ) | 19 | 5 | 1 | (11 | ) | |||||||||||||
Total net inflows (outflows) | (31 | ) | 32 | 32 | 17 | (26 | ) | |||||||||||||
Net market/currency impact/acquisition | 47 | (22 | ) | 32 | 14 | 9 | ||||||||||||||
Ending balance of AUM | $ | 1,636 | $ | 1,646 | $ | 1,710 | $ | 1,741 | $ | 1,724 | (c) | 5 | % | (1 | )% | |||||
AUM at period end, by product type: (a) | ||||||||||||||||||||
Equity | 17 | % | 16 | % | 16 | % | 15 | % | 15 | % | ||||||||||
Fixed income | 14 | 13 | 13 | 13 | 13 | |||||||||||||||
Index | 21 | 21 | 21 | 22 | 21 | |||||||||||||||
Liability-driven investments (b) | 27 | 28 | 29 | 29 | 30 | |||||||||||||||
Alternative investments | 4 | 4 | 4 | 4 | 4 | |||||||||||||||
Cash | 17 | 18 | 17 | 17 | 17 | |||||||||||||||
Total AUM | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | (c) | |||||||||
Investment Management: | ||||||||||||||||||||
Average loans (in millions) | $ | 10,372 | $ | 10,772 | $ | 11,124 | $ | 11,634 | $ | 12,298 | 19 | % | 6 | % | ||||||
Average deposits (in millions) | $ | 13,458 | $ | 13,764 | $ | 14,604 | $ | 15,218 | $ | 14,640 | 9 | % | (4 | )% | ||||||
Investment Services: | ||||||||||||||||||||
Average loans (in millions) | $ | 33,115 | $ | 33,785 | $ | 35,448 | $ | 37,699 | $ | 38,264 | 16 | % | 1 | % | ||||||
Average deposits (in millions) | $ | 220,701 | $ | 221,734 | $ | 228,282 | $ | 234,183 | $ | 237,193 | 7 | % | 1 | % | ||||||
AUC/A at period end (in trillions) (d) | $ | 28.5 | $ | 28.3 | $ | 28.5 | $ | 28.5 | $ | 28.6 | (c) | — | % | — | % | |||||
Market value of securities on loan at period end (in billions) (e) | $ | 280 | $ | 282 | $ | 289 | $ | 291 | $ | 283 | 1 | % | (3 | )% | ||||||
Asset servicing: | ||||||||||||||||||||
Estimated new business wins (AUC/A) (in billions) | $ | 130 | $ | 115 | $ | 130 | $ | 131 | $ | 1,024 | (c) | |||||||||
Depositary Receipts: | ||||||||||||||||||||
Number of sponsored programs | 1,316 | 1,302 | 1,279 | 1,258 | 1,206 | (8 | )% | (4 | )% | |||||||||||
Clearing services: | ||||||||||||||||||||
Global DARTS volume (in thousands) | 207 | 209 | 242 | 261 | 242 | 17 | % | (7 | )% | |||||||||||
Average active clearing accounts (U.S. platform) (in thousands) | 5,752 | 5,805 | 5,900 | 5,979 | 6,046 | 5 | % | 1 | % | |||||||||||
Average long-term mutual fund assets (U.S. platform) (in millions) | $ | 433,047 | $ | 442,827 | $ | 450,305 | $ | 456,954 | $ | 466,195 | 8 | % | 2 | % | ||||||
Average investor margin loans (U.S. platform) (in millions) | $ | 9,236 | $ | 9,861 | $ | 10,711 | $ | 11,232 | $ | 11,890 | 29 | % | 6 | % | ||||||
Broker-Dealer: | ||||||||||||||||||||
Average tri-party repo balances (in billions) | $ | 2,022 | $ | 2,063 | $ | 2,101 | $ | 2,153 | $ | 2,174 | 8 | % | 1 | % |
(a) | Excludes securities lending cash management assets and assets managed in the Investment Services business. |
(b) | Includes currency overlay assets under management. |
(c) | Preliminary. |
(d) | Includes the AUC/A of CIBC Mellon Global Securities Services Company (“CIBC Mellon”), a joint venture with the Canadian Imperial Bank of Commerce, of $1.2 trillion at June 30, 2014 and Sept. 30, 2014 and $1.1 trillion at Dec. 31, 2014, March 31, 2015 and June 30, 2015. |
(e) | Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $64 billion at June 30, 2014, $65 billion at Sept. 30, 2014 and Dec. 31, 2014, $69 billion at March 31, 2015 and $68 billion at June 30, 2015. |
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BNY Mellon 2Q15 Earnings Release |
Key market metrics | 2Q15 vs. | ||||||||||||||||||
2Q14 | 3Q14 | 4Q14 | 1Q15 | 2Q15 | 2Q14 | 1Q15 | |||||||||||||
S&P 500 Index (a) | 1960 | 1972 | 2059 | 2068 | 2063 | 5 | % | — | % | ||||||||||
S&P 500 Index – daily average | 1900 | 1976 | 2009 | 2064 | 2102 | 11 | 2 | ||||||||||||
FTSE 100 Index (a) | 6744 | 6623 | 6566 | 6773 | 6521 | (3 | ) | (4 | ) | ||||||||||
FTSE 100 Index – daily average | 6764 | 6756 | 6526 | 6793 | 6920 | 2 | 2 | ||||||||||||
MSCI World Index (a) | 1743 | 1698 | 1710 | 1741 | 1736 | — | — | ||||||||||||
MSCI World Index – daily average | 1698 | 1733 | 1695 | 1726 | 1780 | 5 | 3 | ||||||||||||
Barclays Capital Global Aggregate BondSM Index (a)(b) | 376 | 361 | 357 | 348 | 342 | (9 | ) | (2 | ) | ||||||||||
NYSE and NASDAQ share volume (in billions) | 187 | 173 | 198 | 187 | 185 | (1 | ) | (1 | ) | ||||||||||
JPMorgan G7 Volatility Index – daily average (c) | 6.22 | 6.21 | 8.54 | 10.40 | 10.06 | 62 | (3 | ) | |||||||||||
Average Fed Funds effective rate | 0.09 | % | 0.09 | % | 0.10 | % | 0.11 | % | 0.13 | % | 4 bps | 2 bps | |||||||
Foreign exchange rates vs. U.S. dollar: | |||||||||||||||||||
British pound - average rate | $ | 1.68 | $ | 1.67 | $ | 1.58 | $ | 1.51 | $ | 1.53 | (9) | % | 1 | % | |||||
Euro - average rate | 1.37 | 1.33 | 1.25 | 1.13 | 1.11 | (19 | ) | (2 | ) |
(a) | Period end. |
(b) | Unhedged in U.S. dollar terms. |
(c) | The JPMorgan G7 Volatility Index is based on the implied volatility in 3-month currency options. |
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BNY Mellon 2Q15 Earnings Release |
Fee and other revenue | 2Q15 vs. | ||||||||||||||||||
(dollars in millions) | 2Q14 | 3Q14 | 4Q14 | 1Q15 | 2Q15 | 2Q14 | 1Q15 | ||||||||||||
Investment services fees: | |||||||||||||||||||
Asset servicing (a) | $ | 1,022 | $ | 1,025 | $ | 1,019 | $ | 1,038 | $ | 1,060 | 4 | % | 2 | % | |||||
Clearing services | 326 | 337 | 347 | 344 | 347 | 6 | 1 | ||||||||||||
Issuer services | 231 | 315 | 193 | 232 | 234 | 1 | 1 | ||||||||||||
Treasury services | 141 | 142 | 145 | 137 | 144 | 2 | 5 | ||||||||||||
Total investment services fees | 1,720 | 1,819 | 1,704 | 1,751 | 1,785 | 4 | 2 | ||||||||||||
Investment management and performance fees (b) | 883 | 881 | 885 | 867 | 878 | (1 | ) | 1 | |||||||||||
Foreign exchange and other trading revenue | 130 | 153 | 151 | 229 | 187 | 44 | (18 | ) | |||||||||||
Financing-related fees | 44 | 44 | 43 | 40 | 58 | 32 | 45 | ||||||||||||
Distribution and servicing | 43 | 44 | 43 | 41 | 39 | (9 | ) | (5 | ) | ||||||||||
Investment and other income (b) | 142 | 890 | 78 | 60 | 104 | N/M | N/M | ||||||||||||
Total fee revenue (b) | 2,962 | 3,831 | 2,904 | 2,988 | 3,051 | 3 | 2 | ||||||||||||
Net securities gains | 18 | 20 | 31 | 24 | 16 | N/M | N/M | ||||||||||||
Total fee and other revenue (b) | $ | 2,980 | $ | 3,851 | $ | 2,935 | $ | 3,012 | $ | 3,067 | 3 | % | 2 | % |
(a) | Asset servicing fees include securities lending revenue of $46 million in 2Q14, $37 million in 3Q14 and 4Q14, $43 million in 1Q15 and $49 million in 2Q15. |
(b) | The first quarter of 2015 was restated to reflect the retrospective application of adopting new accounting guidance related to Consolidations (ASU 2015-02). See page 24 for additional information. |
• | Asset servicing fees were $1.1 billion, an increase of 4% year-over-year and 2% sequentially. The year-over-year increase primarily reflects organic growth, due in part to Global Collateral Services, net new business and higher market values, partially offset by the unfavorable impact of a stronger U.S. dollar. The sequential increase primarily reflects organic growth and seasonally higher securities lending revenue. |
• | Clearing services fees were $347 million, an increase of 6% year-over-year and 1% sequentially. The year-over-year increase was primarily driven by higher mutual fund and asset-based fees, clearance revenue and custody fees. The sequential increase was primarily driven by two additional trading days in 2Q15. |
• | Issuer services fees were $234 million, an increase of 1% year-over-year and sequentially. Both increases primarily reflect higher Depositary Receipts revenue, partially offset by lower Corporate Trust fees. The year-over-year decrease in Corporate Trust fees primarily reflects the unfavorable impact of a stronger U.S. dollar. |
• | Treasury services fees were $144 million, an increase of 2% year-over-year and 5% sequentially. The year-over-year increase primarily reflects higher payment volumes. The sequential increase primarily reflects three additional business days in 2Q15. |
• | Investment management and performance fees were $878 million, a decrease of 1% year-over-year, or an increase of 5% on a constant currency basis (Non-GAAP). The increase was driven by higher equity market values, the impact of the 1Q15 acquisition of Cutwater and strategic initiatives, partially offset by lower performance fees. Sequentially, investment management and performance fees increased 1% primarily reflecting higher equity market values and higher performance fees. |
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BNY Mellon 2Q15 Earnings Release |
• | Foreign exchange and other trading revenue | |||||||||||||||
(in millions) | 2Q14 | 3Q14 | 4Q14 | 1Q15 | 2Q15 | |||||||||||
Foreign exchange | $ | 129 | $ | 154 | $ | 165 | $ | 217 | $ | 181 | ||||||
Other trading revenue (loss): | ||||||||||||||||
Fixed income | (1 | ) | 2 | (18 | ) | 11 | — | |||||||||
Equity/other | 2 | (3 | ) | 4 | 1 | 6 | ||||||||||
Total other trading revenue (loss) | 1 | (1 | ) | (14 | ) | 12 | 6 | |||||||||
Total foreign exchange and other trading revenue | $ | 130 | $ | 153 | $ | 151 | $ | 229 | $ | 187 |
• | Financing-related fees were $58 million in 2Q15 compared with $44 million in 2Q14 and $40 million in 1Q15. Both increases primarily reflect higher fees related to secured intraday credit provided to dealers in connection with their tri-party repo activity. |
• | Investment and other income (loss) | |||||||||||||||
(in millions) | 2Q14 | 3Q14 | 4Q14 | 1Q15 | 2Q15 | |||||||||||
Lease residual gains (losses) | $ | 4 | $ | 5 | $ | 5 | $ | (1 | ) | $ | 54 | |||||
Corporate/bank-owned life insurance | 30 | 34 | 37 | 33 | 31 | |||||||||||
Expense reimbursements from joint venture | 15 | 13 | 15 | 14 | 17 | |||||||||||
Private equity gains (losses) | (2 | ) | 2 | 1 | (3 | ) | 3 | |||||||||
Seed capital gains (losses) (a) | 15 | (1 | ) | — | 16 | 2 | ||||||||||
Asset-related gains | 17 | 836 | 20 | 3 | 1 | |||||||||||
Equity investment revenue (loss) | 17 | (9 | ) | (5 | ) | (4 | ) | (7 | ) | |||||||
Other income (a) | 46 | 10 | 5 | 2 | 3 | |||||||||||
Total investment and other income | $ | 142 | $ | 890 | $ | 78 | $ | 60 | $ | 104 |
(a) | The first quarter of 2015 was restated to reflect the retrospective application of adopting new accounting guidance related to Consolidations (ASU 2015-02). See page 24 for additional information. |
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BNY Mellon 2Q15 Earnings Release |
Net interest revenue | 2Q15 vs. | ||||||||||||||||||
(dollars in millions) | 2Q14 | 3Q14 | 4Q14 | 1Q15 | 2Q15 | 2Q14 | 1Q15 | ||||||||||||
Net interest revenue (non-FTE) | $ | 719 | $ | 721 | $ | 712 | $ | 728 | $ | 779 | 8% | 7 | % | ||||||
Net interest revenue (FTE) – Non-GAAP | 736 | 736 | 726 | 743 | 794 | 8 | 7 | ||||||||||||
Net interest margin (FTE) | 0.98 | % | 0.94 | % | 0.91 | % | 0.97 | % | 1.00 | % | 2 | bps | 3 | bps | |||||
Selected average balances: | |||||||||||||||||||
Cash/interbank investments | $ | 140,357 | $ | 139,278 | $ | 140,599 | $ | 123,647 | $ | 125,640 | (10)% | 2% | |||||||
Trading account securities | 5,532 | 5,435 | 3,922 | 3,046 | 3,253 | (41 | ) | 7 | |||||||||||
Securities | 101,420 | 112,055 | 117,243 | 123,476 | 128,641 | 27 | 4 | ||||||||||||
Loans | 53,449 | 54,835 | 56,844 | 57,935 | 61,076 | 14 | 5 | ||||||||||||
Interest-earning assets | 300,758 | 311,603 | 318,608 | 308,104 | 318,610 | 6 | 3 | ||||||||||||
Interest-bearing deposits | 162,674 | 164,233 | 163,149 | 159,520 | 170,730 | 5 | 7 | ||||||||||||
Noninterest-bearing deposits | 77,820 | 82,334 | 85,330 | 89,592 | 84,890 | 9 | (5 | ) | |||||||||||
Selected average yields/rates: | |||||||||||||||||||
Cash/interbank investments | 0.43 | % | 0.38 | % | 0.31 | % | 0.35 | % | 0.34 | % | |||||||||
Trading account securities | 2.19 | 2.36 | 2.64 | 2.46 | 2.63 | ||||||||||||||
Securities | 1.68 | 1.56 | 1.54 | 1.55 | 1.57 | ||||||||||||||
Loans | 1.66 | 1.61 | 1.58 | 1.55 | 1.51 | ||||||||||||||
Interest-earning assets | 1.10 | 1.05 | 1.02 | 1.07 | 1.08 | ||||||||||||||
Interest-bearing deposits | 0.06 | 0.06 | 0.03 | 0.04 | 0.02 | ||||||||||||||
Average cash/interbank investments as a percentage of average interest-earning assets | 47 | % | 45 | % | 44 | % | 40 | % | 39 | % | |||||||||
Average noninterest-bearing deposits as a percentage of average interest-earning assets | 26 | % | 26 | % | 27 | % | 29 | % | 27 | % |
• | Net interest revenue totaled $779 million in 2Q15, an increase of $60 million compared with 2Q14 and an increase of $51 million sequentially. Both increases primarily reflect higher securities and loans due to higher deposits, lower interest expense incurred on deposits, and the impact of interest rate hedging activities. The year-over-year increase also reflects the shift out of cash and into investments in securities and loans, which was partially offset by lower yields on interest-earning assets. |
Page - 9 |
BNY Mellon 2Q15 Earnings Release |
Noninterest expense | 2Q15 vs. | ||||||||||||||||||
(dollars in millions) | 2Q14 | 3Q14 | 4Q14 | 1Q15 | 2Q15 | 2Q14 | 1Q15 | ||||||||||||
Staff: | |||||||||||||||||||
Compensation | $ | 903 | $ | 909 | $ | 893 | $ | 871 | $ | 877 | (3 | )% | 1 | % | |||||
Incentives | 313 | 340 | 319 | 425 | 349 | 12 | (18 | ) | |||||||||||
Employee benefits | 223 | 228 | 206 | 189 | 208 | (7 | ) | 10 | |||||||||||
Total staff | 1,439 | 1,477 | 1,418 | 1,485 | 1,434 | — | (3 | ) | |||||||||||
Professional, legal and other purchased services | 314 | 323 | 390 | 302 | 299 | (5 | ) | (1 | ) | ||||||||||
Software and equipment | 236 | 234 | 235 | 228 | 228 | (3 | ) | — | |||||||||||
Net occupancy | 152 | 154 | 150 | 151 | 149 | (2 | ) | (1 | ) | ||||||||||
Distribution and servicing | 112 | 107 | 102 | 98 | 96 | (14 | ) | (2 | ) | ||||||||||
Sub-custodian | 81 | 67 | 70 | 70 | 75 | (7 | ) | 7 | |||||||||||
Business development | 68 | 61 | 75 | 61 | 72 | 6 | 18 | ||||||||||||
Other | 347 | 250 | 211 | 242 | 250 | (28 | ) | 3 | |||||||||||
Amortization of intangible assets | 75 | 75 | 73 | 66 | 65 | (13 | ) | (2 | ) | ||||||||||
M&I, litigation and restructuring charges | 122 | 220 | 800 | (3 | ) | 59 | N/M | N/M | |||||||||||
Total noninterest expense – GAAP | $ | 2,946 | $ | 2,968 | $ | 3,524 | $ | 2,700 | $ | 2,727 | (7 | )% | 1 | % | |||||
Total staff expense as a percentage of total revenue | 38 | % | 32 | % | 38 | % | 39 | % | 37 | % | |||||||||
Memo: | |||||||||||||||||||
Total noninterest expense excluding amortization of intangible assets, M&I, litigation and restructuring charges and the charge related to investment management funds, net of incentives – Non-GAAP | $ | 2,640 | $ | 2,673 | $ | 2,651 | $ | 2,637 | $ | 2,603 | (1 | )% | (1 | )% |
• | Total noninterest expense excluding amortization of intangible assets, M&I, litigation and restructuring charges, and the charge related to investment management funds, net of incentives (Non-GAAP) decreased 1% year-over-year and sequentially. |
• | The year-over-year decrease reflects lower expenses in all categories, except incentives and business development expense. The lower expenses primarily reflect the favorable impact of a stronger U.S. dollar and the benefit of the business improvement process which focuses on reducing structural costs. |
• | Total staff expense decreased slightly year-over-year primarily reflecting the favorable impact of a stronger U.S. dollar, lower headcount and the impact of curtailing the U.S. pension plan, partially offset by higher incentive expense reflecting better performance. |
• | The sequential decrease primarily reflects lower incentive expense driven by the impact of vesting of long-term stock awards for retirement eligible employees recorded in 1Q15. The decrease was partially offset by higher employee benefits expense reflecting the curtailment gain recorded in 1Q15 and higher business development expenses. |
Page - 10 |
BNY Mellon 2Q15 Earnings Release |
Investment securities portfolio (dollars in millions) | March 31, 2015 | 2Q15 change in unrealized gain (loss) | June 30, 2015 | Fair value as a % of amortized cost (a) | Unrealized gain (loss) | Ratings | ||||||||||||||||||||||||
BB+ and lower | ||||||||||||||||||||||||||||||
Fair value | Amortized cost | Fair value | AAA/ AA- | A+/ A- | BBB+/ BBB- | Not rated | ||||||||||||||||||||||||
Agency RMBS | $ | 51,101 | $ | (431 | ) | $ | 49,983 | $ | 50,018 | 100 | % | $ | 35 | 100 | % | — | % | — | % | — | % | — | % | |||||||
U.S. Treasury | 28,680 | (183 | ) | 24,139 | 24,222 | 100 | 83 | 100 | — | — | — | — | ||||||||||||||||||
