December 5, 2012 Presented by: Gerald Hassell – Chairman & CEO Todd Gibbons – Chief Financial Officer Exhibit 99.1 Goldman Sachs Financial Services Conference 2012 |
Goldman Sachs Financial Services Conference 2012 Cautionary Statement A number of statements in our presentations, the accompanying slides and the responses to your questions are “forward- looking statements.” These statements relate to, among other things, The Bank of New York Mellon Corporation’s (the “Corporation”) financial outlook and future financial results, including statements with respect to market and economic outlook and the Corporation's growth profile, balance sheet, capital and culture; priorities in a challenging operating environment; driving organic revenue growth, including statements about Global Collateral Services and building on our international presence; operational excellence initiatives, including statements regarding business operations, technology and corporate services initiatives, projected program savings and annualized targeted savings; expectations regarding Basel III; statements regarding the operating environment’s impact on revenue, including 4Q12 trends with respect to net interest revenue, Corporate Trust and the Depositary Receipts market; expectations with respect to returning capital to shareholders; and statements regarding the Corporation's aspirations, as well as the Corporation’s overall plans, strategies, goals, objectives, expectations, estimates, intentions, targets, opportunities and initiatives. These forward-looking statements are based on assumptions that involve risks and uncertainties and that are subject to change based on various important factors (some of which are beyond the Corporation’s control). Actual results may differ materially from those expressed or implied as a result of the factors described under “Forward Looking Statements” and “Risk Factors” in the Corporation’s 2011 Annual Report on Form 10-K for the year ended December 31, 2011, the “2011 Annual Report”, the Quarterly Reports on Form 10-Q for the quarters ended June 30, 2012 and September 30, 2012 and in other filings of the Corporation with the Securities and Exchange Commission (the “SEC”). Such forward-looking statements speak only as of December 5, 2012, and the Corporation undertakes no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events. Non-GAAP Measures: In this presentation we will discuss some non-GAAP measures in detailing the Corporation’s performance. We believe these measures are useful to the investment community in analyzing the financial results and trends of ongoing operations. We believe they facilitate comparisons with prior periods and reflect the principal basis on which our management monitors financial performance. Additional disclosures relating to non-GAAP measures are contained in the Appendix and in the Corporation’s reports filed with the SEC, including the 2011 Annual Report and the Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, available at www.bnymellon.com. 1 |
Goldman Sachs Financial Services Conference 2012 Attractive Business Model A leading manager and servicer of global financial assets 2 Growth Profile Deliver revenue growth in challenging markets, significant upside in normalized markets Operational Excellence Improve efficiency to increase margins, reduce operational risk and deliver the highest service quality Balance Sheet Highly liquid, excellent credit quality and strong capital position Capital Significant capital generation, disciplined capital deployment and high returns on tangible equity Culture Collaborate across our businesses to power global investments for our clients and shareholders |
Goldman Sachs Financial Services Conference 2012 Investment Services (36% non-U.S. Revenue) • Largest global custodian • Global Collateral Management – #1 • Alternative Investment Services – #3 Fund Administrator • Corporate Trust – #1 ~$11.6T in outstanding debt serviced • Depositary Receipts – #1 >60% market share • Pershing – #1 clearing firm in U.S., U.K., Ireland, Australia • Treasury Services – Top 5 global payments Investment Management (44% non-U.S. Revenue)¹ • Asset Management – #7 global asset manager • Wealth Management – #8 U.S. wealth manager Leading Manager and Servicer of Global Financial Assets 3 The global leader in Investment Services, ~$27.9T AUC/A LTM ended 9/30/12: Revenue $9.9B Pretax Income $2.6B A leading global Investment Manager, ~$1.4T AUM LTM ended 9/30/12: Revenue $3.6B Pretax Income $1.0B NOTES: 1 Non-U.S. revenue percentages are last twelve months (LTM) ended 9/30/12. Rankings reflect BNY Mellon's size in the markets in which it operates and are based on internal data as well as BNY Mellon's knowledge of those markets. For additional details regarding these rankings, see page 23 of the Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, available at See Appendix for revenue and pretax income reconciliation. 1 www.bnymellon.com/investorrelations. |
Goldman Sachs Financial Services Conference 2012 We are an Investments Company Serving clients across and at any point in the investment life cycle Investment Life Cycle 4 Depositary Receipts Broker-Dealer Svcs. Global Markets Treasury Services Asset Servicing Investment Management Investment Management Pershing Corporate Trust Create Assets Trade Assets Hold Assets Manage Assets Distribute Assets Restructure Assets |
Goldman Sachs Financial Services Conference 2012 MANAGE Investment Management TRADE Global Collateral Services, Lending, Global Markets, and Treasury Services HOLD Asset Servicing, Pershing, Liquidity Services CREATE Corporate Trust, Depositary Receipts, Capital Markets, Lending DISTRIBUTE Pershing, Liquidity Services 5 Spanning the Investment Life Cycle A client example RESTRUCTURE Corporate Trust Client Example: Large Global Financial Institution RIA = Registered Investment Advisors Debt Servicing globally Depositary Receipts agent for “end” client’s equity issuance Debt underwriting Secured lending U.S. Domestic Clearance Global collateral management Secured financing Currency hedging for alternative investment funds U.S. Cash Management for broker/dealer funding operations Custody and fund services Check-writing for U.S. Operations Administrative / operational support for separately-managed accounts in client’s wealth management business Tri-party custody of initial margin for client’s prime brokerage clients Manage institutional and private wealth assets: Manage U.S. employee 401(k) assets Overnight cash deposits invested via BNY Mellon Cash Investment Strategies Debt Servicing in the Americas, EMEA and APAC for CDOs, CLOs, and Re-securitizations Distribute client’s: Mutual funds via Pershing’s extensive RIA network Money-market funds to our Investment Servicing clients |
Goldman Sachs Financial Services Conference 2012 Challenging Operating Environment Persists 6 • “Lower for longer” macro environment – Interest rates