Sovereign debt/sovereign guaranteed | 18,469 | (142 | ) | 18,466 | 18,516 | 100 | 50 | 77 | 1 | 22 | — | — | ||||||||||||||||||
Non-agency RMBS (b) | 2,138 | (25 | ) | 1,626 | 2,040 | 81 | 414 | — | 1 | 2 | 90 | 7 | ||||||||||||||||||
Non-agency RMBS | 1,070 | (1 | ) | 1,007 | 1,024 | 94 | 17 | 2 | 9 | 19 | 69 | 1 | ||||||||||||||||||
European floating rate notes | 1,723 | (6 | ) | 1,748 | 1,737 | 99 | (11 | ) | 71 | 22 | — | 7 | — | |||||||||||||||||
Commercial MBS | 5,901 | (49 | ) | 5,866 | 5,888 | 100 | 22 | 94 | 5 | 1 | — | — | ||||||||||||||||||
State and political subdivisions | 5,159 | (29 | ) | 4,492 | 4,548 | 101 | 56 | 77 | 22 | — | — | 1 | ||||||||||||||||||
Foreign covered bonds | 2,804 | (15 | ) | 2,666 | 2,723 | 102 | 57 | 100 | — | — | — | — | ||||||||||||||||||
Corporate bonds | 1,745 | (32 | ) | 1,784 | 1,802 | 101 | 18 | 19 | 69 | 12 | — | — | ||||||||||||||||||
CLO | 2,258 | (4 | ) | 2,241 | 2,245 | 100 | 4 | 100 | — | — | — | — | ||||||||||||||||||
U.S. Government agencies | 1,554 | (5 | ) | 1,858 | 1,856 | 100 | (2 | ) | 100 | — | — | — | — | |||||||||||||||||
Consumer ABS | 3,400 | (1 | ) | 3,347 | 3,348 | 100 | 1 | 100 | — | — | — | — | ||||||||||||||||||
Other (c) | 2,890 | (3 | ) | 3,000 | 3,008 | 100 | 8 | 41 | — | 55 | — | 4 | ||||||||||||||||||
Total investment securities | $ | 128,892 | (d) | $ | (926 | ) | $ | 122,223 | $ | 122,975 | (d) | 100 | % | $ | 752 | (d)(e) | 90 | % | 3 | % | 5 | % | 2 | % | — | % |
(b) | These RMBS were included in the former Grantor Trust and were marked-to-market in 2009. We believe these RMBS would receive higher credit ratings if these ratings incorporated, as additional credit enhancements, the difference between the written-down amortized cost and the current face amount of each of these securities. |
(c) | Includes commercial paper with a fair value of $1.6 billion and $1.7 billion and money market funds with a fair value of $814 million and $779 million at March 31, 2015 and June 30, 2015, respectively. |
(d) | Includes net unrealized losses on derivatives hedging securities available-for-sale of $501 million at March 31, 2015 and $71 million at June 30, 2015. |
(e) | Unrealized gains of $740 million at June 30, 2015 related to available-for-sale securities. |
Page - 11 |
BNY Mellon 2Q15 Earnings Release |
Nonperforming assets (dollars in millions) | June 30, 2014 | March 31, 2015 | June 30, 2015 | ||||||
Loans: | |||||||||
Other residential mortgages | $ | 105 | $ | 111 | $ | 110 | |||
Wealth management loans and mortgages | 12 | 12 | 11 | ||||||
Commercial real estate | 4 | 1 | 1 | ||||||
Commercial | 13 | — | — | ||||||
Foreign | 4 | — | — | ||||||
Total nonperforming loans | 138 | 124 | 122 | ||||||
Other assets owned | 4 | 4 | 5 | ||||||
Total nonperforming assets (a) | $ | 142 | $ | 128 | $ | 127 | |||
Nonperforming assets ratio | 0.24 | % | 0.21 | % | 0.20 | % | |||
Allowance for loan losses/nonperforming loans | 135.5 | 153.2 | 150.0 | ||||||
Total allowance for credit losses/nonperforming loans | 225.4 | 228.2 | 227.9 |
(a) | Loans of consolidated investment management funds are not part of BNY Mellon’s loan portfolio. Included in the loans of consolidated investment management funds are nonperforming loans of $68 million at June 30, 2014. These loans are recorded at fair value and therefore do not impact the provision for credit losses and allowance for loan losses, and accordingly are excluded from the nonperforming assets table above. In 2Q15, BNY Mellon adopted the new accounting guidance included in ASU 2015-02, Consolidations. As a result, we deconsolidated substantially all of the loans of consolidated investment management funds retroactively to Jan. 1, 2015. See page 24 for additional information on the new accounting guidance. |
Allowance for credit losses, provision and net charge-offs (in millions) | June 30, 2014 | March 31, 2015 | June 30, 2015 | ||||||
Allowance for credit losses - beginning of period | $ | 326 | $ | 280 | $ | 283 | |||
Provision for credit losses | (12 | ) | 2 | (6 | ) | ||||
Net (charge-offs) recoveries: | |||||||||
Financial institutions | — | — | 1 | ||||||
Other residential mortgages | (1 | ) | 1 | — | |||||
Commercial | 1 | — | — | ||||||
Wealth management loans and mortgages | (1 | ) | — | — | |||||
Foreign | (2 | ) | — | — | |||||
Net (charge-offs) recoveries | (3 | ) | 1 | 1 | |||||
Allowance for credit losses - end of period | $ | 311 | $ | 283 | $ | 278 | |||
Allowance for loan losses | $ | 187 | $ | 190 | $ | 183 | |||
Allowance for lending-related commitments | 124 | 93 | 95 |
Page - 12 |
BNY Mellon 2Q15 Earnings Release |
Capital ratios | Dec. 31, 2014 | March 31, 2015 | June 30, 2015 | |||
Consolidated regulatory capital ratios: (a)(b)(c) | ||||||
CET1 ratio | 11.2 | % | 10.8 | % | 10.9 | % |
Tier 1 capital ratio | 12.2 | 11.7 | 12.4 | |||
Total (Tier 1 plus Tier 2) capital ratio | 12.5 | 12.0 | 12.7 | |||
Leverage capital ratio | 5.6 | 5.7 | 5.8 | |||
BNY Mellon shareholders’ equity to total assets ratio – GAAP (b)(d) | 9.7 | 9.5 | 9.7 | |||
BNY Mellon common shareholders’ equity to total assets ratio – GAAP (b)(d) | 9.3 | 9.1 | 9.0 | |||
BNY Mellon tangible common shareholders’ equity to tangible assets of operations ratio – Non-GAAP (d) | 6.5 | 6.0 | 6.2 | |||
Selected regulatory capital ratios – fully phased-in – Non-GAAP: (a)(b) | ||||||
Estimated CET1 ratio: | ||||||
Standardized Approach | 10.6 | 10.0 | 10.0 | |||
Advanced Approach | 9.8 | 9.9 | 9.9 | |||
Estimated supplementary leverage ratio (“SLR”) | 4.4 | 4.6 | 4.6 |
(a) | Regulatory capital ratios for June 30, 2015 are preliminary. |
(b) | Capital ratios for the first quarter of 2015 were revised to reflect the retrospective application of adopting new accounting guidance in 2Q15 related to Consolidations (ASU 2015-02). As a result of the new accounting guidance, the RWA as of March 31, 2015 decreased $13.3 billion under the Advanced Approach and $7.0 billion under the Standardized Approach. See page 24 for additional information on the new accounting guidance. |
(c) | At Dec. 31, 2014, the CET1, Tier 1 and Total risk-based consolidated regulatory capital ratios determined under the transitional Standardized Approach were 15.0%, 16.3% and 16.9%, and were calculated based on Basel III components of capital, as phased-in, and asset risk-weightings using Basel I-based requirements. At March 31, 2015 and June 30, 2015, the CET1, Tier 1 and Total risk-based consolidated regulatory capital ratios determined under the transitional Basel III Standardized Approach were 11.2%, 12.2%, and 12.7%, and 11.3%, 12.9% and 13.4%, respectively. Additionally, the capital ratios determined under the transitional Basel III Standardized Approach for March 31, 2015 were revised to reflect the new accounting guidance related to Consolidations. |
(d) | See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 25 for a reconciliation of these ratios. |
Estimated Basel III CET1 generation presented on a fully phased-in basis – Non-GAAP – preliminary | |||
(in millions) | 2Q15 | ||
Estimated fully phased-in Basel III CET1 – Non-GAAP – Beginning of period | $ | 16,123 | |
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | 830 | ||
Goodwill and intangible assets, net of related deferred tax liabilities | (129 | ) | |
Gross Basel III CET1 generated | 701 | ||
Capital deployed: | |||
Dividends | (192 | ) | |
Common stock repurchased | (834 | ) | |
Total capital deployed | (1,026 | ) | |
Other comprehensive (loss) | (43 | ) | |
Additional paid-in capital (a) | 191 | ||
Other (primarily cash flow hedges) | (15 | ) | |
Total other additions | 133 | ||
Net Basel III CET1 generated | (192 | ) | |
Estimated fully phased-in Basel III CET1 – Non-GAAP – End of period | $ | 15,931 |
Page - 13 |
BNY Mellon 2Q15 Earnings Release |
Basel III capital components and ratios at June 30, 2015 – preliminary | Fully phased-in Basel III - Non-GAAP | Transitional Approach (a) | |||||
(dollars in millions) | |||||||
CET1: | |||||||
Common shareholders’ equity | $ | 35,718 | $ | 36,253 | |||
Goodwill and intangible assets | (19,277 | ) | (17,584 | ) | |||
Net pension fund assets | (109 | ) | (44 | ) | |||
Equity method investments | (374 | ) | (315 | ) | |||
Deferred tax assets | (18 | ) | (7 | ) | |||
Other | (9 | ) | (5 | ) | |||
Total CET1 | 15,931 | 18,298 | |||||
Other Tier 1 capital: | |||||||
Preferred stock | 2,552 | 2,552 | |||||
Trust preferred securities | — | 79 | |||||
Disallowed deferred tax assets | — | (11 | ) | ||||
Net pension fund assets | — | (65 | ) | ||||
Other | (7 | ) | (11 | ) | |||
Total Tier 1 capital | 18,476 | 20,842 | |||||
Tier 2 capital: | |||||||
Trust preferred securities | — | 236 | |||||
Subordinated debt | 248 | 248 | |||||
Allowance for credit losses | 278 | 278 | |||||
Other | (6 | ) | (7 | ) | |||
Total Tier 2 capital - Standardized Approach | 520 | 755 | |||||
Excess of expected credit losses | 12 | 12 | |||||
Less: Allowance for credit losses | 278 | 278 | |||||
Total Tier 2 capital - Advanced Approach | $ | 254 | $ | 489 | |||
Total capital: | |||||||
Standardized Approach | $ | 18,996 | $ | 21,597 | |||
Advanced Approach | $ | 18,730 | $ | 21,331 | |||
Risk-weighted assets: | |||||||
Standardized Approach | $ | 160,031 | $ | 161,825 | |||
Advanced Approach | $ | 160,505 | $ | 167,562 | |||
Standardized Approach: | |||||||
Estimated Basel III CET1 ratio | 10.0 | % | 11.3 | % | |||
Tier 1 capital ratio | 11.6 | 12.9 | |||||
Total (Tier 1 plus Tier 2) capital ratio | 11.9 | 13.4 | |||||
Advanced Approach: | |||||||
Estimated Basel III CET1 ratio | 9.9 | % | 10.9 | % | |||
Tier 1 capital ratio | 11.5 | 12.4 | |||||
Total (Tier 1 plus Tier 2) capital ratio | 11.7 | 12.7 |
Page - 14 |
BNY Mellon 2Q15 Earnings Release |
Estimated fully phased-in SLR – Non-GAAP (a) (dollars in millions) | Dec. 31, 2014 | March 31, 2015 | June 30, 2015 | (b) | ||||||
Total estimated fully phased-in Basel III CET1 – Non-GAAP | $ | 15,931 | $ | 16,123 | $ | 15,931 | ||||
Additional Tier 1 capital | 1,550 | 1,560 | 2,545 | |||||||
Total Tier 1 capital | $ | 17,481 | $ | 17,683 | $ | 18,476 | ||||
Total leverage exposure: | ||||||||||
Quarterly average total assets (c) | $ | 385,232 | $ | 368,411 | $ | 378,293 | ||||
Less: Amounts deducted from Tier 1 capital | 19,947 | 19,644 | 19,779 | |||||||
Total on-balance sheet assets, as adjusted (c) | 365,285 | 348,767 | 358,514 | |||||||
Off-balance sheet exposures: | ||||||||||
Potential future exposure for derivatives contracts (plus certain other items) | 11,376 | 9,295 | 9,222 | |||||||
Repo-style transaction exposures included in SLR | 302 | 6,474 | 6,589 | |||||||
Credit-equivalent amount of other off-balance sheet exposures (less SLR exclusions) | 21,850 | 22,046 | 27,251 | |||||||
Total off-balance sheet exposures | 33,528 | 37,815 | 43,062 | |||||||
Total leverage exposure (c) | $ | 398,813 | $ | 386,582 | $ | 401,576 | ||||
Estimated fully phased-in SLR – Non-GAAP (c) | 4.4 | % | 4.6 | % | 4.6 | % |
(a) | The estimated fully phased-in SLR (Non-GAAP) is based on our interpretation of the U.S. capital rules. When the SLR is fully phased-in, we expect to maintain an SLR of over 5%. The minimum required SLR is 3% and there is a 2% buffer, in addition to the minimum, that is applicable to U.S. G-SIBs. |
(b) | June 30, 2015 information is preliminary. |
(c) | The first quarter of 2015 was restated to reflect the retrospective application of adopting new accounting guidance related to Consolidations (ASU 2015-02). |
• | The SLR increased slightly on a sequential basis, as both total Tier 1 capital and total leverage exposure increased. |
• | The increase in total Tier 1 capital was driven by the issuance of preferred stock. |
• | The increase in leverage exposure was driven by: |
• | an increase in average total assets, primarily interest-earning assets, as a result of higher average deposits and securities sold under repurchase agreements. |
• | an increase in the credit equivalent amount of other off-balance sheet exposures primarily from the secured intraday credit provided to dealers in connection with their tri-party repo activity. |
Page - 15 |
BNY Mellon 2Q15 Earnings Release |
(dollars in millions, unless otherwise noted) | 2Q15 vs. | |||||||||||||||||||
2Q14 | 3Q14 | 4Q14 | 1Q15 | 2Q15 | 2Q14 | 1Q15 | ||||||||||||||
Revenue: | ||||||||||||||||||||
Investment management fees: | ||||||||||||||||||||
Mutual funds | $ | 311 | $ | 315 | $ | 306 | $ | 301 | $ | 307 | (1 | )% | 2 | % | ||||||
Institutional clients | 385 | 382 | 375 | 376 | 376 | (2 | ) | — | ||||||||||||
Wealth management | 156 | 158 | 157 | 158 | 161 | 3 | 2 | |||||||||||||
Investment management fees | 852 | 855 | 838 | 835 | 844 | (1 | ) | 1 | ||||||||||||
Performance fees | 29 | 22 | 44 | 15 | 20 | (31 | ) | N/M | ||||||||||||
Investment management and performance fees | 881 | 877 | 882 | 850 | 864 | (2 | ) | 2 | ||||||||||||
Distribution and servicing | 41 | 41 | 40 | 39 | 37 | (10 | ) | (5 | ) | |||||||||||
Other (a) | 48 | 16 | 7 | 47 | 25 | N/M | N/M | |||||||||||||
Total fee and other revenue (a) | 970 | 934 | 929 | 936 | 926 | (5 | ) | (1 | ) | |||||||||||
Net interest revenue | 66 | 69 | 69 | 74 | 78 | 18 | 5 | |||||||||||||
Total revenue | 1,036 | 1,003 | 998 | 1,010 | 1,004 | (3 | ) | (1 | ) | |||||||||||
Noninterest expense (ex. amortization of intangible assets and the charge related to investment management funds, net of incentives) | 725 | 727 | 729 | 721 | 714 | (2 | ) | (1 | ) | |||||||||||
Income before taxes (ex. amortization of intangible assets and the charge related to investment management funds, net of incentives) | 311 | 276 | 269 | 289 | 290 | (7 | ) | — | ||||||||||||
Amortization of intangible assets | 31 | 31 | 30 | 25 | 25 | (19 | ) | — | ||||||||||||
Charge related to investment management funds, net of incentives | 109 | — | — | — | — | N/M | N/M | |||||||||||||
Income before taxes | $ | 171 | $ | 245 | $ | 239 | $ | 264 | $ | 265 | 55 | % | — | % | ||||||
Pre-tax operating margin | 16 | % | 24 | % | 24 | % | 26 | % | 26 | % | ||||||||||
Adjusted pre-tax operating margin (b) | 36 | % | 33 | % | 32 | % | 34 | % | 34 | % | ||||||||||
Changes in AUM (in billions): (c) | ||||||||||||||||||||
Beginning balance of AUM | $ | 1,620 | $ | 1,636 | $ | 1,646 | $ | 1,710 | $ | 1,741 | ||||||||||
Net inflows (outflows): | ||||||||||||||||||||
Long-term: | ||||||||||||||||||||
Equity | (4 | ) | (2 | ) | (4 | ) | (6 | ) | (12 | ) | ||||||||||
Fixed income | (1 | ) | — | 4 | 4 | (2 | ) | |||||||||||||
Index | 7 | (3 | ) | 1 | 8 | (9 | ) | |||||||||||||
Liability-driven investments (d) | (17 | ) | 18 | 24 | 8 | 5 | ||||||||||||||
Alternative investments | 2 | — | 2 | 2 | 3 | |||||||||||||||
Total long-term inflows (outflows) | (13 | ) | 13 | 27 | 16 | (15 | ) | |||||||||||||
Short term: | ||||||||||||||||||||
Cash | (18 | ) | 19 | 5 | 1 | (11 | ) | |||||||||||||
Total net inflows (outflows) | (31 | ) | 32 | 32 | 17 | (26 | ) | |||||||||||||
Net market/currency impact/acquisition | 47 | (22 | ) | 32 | 14 | 9 | ||||||||||||||
Ending balance of AUM | $ | 1,636 | $ | 1,646 | $ | 1,710 | $ | 1,741 | $ | 1,724 | (e) | 5 | % | (1 | )% | |||||
AUM at period end, by product type: (c) | ||||||||||||||||||||
Equity | 17 | % | 16 | % | 16 | % | 15 | % | 15 | % | ||||||||||
Fixed income | 14 | 13 | 13 | 13 | 13 | |||||||||||||||
Index | 21 | 21 | 21 | 22 | 21 | |||||||||||||||
Liability-driven investments (d) | 27 | 28 | 29 | 29 | 30 | |||||||||||||||
Alternative investments | 4 | 4 | 4 | 4 | 4 | |||||||||||||||
Cash | 17 | 18 | 17 | 17 | 17 | |||||||||||||||
Total AUM | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | (e) | |||||||||
Average balances: | ||||||||||||||||||||
Average loans | $ | 10,372 | $ | 10,772 | $ | 11,124 | $ | 11,634 | $ | 12,298 | 19 | % | 6 | % | ||||||
Average deposits | $ | 13,458 | $ | 13,764 | $ | 14,604 | $ | 15,218 | $ | 14,640 | 9 | % | (4 | )% |
(a) | Total fee and other revenue includes the impact of the consolidated investment management funds, net of noncontrolling interests. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 25 for the reconciliation of Non-GAAP measures. Additionally, other revenue includes asset servicing, treasury services, foreign exchange and other trading revenue and investment and other income. |
(b) | Excludes the net negative impact of money market fee waivers, amortization of intangible assets and the charge related to investment management funds, net of incentives, and is net of distribution and servicing expense. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 25 for the reconciliation of this Non-GAAP measure. |
(c) | Excludes securities lending cash management assets and assets managed in the Investment Services business. |
(d) | Includes currency overlay assets under management. |
(e) | Preliminary. |
Page - 16 |
BNY Mellon 2Q15 Earnings Release |
• | Assets under management were $1.72 trillion at June 30, 2015, an increase of 5% year-over-year and a decrease of 1% sequentially. The year-over-year increase primarily resulted from higher market values, net new business and the Cutwater acquisition, partially offset by the unfavorable impact of a stronger U.S. dollar. |
• | Net long-term outflows were $15 billion in 2Q15 driven by equity, index and fixed income investments, partially offset by liability-driven and alternative investments. |
• | Net short-term outflows were $11 billion in 2Q15. |
• | Income before taxes excluding amortization of intangible assets and the charge related to investment management funds, net of incentives decreased 7% year-over-year and increased slightly on a sequential basis. |
• | Total revenue was $1.0 billion, a decrease of 3% year-over-year and 1% sequentially. The year-over-year decrease primarily reflects the unfavorable impact of a stronger U.S. dollar and lower performance fees, partially offset by the impact of the 1Q15 acquisition of Cutwater and strategic initiatives. Both decreases also reflect lower seed capital gains, partially offset by higher equity market values. |
• | 43% non-U.S. revenue in 2Q15 vs. 45% in 2Q14. |
• | Investment management fees were $844 million, a decrease of 1% year-over-year, or an increase of 5% on a constant currency basis (Non-GAAP). The increase was primarily driven by higher equity market values, the impact of the 1Q15 acquisition of Cutwater and strategic initiatives. Sequentially, investment management fees increased 1% reflecting higher equity market values. |
• | Performance fees were $20 million in 2Q15 compared with $29 million in 2Q14 and $15 million in 1Q15. |
• | Other revenue was $25 million in 2Q15 compared with $48 million in 2Q14 and $47 million in 1Q15. Both decreases primarily reflect lower seed capital gains, partially offset by gains on hedging activities within a boutique. |
• | Net interest revenue increased 18% year-over-year and 5% sequentially. Both increases primarily reflect higher loan levels. The year-over-year increase also reflects higher average deposits. |
• | Average loans increased 19% year-over-year and 6% sequentially; average deposits increased 9% year-over-year and decreased 4% sequentially. |
• | Total noninterest expense (excluding amortization of intangible assets and the charge related to investment management funds, net of incentives) decreased 2% year-over-year and 1% sequentially. The year-over-year decrease primarily reflects the favorable impact of a stronger U.S. dollar and lower distribution and servicing expense, partially offset by the impact of the Cutwater acquisition and investments in strategic initiatives. The sequential decrease primarily reflects lower incentive expense. |
Page - 17 |
BNY Mellon 2Q15 Earnings Release |
(dollars in millions, unless otherwise noted) | 2Q15 vs. | |||||||||||||||||||
2Q14 | 3Q14 | 4Q14 | 1Q15 | 2Q15 | 2Q14 | 1Q15 | ||||||||||||||
Revenue: | ||||||||||||||||||||
Investment services fees: | ||||||||||||||||||||
Asset servicing | $ | 993 | $ | 998 | $ | 992 | $ | 1,013 | $ | 1,035 | 4 | % | 2 | % | ||||||
Clearing services | 324 | 336 | 346 | 342 | 346 | 7 | 1 | |||||||||||||
Issuer services | 231 | 314 | 193 | 231 | 234 | 1 | 1 | |||||||||||||
Treasury services | 140 | 139 | 142 | 135 | 141 | 1 | 4 | |||||||||||||
Total investment services fees | 1,688 | 1,787 | 1,673 | 1,721 | 1,756 | 4 | 2 | |||||||||||||
Foreign exchange and other trading revenue | 145 | 159 | 165 | 209 | 179 | 23 | (14 | ) | ||||||||||||
Other (a) | 87 | 59 | 69 | 63 | 85 | (2 | ) | 35 | ||||||||||||
Total fee and other revenue | 1,920 | 2,005 | 1,907 | 1,993 | 2,020 | 5 | 1 | |||||||||||||
Net interest revenue | 593 | 583 | 574 | 600 | 635 | 7 | 6 | |||||||||||||
Total revenue | 2,513 | 2,588 | 2,481 | 2,593 | 2,655 | 6 | 2 | |||||||||||||
Noninterest expense (ex. amortization of intangible assets) | 1,824 | 1,835 | 2,512 | 1,797 | 1,841 | 1 | 2 | |||||||||||||
Income (loss) before taxes (ex. amortization of intangible assets) | 689 | 753 | (31 | ) | 796 | 814 | 18 | 2 | ||||||||||||
Amortization of intangible assets | 44 | 44 | 43 | 41 | 40 | (9 | ) | (2 | ) | |||||||||||
Income (loss) before taxes | $ | 645 | $ | 709 | $ | (74 | ) | $ | 755 | $ | 774 | 20 | % | 3 | % | |||||
Pre-tax operating margin | 26 | % | 27 | % | (3 | )% | 29 | % | 29 | % | ||||||||||
Pre-tax operating margin (ex. amortization of intangible assets) | 27 | % | 29 | % | (1 | )% | 31 | % | 31 | % | ||||||||||
Investment services fees as a percentage of noninterest expense (b) | 93 | % | 100 | % | 92 | % | 96 | % | 98 | % | ||||||||||
Securities lending revenue | $ | 35 | $ | 27 | $ | 28 | $ | 34 | $ | 40 | 14 | % | 18 | % | ||||||
Metrics: | ||||||||||||||||||||
Average loans | $ | 33,115 | $ | 33,785 | $ | 35,448 | $ | 37,699 | $ | 38,264 | 16 | % | 1 | % | ||||||
Average deposits | $ | 220,701 | $ | 221,734 | $ | 228,282 | $ | 234,183 | $ | 237,193 | 7 | % | 1 | % | ||||||
AUC/A at period end (in trillions) (c) | $ | 28.5 | $ | 28.3 | $ | 28.5 | $ | 28.5 | $ | 28.6 | (d) | — | % | — | % | |||||
Market value of securities on loan at period end (in billions) (e) | $ | 280 | $ | 282 | $ | 289 | $ | 291 | $ | 283 | 1 | % | (3 | )% | ||||||
Asset servicing: | ||||||||||||||||||||
Estimated new business wins (AUC/A) (in billions) | $ | 130 | $ | 115 | $ | 130 | $ | 131 | $ | 1,024 | (d) | |||||||||
Depositary Receipts: | ||||||||||||||||||||
Number of sponsored programs | 1,316 | 1,302 | 1,279 | 1,258 | 1,206 | (8 | )% | (4 | )% | |||||||||||
Clearing services: | ||||||||||||||||||||
Global DARTS volume (in thousands) | 207 | 209 | 242 | 261 | 242 | 17 | % | (7 | )% | |||||||||||
Average active clearing accounts (U.S. platform) (in thousands) | 5,752 | 5,805 | 5,900 | 5,979 | 6,046 | 5 | % | 1 | % | |||||||||||
Average long-term mutual fund assets (U.S. platform) | $ | 433,047 | $ | 442,827 | $ | 450,305 | $ | 456,954 | $ | 466,195 | 8 | % | 2 | % | ||||||
Average investor margin loans (U.S. platform) | $ | 9,236 | $ | 9,861 | $ | 10,711 | $ | 11,232 | $ | 11,890 | 29 | % | 6 | % | ||||||
Broker-Dealer: | ||||||||||||||||||||
Average tri-party repo balances (in billions) | $ | 2,022 | $ | 2,063 | $ | 2,101 | $ | 2,153 | $ | 2,174 | 8 | % | 1 | % |
(a) | Other revenue includes investment management fees, financing-related fees, distribution and servicing revenue, and investment and other income. |
(b) | Noninterest expense excludes amortization of intangible assets and litigation expense. |
(c) | Includes the AUC/A of CIBC Mellon of $1.2 trillion at June 30, 2014 and Sept. 30, 2014 and $1.1 trillion at Dec. 31, 2014, March 31, 2015 and June 30, 2015. |
(d) | Preliminary. |
(e) | Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $64 billion at June 30, 2014, $65 billion at Sept. 30, 2014 and Dec. 31, 2014, $69 billion at March 31, 2015 and $68 billion at June 30, 2015. |
Page - 18 |
BNY Mellon 2Q15 Earnings Release |
• | Income before taxes excluding amortization of intangible assets totaled $814 million, an increase of 18% year-over-year. |
• | The pre-tax operating margin excluding amortization of intangible assets was 31% in 2Q15 and the investment services fees as a percentage of noninterest expense was 98% in 2Q15, reflecting the continued focus on driving operating leverage. |
• | Investment services fees totaled $1.8 billion, an increase of 4% year-over-year and 2% sequentially. |
• | Asset servicing fees (global custody, broker-dealer services and global collateral services) were $1.04 billion in 2Q15 compared with $993 million in 2Q14 and $1.01 billion in 1Q15. The year-over-year increase primarily reflects organic growth, due in part to Global Collateral Services, net new business and higher market values, partially offset by the unfavorable impact of a stronger U.S. dollar. The sequential increase primarily reflects organic growth and seasonally higher securities lending revenue. |
• | Clearing services fees were $346 million in 2Q15 compared with $324 million in 2Q14 and $342 million in 1Q15. The year-over-year increase was primarily driven by higher mutual fund and asset-based fees, clearance revenue and custody fees. The sequential increase was primarily driven by two additional trading days in 2Q15. |
• | Issuer services fees (Corporate Trust and Depositary Receipts) were $234 million in 2Q15 compared with $231 million in both 2Q14 and 1Q15. Both increases primarily reflect higher Depositary Receipts revenue, partially offset by lower Corporate Trust fees. The year-over-year decrease in Corporate Trust fees primarily reflects the unfavorable impact of a stronger U.S. dollar. |
• | Treasury services fees were $141 million in 2Q15 compared with $140 million in 2Q14 and $135 million in 1Q15. The year-over-year increase primarily reflects higher payment volumes. The sequential increase primarily reflects three additional business days in 2Q15. |
• | Foreign exchange and other trading revenue was $179 million in 2Q15 compared with $145 million in 2Q14 and $209 million in 1Q15. The year-over-year increase primarily reflects higher volatility and volumes, as well as higher Depositary Receipts-related activity. The sequential decrease primarily reflects the benefit of unusually high volatility in 1Q15. |
• | Net interest revenue was $635 million in 2Q15 compared with $593 million in 2Q14 and $600 million in 1Q15. Both increases primarily reflect higher average deposits and higher internal crediting rates for deposits. |
• | Noninterest expense (excluding amortization of intangible assets) was $1.84 billion in 2Q15 compared with $1.82 billion in 2Q14 and $1.80 billion in 1Q15. The year-over-year increase reflects higher litigation expense, partially offset by lower consulting expense and the favorable impact of a stronger U.S. dollar. The sequential increase primarily reflects higher litigation expense. |
Page - 19 |
BNY Mellon 2Q15 Earnings Release |
(dollars in millions) | 2Q14 | 3Q14 | 4Q14 | 1Q15 | 2Q15 | ||||||||||
Revenue: | |||||||||||||||
Fee and other revenue | $ | 119 | $ | 928 | $ | 117 | $ | 104 | $ | 124 | |||||
Net interest revenue | 60 | 69 | 69 | 54 | 66 | ||||||||||
Total revenue | 179 | 997 | 186 | 158 | 190 | ||||||||||
Provision for credit losses | (12 | ) | (19 | ) | 1 | 2 | (6 | ) | |||||||
Noninterest expense (ex. M&I and restructuring charges) | 93 | 274 | 210 | 120 | 98 | ||||||||||
Income (loss) before taxes (ex. M&I and restructuring charges) | 98 | 742 | (25 | ) | 36 | 98 | |||||||||
M&I and restructuring charges (recoveries) | 120 | 57 | — | (4 | ) | 8 | |||||||||
Income (loss) before taxes | $ | (22 | ) | $ | 685 | $ | (25 | ) | $ | 40 | $ | 90 | |||
Average loans and leases | $ | 9,962 | $ | 10,278 | $ | 10,272 | $ | 8,602 | $ | 10,515 |
• | Total fee and other revenue increased $5 million compared with 2Q14 and $20 million compared with 1Q15. Both increases primarily reflect higher leasing gains. The year-over-year increase also reflected higher other trading revenue, which was more than offset by lower other revenue. The sequential increase was partially offset by lower other trading revenue and net securities gains. |
• | Net interest revenue increased $6 million compared with 2Q14 and $12 million compared with 1Q15. Both increases primarily reflect higher interest-earning assets, partially offset by higher internal crediting rates to the business for deposits. |
• | Noninterest expense (excluding M&I and restructuring charges) increased $5 million compared with 2Q14 and decreased $22 million compared with 1Q15. The year-over-year increase primarily reflects higher corporate donations. The sequential decrease was driven by lower incentive expense driven by the impact of vesting of long-term stock awards for retirement eligible employees recorded in 1Q15, partially offset by higher employee benefits expense reflecting the curtailment gain also recorded in 1Q15. |
Page - 20 |
BNY Mellon 2Q15 Earnings Release |
(in millions) | Quarter ended | Year-to-date | ||||||||||||||
June 30, 2015 | March 31, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | ||||||||||||
Fee and other revenue | ||||||||||||||||
Investment services fees: | ||||||||||||||||
Asset servicing | $ | 1,060 | $ | 1,038 | $ | 1,022 | $ | 2,098 | $ | 2,031 | ||||||
Clearing services | 347 | 344 | 326 | 691 | 651 | |||||||||||
Issuer services | 234 | 232 | 231 | 466 | 460 | |||||||||||
Treasury services | 144 | 137 | 141 | 281 | 277 | |||||||||||
Total investment services fees | 1,785 | 1,751 | 1,720 | 3,536 | 3,419 | |||||||||||
Investment management and performance fees (a) | 878 | 867 | 883 | 1,745 | 1,726 | |||||||||||
Foreign exchange and other trading revenue | 187 | 229 | 130 | 416 | 266 | |||||||||||
Financing-related fees | 58 | 40 | 44 | 98 | 82 | |||||||||||
Distribution and servicing | 39 | 41 | 43 | 80 | 86 | |||||||||||
Investment and other income (a) | 104 | 60 | 142 | 164 | 244 | |||||||||||
Total fee revenue (a) | 3,051 | 2,988 | 2,962 | 6,039 | 5,823 | |||||||||||
Net securities gains | 16 | 24 | 18 | 40 | 40 | |||||||||||
Total fee and other revenue (a) | 3,067 | 3,012 | 2,980 | 6,079 | 5,863 | |||||||||||
Operations of consolidated investment management funds | ||||||||||||||||
Investment income (a) | 46 | 56 | 141 | 102 | 279 | |||||||||||
Interest of investment management fund note holders (a) | 6 | 4 | 95 | 10 | 197 | |||||||||||
Income from consolidated investment management funds (a) | 40 | 52 | 46 | 92 | 82 | |||||||||||
Net interest revenue | ||||||||||||||||
Interest revenue | 847 | 807 | 811 | 1,654 | 1,623 | |||||||||||
Interest expense | 68 | 79 | 92 | 147 | 176 | |||||||||||
Net interest revenue | 779 | 728 | 719 | 1,507 | 1,447 | |||||||||||
Provision for credit losses | (6 | ) | 2 | (12 | ) | (4 | ) | (30 | ) | |||||||
Net interest revenue after provision for credit losses | 785 | 726 | 731 | 1,511 | 1,477 | |||||||||||
Noninterest expense | ||||||||||||||||
Staff | 1,434 | 1,485 | 1,439 | 2,919 | 2,950 | |||||||||||
Professional, legal and other purchased services | 299 | 302 | 314 | 601 | 626 | |||||||||||
Software and equipment | 228 | 228 | 236 | 456 | 473 | |||||||||||
Net occupancy | 149 | 151 | 152 | 300 | 306 | |||||||||||
Distribution and servicing | 96 | 98 | 112 | 194 | 219 | |||||||||||
Sub-custodian | 75 | 70 | 81 | 145 | 149 | |||||||||||
Business development | 72 | 61 | 68 | 133 | 132 | |||||||||||
Other | 250 | 242 | 347 | 492 | 570 | |||||||||||
Amortization of intangible assets | 65 | 66 | 75 | 131 | 150 | |||||||||||
Merger and integration, litigation and restructuring charges | 59 | (3 | ) | 122 | 56 | 110 | ||||||||||
Total noninterest expense | 2,727 | 2,700 | 2,946 | 5,427 | 5,685 | |||||||||||
Income | ||||||||||||||||
Income before income taxes (a) | 1,165 | 1,090 | 811 | 2,255 | 1,737 | |||||||||||
Provision for income taxes | 276 | 280 | 217 | 556 | 449 | |||||||||||
Net income (a) | 889 | 810 | 594 | 1,699 | 1,288 | |||||||||||
Net (income) attributable to noncontrolling interests (includes $(37), $(31), $(17), $(68) and $(37) related to consolidated investment management funds, respectively) (a) | (36 | ) | (31 | ) | (17 | ) | (67 | ) | (37 | ) | ||||||
Net income applicable to shareholders of The Bank of New York Mellon Corporation | 853 | 779 | 577 | 1,632 | 1,251 | |||||||||||
Preferred stock dividends | (23 | ) | (13 | ) | (23 | ) | (36 | ) | (36 | ) | ||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 830 | $ | 766 | $ | 554 | $ | 1,596 | $ | 1,215 |
(a) | The first quarter of 2015 was restated to reflect the retrospective application of adopting new accounting guidance related to Consolidations (ASU 2015-02). See page 24 for additional information. |
Page - 21 |
BNY Mellon 2Q15 Earnings Release |
Net income applicable to common shareholders of The Bank of New York Mellon Corporation used for the earnings per share calculation (in millions) | Quarter ended | Year-to-date | ||||||||||||||
June 30, 2015 | March 31, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | ||||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 830 | $ | 766 | $ | 554 | $ | 1,596 | $ | 1,215 | ||||||
Less: Earnings allocated to participating securities | 9 | 12 | 10 | 24 | 23 | |||||||||||
Net income applicable to the common shareholders of The Bank of New York Mellon Corporation after required adjustments for the calculation of basic and diluted earnings per common share | $ | 821 | $ | 754 | $ | 544 | $ | 1,572 | $ | 1,192 |
Average common shares and equivalents outstanding of The Bank of New York Mellon Corporation (in thousands) | Quarter ended | Year-to-date | |||||||||
June 30, 2015 | March 31, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | |||||||
Basic | 1,113,790 | 1,118,602 | 1,133,556 | 1,116,183 | 1,136,086 | ||||||
Diluted | 1,122,135 | 1,126,306 | 1,139,800 | 1,124,154 | 1,141,948 |
Earnings per share applicable to the common shareholders of The Bank of New York Mellon Corporation (in dollars) | Quarter ended | Year-to-date | ||||||||||||||
June 30, 2015 | March 31, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | ||||||||||||
Basic | $ | 0.74 | $ | 0.67 | $ | 0.48 | $ | 1.41 | $ | 1.05 | ||||||
Diluted | $ | 0.73 | $ | 0.67 | $ | 0.48 | $ | 1.40 | $ | 1.04 |
Page - 22 |
BNY Mellon 2Q15 Earnings Release |
(dollars in millions, except per share amounts) | June 30, 2015 | March 31, 2015 | Dec. 31, 2014 | |||||||
Assets | ||||||||||
Cash and due from: | ||||||||||
Banks | $ | 8,354 | $ | 7,167 | $ | 6,970 | ||||
Interest-bearing deposits with the Federal Reserve and other central banks | 104,407 | 89,704 | 96,682 | |||||||
Interest-bearing deposits with banks | 19,179 | 18,937 | 19,495 | |||||||
Federal funds sold and securities purchased under resale agreements | 23,930 | 28,268 | 20,302 | |||||||
Securities: | ||||||||||
Held-to-maturity (fair value of $43,438, $41,676 and $21,127) | 43,426 | 41,237 | 20,933 | |||||||
Available-for-sale | 79,608 | 87,717 | 98,330 | |||||||
Total securities | 123,034 | 128,954 | 119,263 | |||||||
Trading assets | 7,568 | 9,505 | 9,881 | |||||||
Loans | 63,138 | 62,326 | 59,132 | |||||||
Allowance for loan losses | (183 | ) | (190 | ) | (191 | ) | ||||
Net loans | 62,955 | 62,136 | 58,941 | |||||||
Premises and equipment | 1,412 | 1,410 | 1,394 | |||||||
Accrued interest receivable | 574 | 557 | 607 | |||||||
Goodwill | 17,807 | 17,663 | 17,869 | |||||||
Intangible assets | 4,000 | 4,047 | 4,127 | |||||||
Other assets (a) | 21,074 | 22,308 | 20,490 | |||||||
Subtotal assets of operations (a) | 394,294 | 390,656 | 376,021 | |||||||
Assets of consolidated investment management funds, at fair value: | ||||||||||
Trading assets (a) | 2,012 | 1,496 | 8,678 | |||||||
Other assets (a) | 219 | 185 | 604 | |||||||
Subtotal assets of consolidated investment management funds, at fair value (a) | 2,231 | 1,681 | 9,282 | |||||||
Total assets (a) | $ | 396,525 | $ | 392,337 | $ | 385,303 | ||||
Liabilities | ||||||||||
Deposits: | ||||||||||
Noninterest-bearing (principally U.S. offices) | $ | 114,810 | $ | 111,622 | $ | 104,240 | ||||
Interest-bearing deposits in U.S. offices | 58,312 | 60,624 | 53,236 | |||||||
Interest-bearing deposits in Non-U.S. offices | 112,579 | 109,013 | 108,393 | |||||||
Total deposits | 285,701 | 281,259 | 265,869 | |||||||
Federal funds purchased and securities sold under repurchase agreements | 10,020 | 7,919 | 11,469 | |||||||
Trading liabilities | 5,418 | 7,342 | 7,434 | |||||||
Payables to customers and broker-dealers | 22,050 | 21,959 | 21,181 | |||||||
Commercial paper | — | — | — | |||||||
Other borrowed funds | 706 | 869 | 786 | |||||||
Accrued taxes and other expenses | 6,522 | 6,258 | 6,903 | |||||||
Other liabilities (includes allowance for lending-related commitments of $95, $93 and $89) | 5,427 | 7,581 | 5,025 | |||||||
Long-term debt | 20,375 | 20,401 | 20,264 | |||||||
Subtotal liabilities of operations | 356,219 | 353,588 | 338,931 | |||||||
Liabilities of consolidated investment management funds, at fair value: | ||||||||||
Trading liabilities (a) | 770 | 264 | 7,660 | |||||||
Other liabilities (a) | 112 | 106 | 9 | |||||||
Subtotal liabilities of consolidated investment management funds, at fair value (a) | 882 | 370 | 7,669 | |||||||
Total liabilities (a) | 357,101 | 353,958 | 346,600 | |||||||
Temporary equity | ||||||||||
Redeemable noncontrolling interests | 244 | 215 | 229 | |||||||
Permanent equity | ||||||||||
Preferred stock – par value $0.01 per share; authorized 100,000,000 shares; issued 25,826, 15,826 and 15,826 shares | 2,552 | 1,562 | 1,562 | |||||||
Common stock – par value $0.01 per share; authorized 3,500,000,000 shares; issued 1,308,181,033, 1,303,799,499 and 1,290,222,821 shares | 13 | 13 | 13 | |||||||
Additional paid-in capital | 25,078 | 24,887 | 24,626 | |||||||
Retained earnings | 18,895 | 18,257 | 17,683 | |||||||
Accumulated other comprehensive loss, net of tax | (2,225 | ) | (2,182 | ) | (1,634 | ) | ||||
Less: Treasury stock of 201,663,375, 182,287,827 and 171,995,262 common shares, at cost | (6,043 | ) | (5,209 | ) | (4,809 | ) | ||||
Total The Bank of New York Mellon Corporation shareholders’ equity | 38,270 | 37,328 | 37,441 | |||||||
Nonredeemable noncontrolling interests of consolidated investment management funds (a) | 910 | 836 | 1,033 | |||||||
Total permanent equity (a) | 39,180 | 38,164 | 38,474 | |||||||
Total liabilities, temporary equity and permanent equity (a) | $ | 396,525 | $ | 392,337 | $ | 385,303 |
(a) | The first quarter of 2015 was restated to reflect the retrospective application of adopting new accounting guidance related to Consolidations (ASU 2015-02). See page 24 for additional information. |
Page - 23 |
BNY Mellon 2Q15 Earnings Release |
Income statement for quarter ended March 31, 2015 (unaudited) | As previously reported | Adjustments | As revised | ||||||||
(in millions, except per share amounts) | |||||||||||
Fee and other revenue | |||||||||||
Investment management and performance fees | $ | 854 | $ | 13 | $ | 867 | |||||
Investment and other income | 63 | (3 | ) | 60 | |||||||
Total fee revenue | 2,978 | 10 | 2,988 | ||||||||
Total fee and other revenue | 3,002 | 10 | 3,012 | ||||||||
Operations of consolidated investment management funds | |||||||||||
Investment income | 189 | (133 | ) | 56 | |||||||
Interest of investment management fund note holders | 68 | (64 | ) | 4 | |||||||
Income from consolidated investment management funds | 121 | (69 | ) | 52 | |||||||
Income | |||||||||||
Income before income taxes | 1,149 | (59 | ) | 1,090 | |||||||
Net income | 869 | (59 | ) | 810 | |||||||
Net (income) attributable to noncontrolling interests | (90 | ) | 59 | (31 | ) | ||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | 766 | — | 766 | ||||||||
Diluted earnings per share | 0.67 | — | 0.67 |
Balance sheet at March 31, 2015 (unaudited) | As previously reported | Adjustments | As revised | ||||||||
(in millions) | |||||||||||
Assets | |||||||||||
Other assets | $ | 22,315 | $ | (7 | ) | $ | 22,308 | ||||
Subtotal assets of operations | 390,663 | (7 | ) | 390,656 | |||||||
Assets of consolidated investment management funds, at fair value: | |||||||||||
Trading assets | 7,852 | (6,356 | ) | 1,496 | |||||||
Other assets | 573 | (388 | ) | 185 | |||||||
Subtotal assets of consolidated investment management funds, at fair value | 8,425 | (6,744 | ) | 1,681 | |||||||
Total assets | 399,088 | (6,751 | ) | 392,337 | |||||||
Liabilities and Equity | |||||||||||
Liabilities of consolidated investment management funds, at fair value: | |||||||||||
Trading liabilities | 6,584 | (6,320 | ) | 264 | |||||||
Other liabilities | 36 | 70 | 106 | ||||||||
Subtotal liabilities of consolidated investment management funds, at fair value | 6,620 | (6,250 | ) | 370 | |||||||
Total liabilities | 360,208 | (6,250 | ) | 353,958 | |||||||
Nonredeemable noncontrolling interests of consolidated investment management funds | 1,337 | (501 | ) | 836 | |||||||
Total permanent equity | 38,665 | (501 | ) | 38,164 | |||||||
Total liabilities, temporary equity and permanent equity | 399,088 | (6,751 | ) | 392,337 |
Page - 24 |
BNY Mellon 2Q15 Earnings Release |
Page - 25 |
BNY Mellon 2Q15 Earnings Release |
Reconciliation of income before income taxes – pre-tax operating margin | |||||||||||||||||
(dollars in millions) | 2Q14 | 3Q14 | 4Q14 | 1Q15 | 2Q15 | ||||||||||||
Income before income taxes – GAAP | $ | 811 | $ | 1,662 | $ | 164 | $ | 1,090 | $ | 1,165 | |||||||
Less: Net income attributable to noncontrolling interests of consolidated investment management funds | 17 | 23 | 24 | 31 | 37 | ||||||||||||
Gain on the sale of our investment in Wing Hang Bank | — | 490 | — | — | — | ||||||||||||
Gain on the sale of the One Wall Street building | — | 346 | — | — | — | ||||||||||||
Add: Amortization of intangible assets | 75 | 75 | 73 | 66 | 65 | ||||||||||||
M&I, litigation and restructuring charges | 122 | 220 | 800 | (3 | ) | 59 | |||||||||||
Charge related to investment management funds, net of incentives | 109 | — | — | — | — | ||||||||||||
Income before income taxes, as adjusted – Non-GAAP (a) | $ | 1,100 | $ | 1,098 | $ | 1,013 | $ | 1,122 | $ | 1,252 | |||||||
Fee and other revenue – GAAP | $ | 2,980 | $ | 3,851 | $ | 2,935 | $ | 3,012 | $ | 3,067 | |||||||
Income from consolidated investment management funds – GAAP | 46 | 39 | 42 | 52 | 40 | ||||||||||||
Net interest revenue – GAAP | 719 | 721 | 712 | 728 | 779 | ||||||||||||
Total revenue – GAAP | 3,745 | 4,611 | 3,689 | 3,792 | 3,886 | ||||||||||||
Less: Net income attributable to noncontrolling interests of consolidated investment management funds | 17 | 23 | 24 | 31 | 37 | ||||||||||||
Gain on the sale of our investment in Wing Hang Bank | — | 490 | — | — | — | ||||||||||||
Gain on the sale of the One Wall Street building | — | 346 | — | — | — | ||||||||||||
Total revenue, as adjusted – Non-GAAP (a) | $ | 3,728 | $ | 3,752 | $ | 3,665 | $ | 3,761 | $ | 3,849 | |||||||
Pre-tax operating margin (b) | 22 | % | 36 | % | 4 | % | 29 | % | (c) | 30 | % | (c) | |||||
Pre-tax operating margin – Non-GAAP (a)(b) | 30 | % | 29 | % | 28 | % | 30 | % | (c) | 33 | % | (c) |
(a) | Non-GAAP excludes net income attributable to noncontrolling interests of consolidated investment management funds, the gains on the sales of our investment in Wing Hang Bank and the One Wall Street building, amortization of intangible assets, M&I, litigation and restructuring charges, and a charge related to investment management funds, net of incentives, if applicable. |
(b) | Income before taxes divided by total revenue. |
(c) | Our GAAP earnings include tax-advantaged investments such as low income housing, renewable energy, bank-owned life insurance and tax-exempt securities. The benefits of these investments are primarily reflected in tax expense. If reported on a tax-equivalent basis these investments would increase revenue and income before taxes by $64 million and $52 million for 1Q15 and 2Q15 and would increase our pre-tax operating margin by approximately 1.2% and 0.9%, respectively. |
Page - 26 |
BNY Mellon 2Q15 Earnings Release |
Return on common equity and tangible common equity | |||||||||||||||
(dollars in millions) | 2Q14 | 3Q14 | 4Q14 | 1Q15 | 2Q15 | ||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | $ | 554 | $ | 1,070 | $ | 209 | $ | 766 | $ | 830 | |||||
Add: Amortization of intangible assets, net of tax | 49 | 49 | 47 | 43 | 44 | ||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation excluding amortization of intangible assets – Non-GAAP | 603 | 1,119 | 256 | 809 | 874 | ||||||||||
Less: Gain on the sale of our investment in Wing Hang Bank | — | 315 | — | — | — | ||||||||||
Gain on the sale of the One Wall Street building | — | 204 | — | — | — | ||||||||||
Benefit primarily related to a tax carryback claim | — | — | 150 | — | — | ||||||||||
Add: M&I, litigation and restructuring charges | 76 | 183 | 608 | (2 | ) | 38 | |||||||||
Charge related to investment management funds, net of incentives | 85 | — | — | — | — | ||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation, as adjusted – Non-GAAP (a) | $ | 764 | $ | 783 | $ | 714 | $ | 807 | $ | 912 | |||||
Average common shareholders’ equity | $ | 36,565 | $ | 36,751 | $ | 36,859 | $ | 35,486 | $ | 35,516 | |||||
Less: Average goodwill | 18,149 | 18,109 | 17,924 | 17,756 | 17,752 | ||||||||||
Average intangible assets | 4,354 | 4,274 | 4,174 | 4,088 | 4,031 | ||||||||||
Add: Deferred tax liability – tax deductible goodwill (b) | 1,338 | 1,317 | 1,340 | 1,362 | 1,351 | ||||||||||
Deferred tax liability – intangible assets (b) | 1,247 | 1,230 | 1,216 | 1,200 | 1,179 | ||||||||||
Average tangible common shareholders’ equity – Non-GAAP | $ | 16,647 | $ | 16,915 | $ | 17,317 | $ | 16,204 | $ | 16,263 | |||||
Return on common equity – GAAP (c) | 6.1 | % | 11.6 | % | 2.2 | % | 8.8 | % | 9.4 | % | |||||
Return on common equity – Non-GAAP (a)(c) | 8.4 | % | 8.5 | % | 7.7 | % | 9.2 | % | 10.3 | % | |||||
Return on tangible common equity – Non-GAAP (a)(c) | 14.5 | % | 26.2 | % | 5.9 | % | 20.3 | % | 21.5 | % | |||||
Return on tangible common equity – Non-GAAP adjusted (a)(c) | 18.4 | % | 18.4 | % | 16.3 | % | 20.2 | % | 22.5 | % |
(a) | Non-GAAP excludes amortization of intangible assets, the gains on the sales of our investment in Wing Hang Bank and the One Wall Street building, the benefit primarily related to a tax carryback claim, M&I, litigation and restructuring charges, and a charge related to investment management funds, net of incentives, if applicable. |
(b) | Deferred tax liabilities are based on fully phased-in Basel III rules. |
(c) | Annualized. |
Page - 27 |
BNY Mellon 2Q15 Earnings Release |
Equity to assets and book value per common share | June 30, 2014 | Sept. 30, 2014 | Dec. 31, 2014 | March 31, 2015 | June 30, 2015 | ||||||||||
(dollars in millions, unless otherwise noted) | |||||||||||||||
BNY Mellon shareholders’ equity at period end – GAAP | $ | 38,326 | $ | 38,451 | $ | 37,441 | $ | 37,328 | $ | 38,270 | |||||
Less: Preferred stock | 1,562 | 1,562 | 1,562 | 1,562 | 2,552 | ||||||||||
BNY Mellon common shareholders’ equity at period end – GAAP | 36,764 | 36,889 | 35,879 | 35,766 | 35,718 | ||||||||||
Less: Goodwill | 18,196 | 17,992 | 17,869 | 17,663 | 17,807 | ||||||||||
Intangible assets | 4,314 | 4,215 | 4,127 | 4,047 | 4,000 | ||||||||||
Add: Deferred tax liability – tax deductible goodwill (a) | 1,338 | 1,317 | 1,340 | 1,362 | 1,351 | ||||||||||
Deferred tax liability – intangible assets (a) | 1,247 | 1,230 | 1,216 | 1,200 | 1,179 | ||||||||||
BNY Mellon tangible common shareholders’ equity at period end – Non-GAAP | $ | 16,839 | $ | 17,229 | $ | 16,439 | $ | 16,618 | $ | 16,441 | |||||
Total assets at period end – GAAP | $ | 400,740 | $ | 386,296 | $ | 385,303 | $ | 392,337 | $ | 396,525 | |||||
Less: Assets of consolidated investment management funds | 10,428 | 9,562 | 9,282 | 1,681 | 2,231 | ||||||||||
Subtotal assets of operations – Non-GAAP | 390,312 | 376,734 | 376,021 | 390,656 | 394,294 | ||||||||||
Less: Goodwill | 18,196 | 17,992 | 17,869 | 17,663 | 17,807 | ||||||||||
Intangible assets | 4,314 | 4,215 | 4,127 | 4,047 | 4,000 | ||||||||||
Cash on deposit with the Federal Reserve and other central banks (b) | 104,916 | 90,978 | 99,901 | 93,044 | 107,899 | ||||||||||
Tangible total assets of operations at period end – Non-GAAP | $ | 262,886 | $ | 263,549 | $ | 254,124 | $ | 275,902 | $ | 264,588 | |||||
BNY Mellon shareholders’ equity to total assets ratio – GAAP | 9.6 | % | 10.0 | % | 9.7 | % | 9.5 | % | 9.7 | % | |||||
BNY Mellon common shareholders’ equity to total assets ratio – GAAP | 9.2 | % | 9.5 | % | 9.3 | % | 9.1 | % | 9.0 | % | |||||
BNY Mellon tangible common shareholders’ equity to tangible assets of operations ratio – Non-GAAP | 6.4 | % | 6.5 | % | 6.5 | % | 6.0 | % | 6.2 | % | |||||
Period-end common shares outstanding (in thousands) | 1,131,596 | 1,125,710 | 1,118,228 | 1,121,512 | 1,106,518 | ||||||||||
Book value per common share – GAAP | $ | 32.49 | $ | 32.77 | $ | 32.09 | $ | 31.89 | $ | 32.28 | |||||
Tangible book value per common share – Non-GAAP | $ | 14.88 | $ | 15.30 | $ | 14.70 | $ | 14.82 | $ | 14.86 |
(a) | Deferred tax liabilities are based on fully phased-in Basel III rules. |
Income from consolidated investment management funds, net of noncontrolling interests | |||||||||||||||
(in millions) | 2Q14 | 3Q14 | 4Q14 | 1Q15 | 2Q15 | ||||||||||
Income from consolidated investment management funds | $ | 46 | $ | 39 | $ | 42 | $ | 52 | $ | 40 | |||||
Less: Net income attributable to noncontrolling interests of consolidated investment management funds | 17 | 23 | 24 | 31 | 37 | ||||||||||
Income from consolidated investment management funds, net of noncontrolling interests | $ | 29 | $ | 16 | $ | 18 | $ | 21 | $ | 3 |
Investment management and performance fees - Consolidated | 2Q15 vs. | |||||||
(dollars in millions) | 2Q14 | 2Q15 | 2Q14 | |||||
Investment management and performance fees - GAAP | $ | 883 | $ | 878 | (1 | )% | ||
Impact of changes in foreign currency exchange rates | (45 | ) | — | |||||
Investment management and performance fees, as adjusted - Non-GAAP | $ | 838 | $ | 878 | 5 | % |
Page - 28 |
BNY Mellon 2Q15 Earnings Release |
Income from consolidated investment management funds, net of noncontrolling interests - Investment Management business | |||||||||||||||
(in millions) | 2Q14 | 3Q14 | 4Q14 | 1Q15 | 2Q15 | ||||||||||
Investment management fees | $ | 18 | $ | 15 | $ | 15 | $ | 1 | $ | 4 | |||||
Other (Investment income) | 11 | 1 | 3 | 20 | (1 | ) | |||||||||
Income from consolidated investment management funds, net of noncontrolling interests | $ | 29 | $ | 16 | $ | 18 | $ | 21 | $ | 3 |
Investment management fees - Investment Management business | 2Q15 vs. | |||||||
(dollars in millions) | 2Q14 | 2Q15 | 2Q14 | |||||
Investment management fees – GAAP | $ | 852 | $ | 844 | (1 | )% | ||
Impact of changes in foreign currency exchange rates | (45 | ) | — | |||||
Investment management fees, as adjusted – Non-GAAP | $ | 807 | $ | 844 | 5 | % |
Pre-tax operating margin - Investment Management business | |||||||||||||||
(dollars in millions) | 2Q14 | 3Q14 | 4Q14 | 1Q15 | 2Q15 | ||||||||||
Income before income taxes – GAAP | $ | 171 | $ | 245 | $ | 239 | $ | 264 | $ | 265 | |||||
Add: Amortization of intangible assets | 31 | 31 | 30 | 25 | 25 | ||||||||||
Money market fee waivers | 28 | 29 | 34 | 34 | 29 | ||||||||||
Charge related to investment management funds, net of incentives | 109 | — | — | — | — | ||||||||||
Income before income taxes excluding amortization of intangible assets, money market fee waivers and the charge related to investment management funds, net of incentives – Non-GAAP | $ | 339 | $ | 305 | $ | 303 | $ | 323 | $ | 319 | |||||
Total revenue – GAAP | $ | 1,036 | $ | 1,003 | $ | 998 | $ | 1,010 | $ | 1,004 | |||||
Less: Distribution and servicing expense | 111 | 105 | 102 | 97 | 95 | ||||||||||
Money market fee waivers benefiting distribution and servicing expense | 37 | 38 | 36 | 38 | 37 | ||||||||||
Add: Money market fee waivers impacting total revenue | 65 | 67 | 70 | 72 | 66 | ||||||||||
Total revenue net of distribution and servicing expense and excluding money market fee waivers – Non-GAAP | $ | 953 | $ | 927 | $ | 930 | $ | 947 | $ | 938 | |||||
Pre-tax operating margin (a) | 16 | % | 24 | % | 24 | % | 26 | % | 26 | % | |||||
Pre-tax operating margin excluding amortization of intangible assets, money market fee waivers, the charge related to investment management funds, net of incentives and net of distribution and servicing expense – Non-GAAP (a) | 36 | % | 33 | % | 32 | % | 34 | % | 34 | % |
Page - 29 |
BNY Mellon 2Q15 Earnings Release |
• | $1,011.11 per share on the Series A Preferred Stock (equivalent to $10.1111 per Normal Preferred Capital Security of Mellon Capital IV, each representing 1/100th interest in a share of Series A Preferred Stock); and |
• | $1,300.00 per share on the Series C Preferred Stock (equivalent to $0.3250 per depositary share, each representing a 1/4,000th interest in a share of the Series C Preferred Stock). |
Page - 30 |
The Bank of New York Mellon Corporation |
Quarterly Financial Trends |
July 21, 2015 |
Table of Contents | ||
Consolidated Results | Page(s) | |
Consolidated Corporate Earnings - Quarterly Trend | 3 | |
Fee and Other Revenue | 4 | |
Average Balances and Interest Rates | 5-6 | |
Noninterest Expense | 7 | |
Assets Under Management, Custody and/or Administration and Securities Lending; Key Market Metrics | 8 | |
Assets Under Management Net Flows | 9 | |
Business Segment Results | ||
Investment Management Business - Quarterly Trend | 10 | |
Investment Services Business - Quarterly Trend | 11 | |
Other Segment - Quarterly Trend | 12 | |
Full Year Trends | 13 | |
Nonperforming Assets | 14 | |
Allowance for Credit Losses, Provision and Net Charge-offs | 15 | |
Notes | 16 | |
2013 | 2014 | 2015 | |||||||||||||||||||||||||||||||||||||||
(dollar amounts in millions unless otherwise noted) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | |||||||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||||||||||||||
Investment services fees | |||||||||||||||||||||||||||||||||||||||||
Asset servicing | $ | 969 | $ | 988 | $ | 964 | $ | 984 | $ | 1,009 | $ | 1,022 | $ | 1,025 | $ | 1,019 | $ | 1,038 | $ | 1,060 | |||||||||||||||||||||
Issuer services | 237 | 294 | 322 | 237 | 229 | 231 | 315 | 193 | 232 | 234 | |||||||||||||||||||||||||||||||
Clearing services | 304 | 321 | 315 | 324 | 325 | 326 | 337 | 347 | 344 | 347 | |||||||||||||||||||||||||||||||
Treasury services | 141 | 139 | 137 | 137 | 136 | 141 | 142 | 145 | 137 | 144 | |||||||||||||||||||||||||||||||
Total investment services fees | 1,651 | 1,742 | 1,738 | 1,682 | 1,699 | 1,720 | 1,819 | 1,704 | 1,751 | 1,785 | |||||||||||||||||||||||||||||||
Investment management and performance fees (a) | 822 | 848 | 821 | 904 | 843 | 883 | 881 | 885 | 867 | 878 | |||||||||||||||||||||||||||||||
Foreign exchange & other trading revenue | 161 | 207 | 160 | 146 | 136 | 130 | 153 | 151 | 229 | 187 | |||||||||||||||||||||||||||||||
Distribution and servicing | 49 | 45 | 43 | 43 | 43 | 43 | 44 | 43 | 41 | 39 | |||||||||||||||||||||||||||||||
Financing-related fees | 41 | 44 | 44 | 43 | 38 | 44 | 44 | 43 | 40 | 58 | |||||||||||||||||||||||||||||||
Investment and other income (a)(b) | 88 | 285 | 151 | (43 | ) | 102 | 142 | 890 | 78 | 60 | 104 | ||||||||||||||||||||||||||||||
Total fee revenue (a)(b) | 2,812 | 3,171 | 2,957 | 2,775 | 2,861 | 2,962 | 3,831 | 2,904 | 2,988 | 3,051 | |||||||||||||||||||||||||||||||
Net securities gains (losses) | 48 | 32 | 22 | 39 | 22 | 18 | 20 | 31 | 24 | 16 | |||||||||||||||||||||||||||||||
Total fee and other revenue (a)(b) | 2,860 | 3,203 | 2,979 | 2,814 | 2,883 | 2,980 | 3,851 | 2,935 | 3,012 | 3,067 | |||||||||||||||||||||||||||||||
Income (loss) of consolidated investment management funds (a) | 50 | 65 | 32 | 36 | 36 | 46 | 39 | 42 | 52 | 40 | |||||||||||||||||||||||||||||||
Net interest revenue | 719 | 757 | 772 | 761 | 728 | 719 | 721 | 712 | 728 | 779 | |||||||||||||||||||||||||||||||
Total revenue (a)(b) | 3,629 | 4,025 | 3,783 | 3,611 | 3,647 | 3,745 | 4,611 | 3,689 | 3,792 | 3,886 | |||||||||||||||||||||||||||||||
Provision for credit losses | (24 | ) | (19 | ) | 2 | 6 | (18 | ) | (12 | ) | (19 | ) | 1 | 2 | (6 | ) | |||||||||||||||||||||||||
Noninterest expenses | 2,703 | 2,716 | 2,682 | 2,793 | 2,676 | 2,749 | 2,673 | 2,651 | 2,637 | 2,603 | |||||||||||||||||||||||||||||||
Amortization of intangible assets | 86 | 93 | 81 | 82 | 75 | 75 | 75 | 73 | 66 | 65 | |||||||||||||||||||||||||||||||
Merger & integration, litigation and restructuring charges | 39 | 13 | 16 | 2 | (12 | ) | 122 | 220 | 800 | (3 | ) | 59 | |||||||||||||||||||||||||||||
Total noninterest expense | 2,828 | 2,822 | 2,779 | 2,877 | 2,739 | 2,946 | 2,968 | 3,524 | 2,700 | 2,727 | |||||||||||||||||||||||||||||||
Income (loss) from continuing operations before taxes (b) | 825 | 1,222 | 1,002 | 728 | 926 | 811 | 1,662 | 164 | 1,090 | 1,165 | |||||||||||||||||||||||||||||||
Provision for income taxes (b) | 1,062 | 339 | 19 | 172 | 232 | 217 | 556 | (93 | ) | 280 | 276 | ||||||||||||||||||||||||||||||
Net income (loss) from continuing operations (b) | (237 | ) | 883 | 983 | 556 | 694 | 594 | 1,106 | 257 | 810 | 889 | ||||||||||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interest (a)(c) | (16 | ) | (40 | ) | (8 | ) | (17 | ) | (20 | ) | (17 | ) | (23 | ) | (24 | ) | (31 | ) | (36 | ) | |||||||||||||||||||||
Preferred stock dividends | (13 | ) | (12 | ) | (13 | ) | (26 | ) | (13 | ) | (23 | ) | (13 | ) | (24 | ) | (13 | ) | (23 | ) | |||||||||||||||||||||
Net income (loss) applicable to common shareholders of The Bank of New York Mellon Corporation (b) | (266 | ) | 831 | 962 | 513 | 661 | 554 | 1,070 | $ | 209 | $ | 766 | 830 | ||||||||||||||||||||||||||||
Earnings per share (b)(d) | $ | (0.23 | ) | $ | 0.71 | $ | 0.82 | $ | 0.44 | $ | 0.57 | $ | 0.48 | $ | 0.93 | $ | 0.18 | $ | 0.67 | $ | 0.73 | ||||||||||||||||||||
Pre-tax operating margin - GAAP (a) | 23 | % | 30 | % | 26 | % | 20 | % | 25 | % | 22 | % | 36 | % | 4 | % | 29 | % | 30 | % | |||||||||||||||||||||
Non-GAAP (a)(e) | 27 | % | 28 | % | 29 | % | 26 | % | 27 | % | 30 | % | 29 | % | 28 | % | 30 | % | 33 | % | |||||||||||||||||||||
Return on common equity (annualized) - GAAP | N/M | 9.7 | % | 11.1 | % | 5.7 | % | 7.4 | % | 6.1 | % | 11.6 | % | 2.2 | % | 8.8 | % | 9.4 | % | ||||||||||||||||||||||
Return on tangible common equity (annualized) - Non-GAAP | N/M | 25.0 | % | 28.3 | % | 14.3 | % | 17.6 | % | 14.5 | % | 26.2 | % | 5.9 | % | 20.3 | % | 21.5 | % | ||||||||||||||||||||||
Percent of non-US total revenue (f) | 35 | % | 36 | % | 38 | % | 39 | % | 37 | % | 38 | % | 43 | % | 35 | % | 36 | % | 36 | % | |||||||||||||||||||||
(a) The first quarter of 2015 was restated to reflect the retrospective application of adopting new accounting guidance related to Consolidations (ASU 2015-02). For additional information, see page 24 of the Quarterly Earnings Release dated July 21, 2015, for the second quarter of 2015 (the "Quarterly Earnings Release"), furnished as an exhibit to the Current Report on Form 8-K to which these Quarterly Financial Trends are furnished as an exhibit. | |||||||||||||||||||||||||||||||||||||||||
(b) In the 1st quarter 2014, prior periods were restated to reflect the retrospective application of adopting new accounting guidance related to our investments in qualified affordable housing projects (ASU 2014-01). | |||||||||||||||||||||||||||||||||||||||||
(c) Primarily attributable to noncontrolling interests related to consolidated investment management funds. | |||||||||||||||||||||||||||||||||||||||||
(d) The 1st quarter 2013 includes a $0.73 charge related to the disallowance of certain foreign tax credits. The 2nd quarter 2013 includes a $0.09 gain related to an equity investment. The 3rd quarter 2013 includes a $0.22 benefit related to the U.S. Tax Court's partial reconsideration of a tax decision disallowing certain foreign tax credits. The 4th quarter 2013 includes a $0.10 loss related to an equity investment. The 2nd quarter 2014 includes a $0.14 charge related to severance and certain investment management funds. The 3rd quarter 2014 includes a $0.27 gain related to the sale of an investment in Wing Hang Bank, $0.18 related to a gain on the sale of the One Wall Street building and a $0.16 charge related to litigation and restructuring. The 4th quarter 2014 includes a $0.13 benefit primarily related to a tax carryback claim, and a $0.53 charge related to litigation and restructuring. The 2nd quarter 2015 includes a $0.03 charge related to litigation and restructuring. | |||||||||||||||||||||||||||||||||||||||||
(e) Non-GAAP excludes gain (loss) related to equity investment, net income attributable to noncontrolling interests of consolidated investment management funds, the gains on the sales of our investment in Wing Hang Bank and the One Wall Street building, M&I, litigation and restructuring charges, a charge (recovery) related to investment management funds, net of incentives, amortization of intangible assets, and the benefit primarily related to a tax carryback claim, if applicable. See "Supplemental information - Explanation of GAAP and Non-GAAP financial measures" beginning on page 25 of the Quarterly Earnings Release. | |||||||||||||||||||||||||||||||||||||||||
(f) Includes fee revenue, net interest revenue and income from consolidated investment management funds, net of net income attributable to noncontrolling interests. | |||||||||||||||||||||||||||||||||||||||||
Note: See pages 4 through 7 for additional details of revenue/expense items impacting consolidated results. | |||||||||||||||||||||||||||||||||||||||||
N/M - Not meaningful |
3 |
2013 | 2014 | 2015 | ||||||||||||||||||||||||||||||||||||||
(dollar amounts in millions unless otherwise noted) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | ||||||||||||||||||||||||||||||
Investment services fees: | ||||||||||||||||||||||||||||||||||||||||
Asset servicing | $ | 930 | $ | 938 | $ | 929 | $ | 953 | $ | 971 | $ | 976 | $ | 988 | $ | 982 | $ | 995 | $ | 1,011 | ||||||||||||||||||||
Securities lending | 39 | 50 | 35 | 31 | 38 | 46 | 37 | 37 | 43 | 49 | ||||||||||||||||||||||||||||||
Issuer services | 237 | 294 | 322 | 237 | 229 | 231 | 315 | 193 | 232 | 234 | ||||||||||||||||||||||||||||||
Clearing services | 304 | 321 | 315 | 324 | 325 | 326 | 337 | 347 | 344 | 347 | ||||||||||||||||||||||||||||||
Treasury services | 141 | 139 | 137 | 137 | 136 | 141 | 142 | 145 | 137 | 144 | ||||||||||||||||||||||||||||||
Total investment services fees | 1,651 | 1,742 | 1,738 | 1,682 | 1,699 | 1,720 | 1,819 | 1,704 | 1,751 | 1,785 | ||||||||||||||||||||||||||||||
Investment management and performance fees (a) | 822 | 848 | 821 | 904 | 843 | 883 | 881 | 885 | 867 | 878 | ||||||||||||||||||||||||||||||
Foreign exchange and other trading revenue | 161 | 207 | 160 | 146 | 136 | 130 | 153 | 151 | 229 | 187 | ||||||||||||||||||||||||||||||
Distribution and servicing | 49 | 45 | 43 | 43 | 43 | 43 | 44 | 43 | 41 | 39 | ||||||||||||||||||||||||||||||
Financing-related fees | 41 | 44 | 44 | 43 | 38 | 44 | 44 | 43 | 40 | 58 | ||||||||||||||||||||||||||||||
Investment and other income (a) | 88 | 285 | 151 | (43 | ) | 102 | 142 | 890 | 78 | 60 | 104 | |||||||||||||||||||||||||||||
Total fee revenue (a) | $ | 2,812 | $ | 3,171 | $ | 2,957 | $ | 2,775 | $ | 2,861 | $ | 2,962 | $ | 3,831 | 2,904 | 2,988 | 3,051 | |||||||||||||||||||||||
Net securities gains | 48 | 32 | 22 | 39 | 22 | 18 | 20 | 31 | 24 | 16 | ||||||||||||||||||||||||||||||
Total fee and other revenue (a) | $ | 2,860 | $ | 3,203 | $ | 2,979 | $ | 2,814 | $ | 2,883 | $ | 2,980 | $ | 3,851 | $ | 2,935 | $ | 3,012 | $ | 3,067 | ||||||||||||||||||||
Fee revenue as a percentage of total revenue - excluding net securities gains | 79 | % | 79 | % | 79 | % | 78 | % | 79 | % | 79 | % | 83 | % | 79 | % | 79 | % | 79 | % | ||||||||||||||||||||
(a) The first quarter of 2015 was restated to reflect the retrospective application of adopting new accounting guidance related to Consolidations (ASU 2015-02). See page 24 of the Quarterly Earnings Release for additional information. |
4 |
2013 | 2014 | ||||||||||||||||||||||||||||
(dollar amounts in millions) | March 31 | June 30 | September 30 | December 31 | March 31 | ||||||||||||||||||||||||
Average balance | Average rate | Average balance | Average rate | Average balance | Average rate | Average balance | Average rate | Average balance | Average rate | ||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||||||||
Interest-bearing deposits with banks (primarily foreign) | $ | 40,967 | 0.70 | % | $ | 42,772 | 0.64 | % | $ | 41,597 | 0.66 | % | $ | 39,563 | 0.71 | % | $ | 41,617 | 0.71 | % | |||||||||
Interest-bearing deposits with Federal Reserve & other central banks | 63,240 | 0.20 | 55,911 | 0.22 | 65,704 | 0.23 | 83,232 | 0.23 | 74,399 | 0.25 | |||||||||||||||||||
Federal funds sold and securities purchased under resale agreements | 7,478 | 0.54 | 7,878 | 0.52 | 8,864 | 0.56 | 9,403 | 0.61 | 11,118 | 0.61 | |||||||||||||||||||
Margin loans | 13,346 | 1.17 | 13,906 | 1.14 | 14,653 | 1.10 | 15,224 | 1.08 | 15,840 | 1.07 | |||||||||||||||||||
Non-margin loans: | |||||||||||||||||||||||||||||
Domestic offices | 21,358 | 2.38 | 21,689 | 2.40 | 21,378 | 2.40 | 22,538 | 2.28 | 22,002 | 2.31 | |||||||||||||||||||
Foreign offices | 11,575 | 1.36 | 12,318 | 1.32 | 12,225 | 1.31 | 13,006 | 1.22 | 13,805 | 1.26 | |||||||||||||||||||
Total non-margin loans | 32,933 | 2.02 | 34,007 | 2.01 | 33,603 | 2.01 | 35,544 | 1.89 | 35,807 | 1.90 | |||||||||||||||||||
Securities | |||||||||||||||||||||||||||||
U.S. government obligations | 18,814 | 1.54 | 19,887 | 1.62 | 16,540 | 1.76 | 13,418 | 1.96 | 17,213 | 1.61 | |||||||||||||||||||
U.S. government agency obligations | 42,397 | 1.85 | 47,631 | 1.80 | 45,745 | 2.02 | 43,465 | 2.00 | 42,710 | 1.87 | |||||||||||||||||||
Obligations of states and political subdivisions | 6,194 | 2.38 | 6,377 | 2.26 | 6,518 | 2.47 | 6,757 | 2.76 | 6,691 | 2.50 | |||||||||||||||||||
Other securities | 34,507 | 2.03 | 33,243 | 1.93 | 32,403 | 1.92 | 33,000 | 1.78 | 33,920 | 1.64 | |||||||||||||||||||
Trading securities | 5,878 | 2.40 | 6,869 | 2.33 | 5,523 | 2.83 | 6,173 | 2.82 | 5,217 | 2.60 | |||||||||||||||||||
Total securities | 107,790 | 1.91 | 114,007 | 1.86 | 106,729 | 2.02 | 102,813 | 1.97 | 105,751 | 1.83 | |||||||||||||||||||
Total interest-earning assets | 265,754 | 1.26 | 268,481 | 1.27 | 271,150 | 1.28 | 285,779 | 1.21 | 284,532 | 1.17 | |||||||||||||||||||
Allowance for loan losses | (264 | ) | (237 | ) | (212 | ) | (207 | ) | (210 | ) | |||||||||||||||||||
Cash and due from banks | 4,534 | 5,060 | 6,400 | 6,623 | 5,886 | ||||||||||||||||||||||||
Other assets | 52,137 | 52,627 | 52,549 | 52,434 | 53,430 | ||||||||||||||||||||||||
Total Asset Consol VIE FAS 167 | 11,503 | 11,524 | 11,863 | 11,506 | 11,354 | ||||||||||||||||||||||||
Total Assets | $ | 333,664 | $ | 337,455 | $ | 341,750 | $ | 356,135 | $ | 354,992 | |||||||||||||||||||
Liabilities and total equity | |||||||||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||
Money market rate accounts and demand deposit accounts | $ | 8,778 | 0.19 | % | $ | 8,183 | 0.22 | % | $ | 8,626 | 0.16 | % | $ | 11,042 | 0.12 | % | $ | 9,333 | 0.11 | % | |||||||||
Savings | 819 | 0.29 | 897 | 0.24 | 1,015 | 0.25 | 993 | 0.25 | 1,034 | 0.25 | |||||||||||||||||||
Other time deposits | 39,091 | 0.05 | 41,706 | 0.04 | 41,546 | 0.04 | 41,523 | 0.04 | 41,544 | 0.04 | |||||||||||||||||||
Foreign offices | 99,040 | 0.08 | 100,433 | 0.07 | 102,360 | 0.07 | 103,462 | 0.06 | 101,075 | 0.06 | |||||||||||||||||||
Total interest-bearing deposits | 147,728 | 0.08 | 151,219 | 0.07 | 153,547 | 0.06 | 157,020 | 0.06 | 152,986 | 0.06 | |||||||||||||||||||
Federal funds purchased and securities sold under repurchase agreements | 9,187 | (0.12 | ) | 9,206 | (0.28 | ) | 12,164 | (0.12 | ) | 13,155 | (0.10 | ) | 14,505 | (0.13 | ) | ||||||||||||||
Trading Liabilities | 2,552 | 1.35 | 3,036 | 1.40 | 2,325 | 1.69 | 2,534 | 1.42 | 1,978 | 1.59 | |||||||||||||||||||
Other borrowed funds | 1,397 | 0.76 | 1,443 | 0.19 | 2,233 | 0.19 | 2,378 | 0.42 | 1,137 | 0.47 | |||||||||||||||||||
Payables to customers and broker-dealers | 9,019 | 0.09 | 9,073 | 0.08 | 8,659 | 0.09 | 9,400 | 0.09 | 8,883 | 0.09 | |||||||||||||||||||
Long-term debt | 18,878 | 1.18 | 19,002 | 0.94 | 19,025 | 1.00 | 19,501 | 1.05 | 20,420 | 1.09 | |||||||||||||||||||
Total interest-bearing liabilities | 188,761 | 0.20 | 192,979 | 0.16 | 197,953 | 0.16 | 203,988 | 0.17 | 199,909 | 0.17 | |||||||||||||||||||
Total noninterest-bearing deposits | 70,337 | 70,648 | 72,075 | 79,999 | 81,430 | ||||||||||||||||||||||||
Other liabilities | 27,416 | 26,779 | 24,380 | 23,546 | 24,608 | ||||||||||||||||||||||||
VIE Liabilities & Obligations FAS 167 | 10,186 | 10,242 | 10,466 | 10,283 | 10,128 | ||||||||||||||||||||||||
Total Shareholders' Equity | 35,966 | 35,817 | 35,826 | 37,260 | 37,851 | ||||||||||||||||||||||||
Noncontrolling interest | 998 | 990 | 1,050 | 1,059 | 1,066 | ||||||||||||||||||||||||
Total liabilities and shareholders' equity | $ | 333,664 | $ | 337,455 | $ | 341,750 | $ | 356,135 | $ | 354,992 | |||||||||||||||||||
Net interest margin - Taxable equivalent basis | 1.11 | % | 1.15 | % | 1.16 | % | 1.09 | % | 1.05 | % |
5 |
2014 | 2015 | ||||||||||||||||||||||||||||
(dollar amounts in millions) | June 30 | September 30 | December 31 | March 31 | June 30 | ||||||||||||||||||||||||
Average balance | Average rate | Average balance | Average rate | Average balance | Average rate | Average balance | Average rate | Average balance | Average rate | ||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||||||||
Interest-bearing deposits with banks (primarily foreign) | $ | 41,424 | 0.74 | % | $ | 34,882 | 0.66 | % | $ | 24,623 | 0.49 | % | $ | 22,071 | 0.56 | % | $ | 20,235 | 0.56 | % | |||||||||
Interest-bearing deposits with Federal Reserve & other central banks | 85,546 | 0.26 | 88,713 | 0.23 | 97,440 | 0.22 | 81,160 | 0.23 | 81,860 | 0.21 | |||||||||||||||||||
Federal funds sold and securities purchased under resale agreements | 13,387 | 0.58 | 15,683 | 0.61 | 18,536 | 0.56 | 20,416 | 0.59 | 23,545 | 0.61 | |||||||||||||||||||
Margin loans | 17,050 | 1.05 | 18,108 | 1.04 | 18,897 | 1.01 | 20,051 | 1.00 | 20,467 | 1.01 | |||||||||||||||||||
Non-margin loans: | |||||||||||||||||||||||||||||
Domestic offices | 22,566 | 2.30 | 23,826 | 2.20 | 25,103 | 2.20 | 25,256 | 2.14 | 26,716 | 2.06 | |||||||||||||||||||
Foreign offices | 13,833 | 1.34 | 12,901 | 1.30 | 12,844 | 1.21 | 12,628 | 1.24 | 13,893 | 1.19 | |||||||||||||||||||
Total non-margin loans | 36,399 | 1.94 | 36,727 | 1.88 | 37,947 | 1.86 | 37,884 | 1.84 | 40,609 | 1.77 | |||||||||||||||||||
Securities | |||||||||||||||||||||||||||||
U.S. government obligations | 17,462 | 1.63 | 23,067 | 1.38 | 24,331 | 1.48 | 27,454 | 1.38 | 28,331 | 1.42 | |||||||||||||||||||
U.S. government agency obligations | 43,167 | 1.67 | 46,186 | 1.67 | 49,106 | 1.70 | 52,744 | 1.68 | 56,332 | 1.77 | |||||||||||||||||||
Obligations of states and political subdivisions | 6,473 | 2.58 | 5,830 | 2.54 | 5,305 | 2.61 | 5,213 | 2.64 | 5,021 | 2.67 | |||||||||||||||||||
Other securities | 34,318 | 1.55 | 36,972 | 1.37 | 38,501 | 1.23 | 38,065 | 1.33 | 38,957 | 1.24 | |||||||||||||||||||
Trading securities | 5,532 | 2.19 | 5,435 | 2.36 | 3,922 | 2.64 | 3,046 | 2.46 | 3,253 | 2.63 | |||||||||||||||||||
Total securities | 106,952 | 1.71 | 117,490 | 1.59 | 121,165 | 1.58 | 126,522 | 1.57 | 131,894 | 1.59 | |||||||||||||||||||
Total interest-earning assets | 300,758 | 1.10 | 311,603 | 1.05 | 318,608 | 1.02 | 308,104 | 1.07 | 318,610 | 1.08 | |||||||||||||||||||
Allowance for loan losses | (197 | ) | (187 | ) | (186 | ) | (191 | ) | (190 | ) | |||||||||||||||||||
Cash and due from banks | 5,064 | 6,225 | 4,715 | 6,204 | 6,785 | ||||||||||||||||||||||||
Other assets (a) | 52,182 | 52,526 | 52,472 | 51,966 | 50,808 | ||||||||||||||||||||||||
Total Asset Consol VIE FAS 167 (a) | 11,405 | 10,242 | 9,623 | 2,328 | 2,280 | ||||||||||||||||||||||||
Total Assets (a) | $ | 369,212 | $ | 380,409 | $ | 385,232 | $ | 368,411 | $ | 378,293 | |||||||||||||||||||
Liabilities and total equity | |||||||||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||
Money market rate accounts and demand deposit accounts | $ | 7,583 | 0.13 | % | 7,886 | 0.14 | % | 8,869 | 0.12 | % | 10,021 | 0.12 | % | 10,322 | 0.13 | % | |||||||||||||
Savings | 1,185 | 0.27 | 1,258 | 0.28 | 1,262 | 0.30 | 1,429 | 0.30 | 1,326 | 0.27 | |||||||||||||||||||
Other time deposits | 42,824 | 0.04 | 41,248 | 0.04 | 41,507 | 0.04 | 43,259 | 0.04 | 46,807 | 0.03 | |||||||||||||||||||
Foreign offices | 111,082 | 0.06 | 113,841 | 0.05 | 111,511 | 0.02 | 104,811 | 0.03 | 112,275 | — | |||||||||||||||||||
Total interest-bearing deposits | 162,674 | 0.06 | 164,233 | 0.06 | 163,149 | 0.03 | 159,520 | 0.04 | 170,730 | 0.02 | |||||||||||||||||||
Federal funds purchased and securities sold under repurchase agreements | 19,030 | (0.05 | ) | 20,620 | (0.07 | ) | 20,285 | (0.05 | ) | 13,877 | (0.09 | ) | 16,732 | (0.02 | ) | ||||||||||||||
Trading Liabilities | 2,993 | 0.97 | 2,806 | 0.84 | 1,024 | 1.44 | 795 | 1.07 | 632 | 1.84 | |||||||||||||||||||
Other borrowed funds | 3,242 | 0.23 | 4,587 | 0.15 | 5,270 | 0.25 | 2,108 | 0.50 | 3,795 | 0.37 | |||||||||||||||||||
Payables to customers and broker-dealers | 8,916 | 0.09 | 9,705 | 0.10 | 10,484 | 0.08 | 10,932 | 0.07 | 11,234 | 0.07 | |||||||||||||||||||
Long-term debt | 20,361 | 1.16 | 20,429 | 1.12 | 21,187 | 1.27 | 20,199 | 1.21 | 20,625 | 0.99 | |||||||||||||||||||
Total interest-bearing liabilities | 217,216 | 0.17 | 222,380 | 0.16 | $ | 221,399 | 0.16 | % | $ | 207,431 | 0.15 | $ | 223,748 | 0.12 | |||||||||||||||
Total noninterest-bearing deposits | 77,820 | 82,334 | 85,330 | 89,592 | 84,890 | ||||||||||||||||||||||||
Other liabilities | 24,854 | 27,369 | 30,743 | 32,341 | 29,840 | ||||||||||||||||||||||||
VIE Liabilities & Obligations FAS 167 (a) | 10,180 | 8,879 | 8,101 | 1,004 | 857 | ||||||||||||||||||||||||
Total Shareholders' Equity | 38,127 | 38,313 | 38,421 | 37,048 | 37,829 | ||||||||||||||||||||||||
Noncontrolling interest (a) | 1,015 | 1,134 | 1,238 | 995 | 1,129 | ||||||||||||||||||||||||
Total liabilities and shareholders' equity (a) | $ | 369,212 | $ | 380,409 | $ | 385,232 | $ | 368,411 | $ | 378,293 | |||||||||||||||||||
Net interest margin - Taxable equivalent basis | 0.98 | % | 0.94 | % | 0.91 | % | 0.97 | % | 1.00 | % | |||||||||||||||||||
(a) The first quarter of 2015 was restated to reflect the retrospective application of adopting new accounting guidance related to Consolidations (ASU 2015-02). For additional information, see page 24 of the Quarterly Earnings Release dated July 21, 2015, for the second quarter of 2015 (the "Quarterly Earnings Release"), furnished as an exhibit to the Current Report on Form 8-K to which these Quarterly Financial Trends are furnished as an exhibit. |
6 |
2013 | 2014 | 2015 | ||||||||||||||||||||||||||||||||||||||
(dollar amounts in millions) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | ||||||||||||||||||||||||||||||
Staff: | ||||||||||||||||||||||||||||||||||||||||
Compensation | $ | 885 | $ | 891 | $ | 915 | $ | 929 | $ | 925 | $ | 903 | $ | 909 | $ | 893 | $ | 871 | $ | 877 | ||||||||||||||||||||
Incentives | 338 | 364 | 339 | 343 | 359 | 313 | 340 | 319 | 425 | 349 | ||||||||||||||||||||||||||||||
Employee benefits | 249 | 254 | 262 | 250 | 227 | 223 | 228 | 206 | 189 | 208 | ||||||||||||||||||||||||||||||
Total staff | 1,472 | 1,509 | 1,516 | 1,522 | 1,511 | 1,439 | 1,477 | 1,418 | 1,485 | 1,434 | ||||||||||||||||||||||||||||||
Professional, legal and other purchased services | 295 | 317 | 296 | 344 | 312 | 314 | 323 | 390 | 302 | 299 | ||||||||||||||||||||||||||||||
Software and equipment | 228 | 238 | 226 | 241 | 237 | 236 | 234 | 235 | 228 | 228 | ||||||||||||||||||||||||||||||
Net occupancy | 163 | 159 | 153 | 154 | 154 | 152 | 154 | 150 | 151 | 149 | ||||||||||||||||||||||||||||||
Distribution and servicing | 106 | 111 | 108 | 110 | 107 | 112 | 107 | 102 | 98 | 96 | ||||||||||||||||||||||||||||||
Business development | 68 | 90 | 63 | 96 | 64 | 68 | 61 | 75 | 61 | 72 | ||||||||||||||||||||||||||||||
Sub-custodian | 64 | 77 | 71 | 68 | 68 | 81 | 67 | 70 | 70 | 75 | ||||||||||||||||||||||||||||||
Other | 307 | 215 | 249 | 258 | 223 | 347 | 250 | 211 | 242 | 250 | ||||||||||||||||||||||||||||||
Amortization of intangible assets | 86 | 93 | 81 | 82 | 75 | 75 | 75 | 73 | 66 | 65 | ||||||||||||||||||||||||||||||
Merger & integration, litigation and restructuring charges | 39 | 13 | 16 | 2 | (12 | ) | 122 | 220 | 800 | (3 | ) | 59 | ||||||||||||||||||||||||||||
Total noninterest expense | $ | 2,828 | $ | 2,822 | $ | 2,779 | $ | 2,877 | $ | 2,739 | $ | 2,946 | $ | 2,968 | $ | 3,524 | $ | 2,700 | $ | 2,727 | ||||||||||||||||||||
Memo: | ||||||||||||||||||||||||||||||||||||||||
Total noninterest expense excluding M&I, litigation, restructuring, amortization of intangible assets and the charge (recovery) related to investment management funds, net of incentives - Non-GAAP | $ | 2,664 | $ | 2,743 | $ | 2,682 | $ | 2,793 | $ | 2,681 | $ | 2,640 | $ | 2,673 | $ | 2,651 | $ | 2,637 | $ | 2,603 | ||||||||||||||||||||
Full-time employees at period-end | 49,700 | 49,800 | 50,800 | 51,100 | 51,400 | 51,100 | 50,900 | 50,300 | 50,500 | 50,700 |
7 |
2013 | 2014 | 2015 | |||||||||||||||||||||||||||||||||||||||
(dollar amounts in billions unless otherwise noted) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | |||||||||||||||||||||||||||||||
Assets under management at period-end: (a) | |||||||||||||||||||||||||||||||||||||||||
Institutional | $ | 939 | $ | 968 | $ | 1,041 | $ | 1,072 | $ | 1,118 | $ | 1,109 | $ | 1,131 | $ | 1,187 | $ | 1,210 | $ | 1,185 | |||||||||||||||||||||
Mutual Funds | 405 | 378 | 407 | 425 | 415 | 440 | 430 | 438 | 445 | 454 | |||||||||||||||||||||||||||||||
Private Client | 79 | 81 | 84 | 86 | 87 | 87 | 85 | 85 | 86 | 85 | |||||||||||||||||||||||||||||||
Assets under management | $ | 1,423 | $ | 1,427 | $ | 1,532 | $ | 1,583 | $ | 1,620 | $ | 1,636 | $ | 1,646 | $ | 1,710 | $ | 1,741 | $ | 1,724 | (b) | ||||||||||||||||||||
AUM at period-end, by product type: (a) | |||||||||||||||||||||||||||||||||||||||||
Equity | 17 | % | 17 | % | 17 | % | 17 | % | 17 | % | 17 | % | 16 | % | 16 | % | 15 | % | 15 | % | |||||||||||||||||||||
Fixed income | 15 | 15 | 14 | 14 | 14 | 14 | 13 | 13 | 13 | 13 | |||||||||||||||||||||||||||||||
Index | 19 | 20 | 20 | 20 | 20 | 21 | 21 | 21 | 22 | 21 | |||||||||||||||||||||||||||||||
Liability-driven investments (c) | 25 | 25 | 26 | 26 | 27 | 27 | 28 | 29 | 29 | 30 | |||||||||||||||||||||||||||||||
Alternative investments | 4 | 4 | 4 | 4 | 4 | 4 | 4 | 4 | 4 | 4 | |||||||||||||||||||||||||||||||
Cash | 20 | 19 | 19 | 19 | 18 | 17 | 18 | 17 | 17 | 17 | |||||||||||||||||||||||||||||||
Total AUM | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | (b) | ||||||||||||||||||||
Assets under custody and/or administration at period-end (in trillions) (d) | $ | 26.3 | $ | 26.2 | $ | 27.4 | $ | 27.6 | $ | 27.9 | $ | 28.5 | $ | 28.3 | $ | 28.5 | $ | 28.5 | $ | 28.6 | (b) | ||||||||||||||||||||
Market value of securities on loan at period-end (e) | $ | 244 | $ | 255 | $ | 255 | $ | 235 | $ | 264 | $ | 280 | $ | 282 | $ | 289 | $ | 291 | $ | 283 | |||||||||||||||||||||
Key Market Metrics | |||||||||||||||||||||||||||||||||||||||||
S&P 500 Index (f) | 1569 | 1606 | 1682 | 1848 | 1872 | 1960 | 1972 | 2059 | 2068 | 2063 | |||||||||||||||||||||||||||||||
S&P 500 Index - daily average | 1514 | 1609 | 1675 | 1769 | 1835 | 1900 | 1976 | 2009 | 2064 | 2102 | |||||||||||||||||||||||||||||||
FTSE 100 Index (f) | 6412 | 6215 | 6462 | 6749 | 6598 | 6744 | 6623 | 6566 | 6773 | 6521 | |||||||||||||||||||||||||||||||
FTSE 100 Index-daily average | 6300 | 6438 | 6530 | 6612 | 6680 | 6764 | 6756 | 6526 | 6793 | 6920 | |||||||||||||||||||||||||||||||
MSCI World Index (f) | 1435 | 1434 | 1544 | 1661 | 1674 | 1743 | 1698 | 1710 | 1741 | 1736 | |||||||||||||||||||||||||||||||
MSCI World Index-daily average | 1405 | 1463 | 1511 | 1602 | 1647 | 1698 | 1733 | 1695 | 1726 | 1780 | |||||||||||||||||||||||||||||||
Barclays Capital Global Aggregate BondSM Index (f)(g) | 356 | 343 | 356 | 354 | 365 | 376 | 361 | 357 | 348 | 342 | |||||||||||||||||||||||||||||||
NYSE & NASDAQ Share Volume (in billions) | 174 | 186 | 166 | 179 | 196 | 187 | 173 | 198 | 187 | 185 | |||||||||||||||||||||||||||||||
JP Morgan G7 Volatility Index - daily average (h) | 9.02 | 9.84 | 9.72 | 8.20 | 7.80 | 6.22 | 6.21 | 8.54 | 10.40 | 10.06 | |||||||||||||||||||||||||||||||
Average Fed Funds effective rate | 0.14 | % | 0.12 | % | 0.09 | % | 0.09 | % | 0.07 | % | 0.09 | % | 0.09 | % | 0.10 | % | 0.11 | % | 0.13 | % | |||||||||||||||||||||
Foreign exchange rates vs. U.S. dollar: | |||||||||||||||||||||||||||||||||||||||||
British pound - average rate | $1.55 | $1.54 | $1.55 | $1.62 | $1.66 | $1.68 | $1.67 | $1.58 | $1.51 | $1.53 | |||||||||||||||||||||||||||||||
Euro - average rate | 1.32 | 1.31 | 1.32 | 1.36 | 1.37 | 1.37 | 1.33 | 1.25 | 1.13 | 1.11 | |||||||||||||||||||||||||||||||
(a) Excludes securities lending cash management assets and assets managed in the Investment Services business. Also excludes assets under management related to Newton's private client business that was sold in September 2013. | |||||||||||||||||||||||||||||||||||||||||
(b) Preliminary. | |||||||||||||||||||||||||||||||||||||||||
(c) Includes currency overlay assets under management. | |||||||||||||||||||||||||||||||||||||||||
(d) Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.2 trillion at March 31, 2013, $1.1 trillion at June 30, 2013, $1.2 trillion at Sept. 30, 2013, Dec. 31, 2013, March 31, 2014, June 30, 2014 and Sept. 30, 2014, and $1.1 trillion at Dec. 31, 2014, March 31, 2015, and June 30, 2015. | |||||||||||||||||||||||||||||||||||||||||
(e) Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent, beginning in the fourth quarter of 2013, on behalf of CIBC Mellon clients, which totaled $62 billion at Dec. 31, 2013, $66 billion at March 31, 2014, $64 billion at June 30, 2014, $65 billion at Sept. 30, 2014 and Dec. 31, 2014, $69 billion at March 31, 2015, and $68 billion at June 30, 2015. | |||||||||||||||||||||||||||||||||||||||||
(f) Period end. | |||||||||||||||||||||||||||||||||||||||||
(g) Unhedged in U.S. dollar terms. | |||||||||||||||||||||||||||||||||||||||||
(h) The JP Morgan G7 Volatility Index is based on the implied volatility in 3-month currency options. |
8 |
2013 | 2014 | 2015 | |||||||||||||||||||||||||||||||||||||||
(dollar amounts in billions) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | |||||||||||||||||||||||||||||||
Assets under management at beginning of period (a) | $ | 1,380 | $ | 1,423 | $ | 1,427 | $ | 1,532 | $ | 1,583 | $ | 1,620 | 1,636 | $ | 1,646 | $ | 1,710 | $ | 1,741 | ||||||||||||||||||||||
Net inflows (outflows): | |||||||||||||||||||||||||||||||||||||||||
Long-term: | |||||||||||||||||||||||||||||||||||||||||
Equity | 1 | 1 | 3 | (5 | ) | (1 | ) | (4 | ) | (2 | ) | (4 | ) | (6 | ) | (12 | ) | ||||||||||||||||||||||||
Fixed income | 5 | 2 | (1 | ) | 5 | — | (1 | ) | — | 4 | 4 | (2 | ) | ||||||||||||||||||||||||||||
Index | 12 | 8 | 2 | (3 | ) | — | 7 | (3 | ) | 1 | 8 | (9 | ) | ||||||||||||||||||||||||||||
Liability-driven investments (b) | 22 | 11 | 27 | 4 | 20 | (17 | ) | 18 | 24 | 8 | 5 | ||||||||||||||||||||||||||||||
Alternative investments | — | (1 | ) | 1 | 1 | 2 | 2 | — | 2 | 2 | 3 | ||||||||||||||||||||||||||||||
Total long-term inflows (outflows) | 40 | 21 | 32 | 2 | 21 | (13 | ) | 13 | 27 | 16 | (15 | ) | |||||||||||||||||||||||||||||
Short-term: | |||||||||||||||||||||||||||||||||||||||||
Cash | (13 | ) | (1 | ) | 13 | 6 | (7 | ) | (18 | ) | 19 | 5 | 1 | (11 | ) | ||||||||||||||||||||||||||
Total net inflows (outflows) | 27 | 20 | 45 | 8 | 14 | (31 | ) | 32 | 32 | 17 | (26 | ) | |||||||||||||||||||||||||||||
Net market / currency impact / acquisition | 16 | (16 | ) | 60 | 43 | 23 | 47 | (22 | ) | 32 | 14 | 9 | |||||||||||||||||||||||||||||
Assets under management at end of period (a) | $ | 1,423 | $ | 1,427 | $ | 1,532 | $ | 1,583 | $ | 1,620 | $ | 1,636 | $ | 1,646 | $ | 1,710 | $ | 1,741 | $ | 1,724 | (c) | ||||||||||||||||||||
(a) Excludes securities lending cash management assets and assets managed in the Investment Services business. Also excludes assets under management related to Newton's private client business that was sold in September 2013. | |||||||||||||||||||||||||||||||||||||||||
(b) Includes currency overlay assets under management. | |||||||||||||||||||||||||||||||||||||||||
(c) Preliminary. | |||||||||||||||||||||||||||||||||||||||||
9 |
2013 | 2014 | 2015 | |||||||||||||||||||||||||||||||||||||||
(dollar amounts in millions unless otherwise noted) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | |||||||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||||||||||||||
Investment management fees: | |||||||||||||||||||||||||||||||||||||||||
Mutual funds | $ | 299 | $ | 299 | $ | 293 | $ | 303 | $ | 299 | $ | 311 | $ | 315 | $ | 306 | $ | 301 | $ | 307 | |||||||||||||||||||||
Institutional clients | 360 | 366 | 367 | 385 | 372 | 385 | 382 | 375 | 376 | 376 | |||||||||||||||||||||||||||||||
Wealth management | 143 | 146 | 145 | 149 | 153 | 156 | 158 | 157 | 158 | 161 | |||||||||||||||||||||||||||||||
Total investment management fees | 802 | 811 | 805 | 837 | 824 | 852 | 855 | 838 | 835 | 844 | |||||||||||||||||||||||||||||||
Performance fees | 15 | 33 | 10 | 72 | 20 | 29 | 22 | 44 | 15 | 20 | |||||||||||||||||||||||||||||||
Investment management and performance fees | 817 | 844 | 815 | 909 | 844 | 881 | 877 | 882 | 850 | 864 | |||||||||||||||||||||||||||||||
Distribution and servicing | 46 | 44 | 41 | 41 | 40 | 41 | 41 | 40 | 39 | 37 | |||||||||||||||||||||||||||||||
Other (a) | 18 | 24 | 26 | 43 | 16 | 48 | 16 | 7 | 47 | 25 | |||||||||||||||||||||||||||||||
Total fee and other revenue (a) | 881 | 912 | 882 | 993 | 900 | 970 | 934 | 929 | 936 | 926 | |||||||||||||||||||||||||||||||
Net interest revenue | 62 | 63 | 67 | 68 | 70 | 66 | 69 | 69 | 74 | 78 | |||||||||||||||||||||||||||||||
Total revenue | 943 | 975 | 949 | 1,061 | 970 | 1,036 | 1,003 | 998 | 1,010 | 1,004 | |||||||||||||||||||||||||||||||
Noninterest expense (ex. intangible amortization and the charge (recovery) related to investment management funds, net of incentives) | 659 | 692 | 689 | 760 | 698 | 725 | 727 | 729 | 721 | 714 | |||||||||||||||||||||||||||||||
Income before taxes (ex. intangible amortization and the charge (recovery) related to investment management funds) | 284 | 283 | 260 | 301 | 272 | 311 | 276 | 269 | 289 | 290 | |||||||||||||||||||||||||||||||
Charge (recovery) related to investment management funds, net of incentives | 39 | (27 | ) | — | — | (5 | ) | 109 | — | — | — | — | |||||||||||||||||||||||||||||
Amortization of intangible assets | 39 | 39 | 35 | 35 | 31 | 31 | 31 | 30 | 25 | 25 | |||||||||||||||||||||||||||||||
Income before taxes | $ | 206 | $ | 271 | $ | 225 | $ | 266 | $ | 246 | $ | 171 | $ | 245 | $ | 239 | $ | 264 | $ | 265 | |||||||||||||||||||||
Average assets | $ | 38,743 | $ | 37,953 | $ | 38,690 | $ | 38,796 | $ | 39,463 | $ | 37,750 | $ | 36,670 | $ | 37,286 | $ | 31,017 | $ | 30,512 | |||||||||||||||||||||
Assets under management at period-end (in billions) (b) | $ | 1,423 | $ | 1,427 | $ | 1,532 | $ | 1,583 | $ | 1,620 | $ | 1,636 | $ | 1,646 | $ | 1,710 | $ | 1,741 | $ | 1,724 | (c) | ||||||||||||||||||||
Pre-tax operating margin | 22 | % | 28 | % | 24 | % | 25 | % | 25 | % | 16 | % | 24 | % | 24 | % | 26 | % | 26 | % | |||||||||||||||||||||
Adjusted pre-tax operating margin (d) | 35 | % | 34 | % | 33 | % | 34 | % | 34 | % | 36 | % | 33 | % | 32 | % | 34 | % | 34 | % | |||||||||||||||||||||
(a) Total fee and other revenue includes the impact of the consolidated investment management funds. See "Supplemental information - Explanation of GAAP and Non-GAAP financial measures" beginning on page 25 of the Quarterly Earnings Release for the reconciliation of Non-GAAP measures. Additionally, other revenue includes asset servicing, treasury services, foreign exchange and other trading revenue and investment and other income. | |||||||||||||||||||||||||||||||||||||||||
(b) Excludes securities lending cash management assets and assets managed in the Investment Services business. Also excludes assets under management related to Newton's private client business that was sold in September 2013. | |||||||||||||||||||||||||||||||||||||||||
(c) Preliminary. | |||||||||||||||||||||||||||||||||||||||||
(d) Excludes the net negative impact of money market fee waivers, amortization of intangible assets and the charge (recovery) related to investment management funds net of incentives, and is net of distribution and servicing expense. See "Supplemental information - Explanation of GAAP and Non-GAAP financial measures" beginning on page 25 of the Quarterly Earnings Release for the reconciliation of Non-GAAP measures. |
10 |
2013 | 2014 | 2015 | |||||||||||||||||||||||||||||||||||||||
(dollar amounts in millions unless otherwise noted) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | |||||||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||||||||||||||
Investment services fees | |||||||||||||||||||||||||||||||||||||||||
Asset servicing fees - ex. securities lending | $ | 912 | $ | 922 | $ | 913 | $ | 936 | $ | 955 | $ | 958 | $ | 971 | $ | 964 | $ | 979 | $ | 995 | |||||||||||||||||||||
Securities lending revenue | 31 | 39 | 26 | 21 | 30 | 35 | 27 | 28 | 34 | 40 | |||||||||||||||||||||||||||||||
Issuer services | 236 | 294 | 321 | 236 | 228 | 231 | 314 | 193 | 231 | 234 | |||||||||||||||||||||||||||||||
Clearing services | 302 | 320 | 314 | 322 | 323 | 324 | 336 | 346 | 342 | 346 | |||||||||||||||||||||||||||||||
Treasury services | 137 | 135 | 135 | 137 | 134 | 140 | 139 | 142 | 135 | 141 | |||||||||||||||||||||||||||||||
Total investment services fees | 1,618 | 1,710 | 1,709 | 1,652 | 1,670 | 1,688 | 1,787 | 1,673 | 1,721 | 1,756 | |||||||||||||||||||||||||||||||
Foreign Exchange and other trading revenue | 173 | 193 | 177 | 150 | 158 | 145 | 159 | 165 | 209 | 179 | |||||||||||||||||||||||||||||||
Other (a) | 70 | 67 | 63 | 58 | 59 | 87 | 59 | 69 | 63 | 85 | |||||||||||||||||||||||||||||||
Total fee and other revenue | 1,861 | 1,970 | 1,949 | 1,860 | 1,887 | 1,920 | 2,005 | 1,907 | 1,993 | 2,020 | |||||||||||||||||||||||||||||||
Net interest revenue | 653 | 633 | 619 | 610 | 590 | 593 | 583 | 574 | 600 | 635 | |||||||||||||||||||||||||||||||
Total revenue | 2,514 | 2,603 | 2,568 | 2,470 | 2,477 | 2,513 | 2,588 | 2,481 | 2,593 | 2,655 | |||||||||||||||||||||||||||||||
Provision for credit losses | 1 | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Noninterest expenses (ex. intangible amortization) | 1,796 | 1,825 | 1,765 | 1,822 | 1,778 | 1,824 | 1,835 | 2,512 | 1,797 | 1,841 | |||||||||||||||||||||||||||||||
Income before taxes (ex. intangible amortization) | 717 | 778 | 803 | 648 | 699 | 689 | 753 | (31 | ) | 796 | 814 | ||||||||||||||||||||||||||||||
Amortization of intangible assets | 47 | 54 | 46 | 47 | 44 | 44 | 44 | 43 | 41 | 40 | |||||||||||||||||||||||||||||||
Income before taxes | $ | 670 | $ | 724 | $ | 757 | $ | 601 | $ | 655 | $ | 645 | $ | 709 | $ | (74 | ) | $ | 755 | $ | 774 | ||||||||||||||||||||
Average loans | $ | 26,697 | $ | 27,814 | $ | 27,865 | $ | 31,211 | $ | 31,468 | $ | 33,115 | $ | 33,785 | $ | 35,448 | $ | 37,699 | $ | 38,264 | |||||||||||||||||||||
Average assets | $ | 240,187 | $ | 244,802 | $ | 246,252 | $ | 258,294 | $ | 258,470 | $ | 264,221 | $ | 266,455 | $ | 276,586 | $ | 284,978 | $ | 290,102 | |||||||||||||||||||||
Average deposits | $ | 200,222 | $ | 204,499 | $ | 206,068 | $ | 216,216 | $ | 214,947 | $ | 220,701 | $ | 221,734 | $ | 228,282 | $ | 234,183 | $ | 237,193 | |||||||||||||||||||||
Pre-tax operating margin | 27 | % | 28 | % | 29 | % | 24 | % | 26 | % | 26 | % | 27 | % | (3 | )% | 29 | % | 29 | % | |||||||||||||||||||||
Pre-tax operating margin (ex. intangible amortization) | 29 | % | 30 | % | 31 | % | 26 | % | 28 | % | 27 | % | 29 | % | (1 | )% | 31 | % | 31 | % | |||||||||||||||||||||
Investment services fees as a percentage of noninterest expense (b) | 92 | % | 94 | % | 97 | % | 90 | % | 93 | % | 93 | % | 100 | % | 92 | % | 96 | % | 98 | % | |||||||||||||||||||||
Assets under custody and/or administration at period-end (in trillions) (c) | $ | 26.3 | $ | 26.2 | $ | 27.4 | $ | 27.6 | $ | 27.9 | $ | 28.5 | $ | 28.3 | $ | 28.5 | $ | 28.5 | $ | 28.6 | (d) | ||||||||||||||||||||
Market value of securities on loan at period-end (in billions) (e) | $ | 244 | $ | 255 | $ | 255 | $ | 235 | $ | 264 | $ | 280 | $ | 282 | $ | 289 | $ | 291 | $ | 283 | |||||||||||||||||||||
(a) Other revenue includes investment management fees, financing-related fees, distribution and servicing revenue, and investment and other income. | |||||||||||||||||||||||||||||||||||||||||
(b) Noninterest expense excludes amortization of intangible assets and litigation expense. | |||||||||||||||||||||||||||||||||||||||||
(c) Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.2 trillion at March 31, 2013, $1.1 trillion at June 30, 2013, $1.2 trillion at Sept. 30, 2013, Dec. 31, 2013, March 31, 2014, June 30, 2014 and Sept. 30, 2014, and $1.1 trillion at Dec. 31, 2014, March 31, 2015, and June 30, 2015. | |||||||||||||||||||||||||||||||||||||||||
(d) Preliminary. | |||||||||||||||||||||||||||||||||||||||||
(e) Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent, beginning in the fourth quarter of 2013, on behalf of CIBC Mellon clients, which totaled $62 billion at Dec. 31, 2013, $66 billion at March 31, 2014, $64 billion at June 30, 2014, $65 billion at Sept. 30, 2014 and Dec. 31, 2014, $69 billion at March 31, 2015, and $68 billion at June 30, 2015. |
11 |
2013 (a) | 2014 | 2015 | ||||||||||||||||||||||||||||||||||||||
(dollar amounts in millions) | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | 3rd Qtr | 4th Qtr | 1st Qtr | 2nd Qtr | ||||||||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||||||||||||||
Fee and other revenue (a) | $ | 152 | $ | 347 | $ | 172 | $ | (20 | ) | $ | 112 | $ | 119 | $ | 928 | $ | 117 | $ | 104 | $ | 124 | |||||||||||||||||||
Net interest revenue | 4 | 61 | 86 | 83 | 68 | 60 | 69 | 69 | 54 | 66 | ||||||||||||||||||||||||||||||
Total revenue (a) | 156 | 408 | 258 | 63 | 180 | 179 | 997 | 186 | 158 | 190 | ||||||||||||||||||||||||||||||
Provision for credit loss | (25 | ) | (19 | ) | 2 | 6 | (18 | ) | (12 | ) | (19 | ) | 1 | 2 | (6 | ) | ||||||||||||||||||||||||
Noninterest expense (ex. M&I and restructuring charges) | 243 | 236 | 230 | 200 | 193 | 93 | 274 | 210 | 120 | 98 | ||||||||||||||||||||||||||||||
Income (loss) before taxes (ex. M&I and restructuring charges) (a) | $ | (62 | ) | $ | 191 | $ | 26 | $ | (143 | ) | $ | 5 | $ | 98 | $ | 742 | $ | (25 | ) | $ | 36 | $ | 98 | |||||||||||||||||
M&I and restructuring charges | 5 | 3 | 14 | 13 | — | 120 | 57 | — | (4 | ) | 8 | |||||||||||||||||||||||||||||
Income (loss) before taxes (a) | $ | (67 | ) | $ | 188 | $ | 12 | $ | (156 | ) | $ | 5 | $ | (22 | ) | $ | 685 | $ | (25 | ) | $ | 40 | $ | 90 | ||||||||||||||||
Average loans and leases | $ | 10,610 | $ | 10,846 | $ | 10,938 | $ | 9,802 | $ | 10,104 | $ | 9,962 | $ | 10,278 | $ | 10,272 | $ | 8,602 | $ | 10,515 | ||||||||||||||||||||
Average assets | $ | 54,734 | $ | 54,700 | $ | 56,808 | $ | 59,045 | $ | 57,059 | $ | 67,241 | $ | 77,284 | $ | 71,359 | $ | 52,416 | $ | 57,679 | ||||||||||||||||||||
(a) In the first quarter of 2014, prior periods were restated to reflect the retrospective application of adopting new accounting guidance related to our investments in qualified affordable housing projects (ASU 2014-01). | ||||||||||||||||||||||||||||||||||||||||
12 |
Investment Management | Investment Services | Other | Consolidated Results | ||||||||||||||||||||||||||||||||||||||||||||||
(dollar amounts in millions unless otherwise noted) | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | 2014 | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||||||||||||||||||||||||
Investment services fees | |||||||||||||||||||||||||||||||||||||||||||||||||
Asset servicing | $ | 106 | $ | 104 | $ | 117 | $ | 3,968 | $ | 3,800 | $ | 3,663 | $ | 1 | $ | 1 | $ | — | $ | 4,075 | $ | 3,905 | $ | 3,780 | |||||||||||||||||||||||||
Issuer services | — | — | — | 966 | 1,087 | 1,049 | 2 | 3 | 3 | 968 | 1,090 | 1,052 | |||||||||||||||||||||||||||||||||||||
Clearing services | — | — | — | 1,329 | 1,258 | 1,183 | 6 | 6 | 10 | 1,335 | 1,264 | 1,193 | |||||||||||||||||||||||||||||||||||||
Treasury services | 9 | 2 | 2 | 555 | 544 | 527 | — | 8 | 20 | 564 | 554 | 549 | |||||||||||||||||||||||||||||||||||||
Total investment services fees | 115 | 106 | 119 | 6,818 | 6,689 | 6,422 | 9 | 18 | 33 | 6,942 | 6,813 | 6,574 | |||||||||||||||||||||||||||||||||||||
Investment management fees | 3,369 | 3,255 | 3,016 | 74 | 63 | 66 | — | 27 | 37 | 3,443 | 3,345 | 3,119 | |||||||||||||||||||||||||||||||||||||
Performance fees | 115 | 130 | 137 | — | — | — | — | — | (1 | ) | 115 | 130 | 136 | ||||||||||||||||||||||||||||||||||||
Foreign exchange and other trading revenue | (23 | ) | 8 | 9 | 627 | 693 | 628 | (34 | ) | (27 | ) | 55 | 570 | 674 | 692 | ||||||||||||||||||||||||||||||||||
Distribution and servicing | 162 | 172 | 187 | 11 | 8 | 5 | — | — | — | 173 | 180 | 192 | |||||||||||||||||||||||||||||||||||||
Financing-related fees | 1 | 5 | 6 | 50 | 44 | 42 | 118 | 123 | 124 | 169 | 172 | 172 | |||||||||||||||||||||||||||||||||||||
Investment and other income | (7 | ) | (14 | ) | (9 | ) | 139 | 142 | 171 | 1,093 | (a) | 376 | (a) | 352 | (a) | 1,225 | (a) | 504 | (a) | 514 | (a) | ||||||||||||||||||||||||||||
Total fee revenue | 3,732 | 3,662 | 3,465 | 7,719 | 7,639 | 7,334 | 1,186 | (a) | 517 | (a) | 600 | (a) | 12,637 | (a)(b) | 11,818 | (a)(b) | 11,399 | (a)(b) | |||||||||||||||||||||||||||||||
Net securities gains (losses) | 1 | 6 | (1 | ) | — | 1 | 11 | 90 | 134 | 152 | 91 | 141 | 162 | ||||||||||||||||||||||||||||||||||||
Total fee and other revenue | 3,733 | 3,668 | 3,464 | 7,719 | 7,640 | 7,345 | 1,276 | (a) | 651 | (a) | 752 | (a) | 12,728 | (a)(b) | 11,959 | (a)(b) | 11,561 | (a)(b) | |||||||||||||||||||||||||||||||
Net interest revenue (expense) | 274 | 260 | 214 | 2,340 | 2,515 | 2,439 | 266 | 234 | 320 | 2,880 | 3,009 | 2,973 | |||||||||||||||||||||||||||||||||||||
Total revenue | 4,007 | 3,928 | 3,678 | 10,059 | 10,155 | 9,784 | 1,542 | (a) | 885 | (a) | 1,072 | (a) | 15,608 | (a) | 14,968 | (a) | 14,534 | (a) | |||||||||||||||||||||||||||||||
Provision for credit losses | — | — | — | — | 1 | (3 | ) | (48 | ) | (36 | ) | (77 | ) | (48 | ) | (35 | ) | (80 | ) | ||||||||||||||||||||||||||||||
Noninterest expenses (ex. intangible amortization) (f) | 2,983 | 2,812 | 2,590 | 7,949 | 7,208 | 7,368 | 947 | 944 | 991 | 11,879 | 10,964 | 10,949 | |||||||||||||||||||||||||||||||||||||
Income (loss) before taxes (ex. intangible amortization) | 1,024 | 1,116 | 1,088 | 2,110 | 2,946 | 2,419 | 643 | (a) | (23 | ) | (a) | 158 | (a) | 3,777 | (a)(b) | 4,039 | (a)(b) | 3,665 | (a)(b) | ||||||||||||||||||||||||||||||
Amortization of intangible assets | 123 | 148 | 192 | 175 | 194 | 192 | — | — | — | 298 | 342 | 384 | |||||||||||||||||||||||||||||||||||||
Income (loss) before taxes and noncontrolling interest | $ | 901 | $ | 968 | $ | 896 | $ | 1,935 | $ | 2,752 | $ | 2,227 | $ | 643 | (a) | $ | (23 | ) | (a) | $ | 158 | (a) | $ | 3,479 | (a)(b) | $ | 3,697 | (a)(b) | $ | 3,281 | (a)(b) | ||||||||||||||||||
Average loans | $ | 10,589 | $ | 9,361 | $ | 7,950 | $ | 33,466 | $ | 28,407 | $ | 25,503 | $ | 10,155 | $ | 10,548 | $ | 9,607 | $ | 54,210 | $ | 48,316 | $ | 43,060 | |||||||||||||||||||||||||
Average assets | $ | 37,783 | $ | 38,546 | $ | 36,120 | $ | 266,483 | $ | 247,430 | $ | 223,233 | $ | 68,300 | $ | 56,335 | $ | 56,028 | $ | 372,566 | $ | 342,311 | $ | 315,381 | |||||||||||||||||||||||||
Average deposits | $ | 14,156 | $ | 13,755 | $ | 11,311 | $ | 221,453 | $ | 206,793 | $ | 185,441 | $ | 6,930 | $ | 5,148 | $ | 7,458 | $ | 242,539 | $ | 225,696 | $ | 204,210 | |||||||||||||||||||||||||
Assets under management at period-end (in billions) (c) | $ | 1,710 | $ | 1,583 | $ | 1,380 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,710 | $ | 1,583 | $ | 1,380 | |||||||||||||||||||||||||
Assets under custody and/or administration at period-end (in trillions) (d) | $ | — | $ | — | $ | — | $ | 28.5 | $ | 27.6 | $ | 26.3 | $ | — | $ | — | $ | — | $ | 28.5 | $ | 27.6 | $ | 26.3 | |||||||||||||||||||||||||
Market value of securities on loan at period-end (in billions) (e) | $ | — | $ | — | $ | — | $ | 289 | $ | 235 | $ | 237 | $ | — | $ | — | $ | — | $ | 289 | $ | 235 | $ | 237 | |||||||||||||||||||||||||
Pre-tax operating margin - GAAP | 22 | % | 25 | % | 24 | % | 19 | % | 27 | % | 23 | % | N/M | N/M | N/M | 22 | % | 25 | % | 23 | % | ||||||||||||||||||||||||||||
Memo: | |||||||||||||||||||||||||||||||||||||||||||||||||
Securities Lending Revenue | $ | 158 | $ | 155 | $ | 198 | |||||||||||||||||||||||||||||||||||||||||||
(a) In the first quarter of 2014, prior periods were restated to reflect the retrospective application of adopting new accounting guidance related to our investments in qualified affordable housing projects (ASU 2014-01). | |||||||||||||||||||||||||||||||||||||||||||||||||
(b) Total fee and other revenue and income before taxes for the years 2012, 2013 and 2014 include income from consolidated investment management funds of $189 million, $183 million and $163 million, respectively, net of income attributable to noncontrolling interests of $76 million, $80 million and $84 million respectively. The net of these income statement line items of $113 million, $103 million and $79 million, respectively, are included above in fee and other revenue. | |||||||||||||||||||||||||||||||||||||||||||||||||
(c) Excludes securities lending cash management assets and assets managed in the Investment Services business. Also excludes assets under management related to Newton's private client business that was sold in September 2013. | |||||||||||||||||||||||||||||||||||||||||||||||||
(d) Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.1 trillion at Dec. 31, 2012, $1.2 trillion at Dec. 31, 2013 and $1.1 trillion at Dec. 31, 2014. | |||||||||||||||||||||||||||||||||||||||||||||||||
(e) Represents the total amount of securities on loan managed by the Investment Services business. Excludes securities for which BNY Mellon acts as agent, beginning in the fourth quarter of 2013, on behalf of CIBC Mellon clients, which totaled $62 billion at Dec. 31, 2013 and $65 billion at Dec. 31, 2014. | |||||||||||||||||||||||||||||||||||||||||||||||||
(f) The second quarter of 2012 includes a charge related to the settlement of the Sigma class action lawsuit. | |||||||||||||||||||||||||||||||||||||||||||||||||
Note: See pages 10 through 12 for businesses results. | |||||||||||||||||||||||||||||||||||||||||||||||||
N/M - Not meaningful |
13 |
2013 | 2014 | 2015 | ||||||||||||||||||||||||||||||||||||||
(dollar amounts in millions) | Mar 31 | Jun 30 | Sep 30 | Dec 31 | Mar 31 | Jun 30 | Sep 30 | Dec 31 | Mar 31 | Jun 30 | ||||||||||||||||||||||||||||||
Nonperforming loans: | ||||||||||||||||||||||||||||||||||||||||
Other residential mortgages | $ | 148 | $ | 135 | $ | 128 | $ | 117 | $ | 107 | $ | 105 | $ | 113 | $ | 112 | $ | 111 | $ | 110 | ||||||||||||||||||||
Wealth management loans and mortgages | 30 | 13 | 12 | 11 | 12 | 12 | 13 | 12 | 12 | 11 | ||||||||||||||||||||||||||||||
Commercial real estate | 17 | 18 | 4 | 4 | 4 | 4 | 4 | 1 | 1 | 1 | ||||||||||||||||||||||||||||||
Commercial | 24 | 24 | 15 | 15 | 13 | 13 | 13 | — | — | — | ||||||||||||||||||||||||||||||
Foreign | 9 | 9 | 9 | 6 | 7 | 4 | — | — | — | — | ||||||||||||||||||||||||||||||
Financial institutions | 3 | 2 | 1 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Total nonperforming loans | 231 | 201 | 169 | 153 | 143 | 138 | 143 | 125 | 124 | 122 | ||||||||||||||||||||||||||||||
Other assets owned | 3 | 3 | 3 | 3 | 3 | 4 | 4 | 3 | 4 | 5 | ||||||||||||||||||||||||||||||
Total nonperforming assets (a) | $ | 234 | $ | 204 | $ | 172 | $ | 156 | $ | 146 | $ | 142 | $ | 147 | $ | 128 | $ | 128 | $ | 127 | ||||||||||||||||||||
Nonperforming assets ratio | 0.48 | % | 0.41 | % | 0.34 | % | 0.30 | % | 0.27 | % | 0.24 | % | 0.26 | % | 0.22 | % | 0.21 | % | 0.20 | % | ||||||||||||||||||||
Nonperforming assets ratio excluding margin loans | 0.65 | % | 0.57 | % | 0.49 | % | 0.43 | % | 0.39 | % | 0.34 | % | 0.37 | % | 0.33 | % | 0.30 | % | 0.30 | % | ||||||||||||||||||||
Allowance for loan losses/nonperforming loans | 102.6 | 105.5 | 121.9 | 137.3 | 138.5 | 135.5 | 133.6 | 152.8 | 153.2 | 150.0 | ||||||||||||||||||||||||||||||
Allowance for loan losses/nonperforming assets | 101.3 | 103.9 | 119.8 | 134.6 | 135.6 | 131.7 | 129.9 | 149.2 | 148.4 | 144.1 | ||||||||||||||||||||||||||||||
Total allowance for credit losses/nonperforming loans | 155.0 | 167.7 | 200.6 | 224.8 | 228.0 | 225.4 | 201.4 | 224.0 | 228.2 | 227.9 | ||||||||||||||||||||||||||||||
Total allowance for credit losses/nonperforming assets | 153.0 | 165.2 | 197.1 | 220.5 | 221.8 | 219.0 | 195.9 | 218.8 | 221.1 | 218.9 | ||||||||||||||||||||||||||||||
(a) Loans of consolidated investment management funds are not part of BNY Mellon's loan portfolio. Included in the loans of consolidated investment management funds are nonperforming loans for the 1st through 4th quarters of 2013 of $161 million, $44 million, $31 million, and $16 million, respectively, for the 1st through 4th quarters of 2014 of $74 million, $68 million, $79 million, and $53 million, respectively. These loans are recorded at fair value and therefore do not impact the provision for credit losses and allowance for loan losses, and accordingly are excluded from the nonperforming assets table above. In 2Q15, BNY Mellon adopted the new accounting guidance included in ASU 2015-02, Consolidations. As a result, we deconsolidated substantially all of the loans of consolidated investment management funds retroactively to Jan. 1, 2015. See page 24 in the Quarterly Earnings Release for additional information on the new accounting guidance. |
14 |
2013 | 2014 | 2015 | ||||||||||||||||||||||||||||||||||||||
(dollar amounts in millions) | Mar 31 | Jun 30 | Sep 30 | Dec 31 | Mar 31 | Jun 30 | Sep 30 | Dec 31 | Mar 31 | Jun 30 | ||||||||||||||||||||||||||||||
Allowance for credit losses: | ||||||||||||||||||||||||||||||||||||||||
Allowance for credit losses | $ | 266 | $ | 237 | $ | 212 | $ | 206 | $ | 210 | $ | 198 | $ | 187 | $ | 191 | $ | 191 | $ | 190 | ||||||||||||||||||||
Allowance for lending-related commitments | 121 | 121 | 125 | 133 | 134 | 128 | 124 | 97 | 89 | 93 | ||||||||||||||||||||||||||||||
Allowance for credit losses - beginning of period | 387 | 358 | 337 | 339 | 344 | 326 | 311 | 288 | 280 | 283 | ||||||||||||||||||||||||||||||
Net (charge-offs) | ||||||||||||||||||||||||||||||||||||||||
Charge-offs | (5 | ) | (3 | ) | (2 | ) | (6 | ) | (1 | ) | (4 | ) | (5 | ) | (10 | ) | — | — | ||||||||||||||||||||||
Recoveries | — | 1 | 2 | 5 | 1 | 1 | 1 | 1 | 1 | 1 | ||||||||||||||||||||||||||||||
Total Net (charge-offs) | (5 | ) | (2 | ) | — | (1 | ) | — | (3 | ) | (4 | ) | (9 | ) | 1 | 1 | ||||||||||||||||||||||||
Provision for credit losses | (24 | ) | (19 | ) | 2 | 6 | (18 | ) | (12 | ) | (19 | ) | 1 | 2 | (6 | ) | ||||||||||||||||||||||||
Allowance for credit losses - end of period | 358 | 337 | 339 | 344 | 326 | 311 | 288 | 280 | 283 | 278 | ||||||||||||||||||||||||||||||
Allowance for loan losses | ||||||||||||||||||||||||||||||||||||||||
Allowance for loan losses | $ | 237 | $ | 212 | $ | 206 | $ | 210 | $ | 198 | $ | 187 | $ | 191 | $ | 191 | $ | 190 | $ | 183 | ||||||||||||||||||||
Allowance for lending-related commitments | 121 | 125 | 133 | 134 | 128 | 124 | 97 | 89 | 93 | 95 | ||||||||||||||||||||||||||||||
Allowance for credit losses - end of period | 358 | 337 | 339 | 344 | 326 | 311 | 288 | 280 | 283 | 278 | ||||||||||||||||||||||||||||||
Allowance for loan losses as a percentage of total loans | 0.48 | % | 0.42 | % | 0.41 | % | 0.41 | % | 0.37 | % | 0.32 | % | 0.33 | % | 0.32 | % | 0.31 | % | 0.29 | % |
15 |
Notes: |
The following transactions/changes have impacted the reporting of our results: |
The first quarter of 2015 was restated to reflect the retrospective application of adopting new accounting guidance related to Consolidations (ASU 2015-02). See page 24 of the Quarterly Earnings Release for more information. |
In the first quarter of 2014, prior periods were restated to reflect the retrospective application of adopting new accounting guidance related to our investments in qualified affordable housing projects (ASU 2014-01). |
In the first quarter of 2014, results of Newton's private client business were reclassified from the Investment Management business to the Other segment. Newton's private client business was sold in September 2013. |
Restructuring charges in the second quarter of 2014 represent corporate initiatives and were recorded in the Other segment. In the fourth quarter of 2013, restructuring charges were recorded in the businesses. Prior to the fourth quarter of 2013, all restructuring charges were reported in the Other segment. |
In the first quarter of 2013, incentive expense related to restricted stock and certain corporate overhead charges were allocated to Investment Management and Investment Services businesses which were previously included in the Other segment. All prior periods were restated to reflect these changes. |
Certain immaterial reclassifications/revisions have been made to prior periods to place them on a basis comparable with the current period's presentation. |
In businesses where average deposits are greater than average loans, average assets include an allocation of investment securities equal to the difference. |
Quarterly return on common and tangible common equity ratios are annualized. |
Non-GAAP Measures: |
Certain Non-GAAP measures are included in this document. These measures are used by management to monitor financial performance, both on a company-wide and on a business basis. These Non-GAAP measures relate to certain revenue/expense categories, percentages and ratios as described in footnotes. For further information, see 'Supplemental information -- Explanation of GAAP and Non-GAAP Financial Measures' in the Quarterly Earnings Release. Summations may not equal due to rounding. As a result of our rounding convention and reclassifications noted above, differences may exist between the business trends data versus business data in the Form 10-K for the year ended December 31, 2014 or other reports filed with the SEC. |
16 |
Total Shareholder Return | 2013 | 2014 | YTD 6/30/15 |
BNY Mellon | 38.6% | 18.3% | 4.4% |
11-Member Peer Group Median (a) | 38.9% | 13.8% | 0.7% |
S&P 500 Financials | 35.6% | 15.2% | (0.4)% |
S&P 500 Index | 32.4% | 13.7% | 1.2% |
Strategic Priorities to Drive Growth | |
Driving Revenue Growth | • Delivered revenue growth across our businesses • Continued growth in Clearing and Global Collateral Services |
Business Improvement Process | • Continued expense control • Positive results reflect benefits in areas where we have been investing in enhanced capabilities for our clients • Divesting Meriten investment manager |
Being a Strong, Safe, Trusted Counterparty | • Strong liquidity and improving capital positions |
Generating Excess Capital and Deploying Capital Effectively | • Executing on capital plan and returning value to shareholders o More than $1B returned in share repurchases and dividends |
Attracting and Retaining Top Talent | • Further improving expertise in Investment Services and Client Technology Solutions |
• | Total revenue in 2Q15 increased 3% year-over-year, as adjusted (b) |
• | Continued fee income growth |
◦ | Investment Management and performance fees decreased 1% year-over-year, or increased 5% on a constant currency basis, as adjusted (b) |
◦ | Investment Services fees increased 4% year-over-year |
• | Combination of Investment Management and Investment Services positions us well for future growth |
• | Continued progress on expense control in 2Q15 |
◦ | Expenses in 2Q15 decreased 1% year-over-year, as adjusted (b) |
• | Generated more than 460 basis points of positive operating leverage, as adjusted (b) |
• | AUM up 5% in 2Q15 versus 2Q14 |
◦ | $15 billion of net long-term AUM outflows in 2Q15 |
• | AUC/A increased slightly in 2Q15 versus 2Q14 |
◦ | $1.02 trillion of estimated new business wins in 2Q15 |
• | Optimizing our infrastructure to create efficiencies and cost savings |
• | Insourcing application development to retain talent and expertise |
• | Shifting our investments from tactical to strategic, enhancing client experience |
• | Digitizing BNY Mellon: BNY Mellon Extreme Platform (BXP); Digital Pulse |
• | Extending technology solutions leadership: Eagle, Albridge, HedgeMark, NetX360 |
• | Deploying NEXEN: Our next generation, intelligent and secure, open-architecture platform |
Revenue initiatives | Expense Initiatives |
o Entered significant strategic partnership in Asset Servicing | o Exited Central Securities Depository |
o Extending private banking solutions to Pershing clients | o Exiting U.K.Transfer Agency retail business |
o Created direct lending capability through investment management | o Exited separately managed accounts solutions business in Asia |
o Created dedicated technology solutions unit to increase return on technology investment | o Exited Transition Management and derivatives clearing (U.S. & Europe) |
o Created the Markets Group | o Sold One Wall Street Headquarters |
• | Numerous ongoing initiatives focused on: Portfolio Review; Operations and Technology Enhancements; Real Estate & Procurement; and Process Improvement |
• | Capital generation and strong liquidity position |
• | Key capital ratios continue to improve, ending 2Q15 with an estimated common equity tier 1 ratio, fully phased-in (Non-GAAP) under the Advanced Approach of 9.9% (b) |
• | Compliant with estimated U.S. LCR1: >100% (current requirement is 80%) |
• | 2015 Capital Plan: repurchase up to $3.1 billion in common stock and maintain strong dividend payout ratio |
◦ | Repurchased 19.4 million common shares for $834 million in 2Q15 |
• | Delivered return on tangible common equity of 22% in 2Q15 (b) |
• | Post financial crisis, our capital generation enabled us to more than double tangible capital |
Flat | Normalizing | |
Revenue Growth3 | 3.5 - 4.5% | 6 - 8% |
EPS Growth3 | 7 - 9% | 12 - 15% |
Return on Tangible Common Equity | 17 - 19% | 20 - 22% |
Assumptions | • NIM: 95 - 100 bps • Operating margin: 28 - 30% • Environment: no deterioration in volatility, volume, short-term interest rates | • NIM: 125 - 150 bps • Operating margin: 30 - 32% |
100% payout ratio Execution on expense and revenue initiatives Equity market, +5% p.a. Reasonable regulatory outcomes Deposits, money market balances and fee waivers recovery as modeled |
(a) | For information about our 11-Member Peer Group, see page 46 of our Proxy Statement dated |
(b) | This fact sheet includes Non-GAAP measures. These measures are used by management to monitor financial performance and capital adequacy and BNY Mellon believes they are useful to investors in analyzing financial results and trends of ongoing operations because they permit a focus on period-to-period comparisons, which relate to the ability of BNY Mellon to enhance revenue and limit expenses in circumstances where such matters are within BNY Mellon's control. For a reconciliation of these measures and further information, see “Supplemental information – Explanation of GAAP and Non-GAAP Financial Measures” in BNY Mellon’s Quarterly Earnings Release dated July 21, 2015, filed as an exhibit to the Current Report on Form 8-K to which this fact sheet is furnished as an exhibit. |
(c) | Preliminary. |
2 | Additional information regarding Financial Goals is available in the company’s 2014 Investor Day presentation available at www.bnymellon.com/investorrelations. |
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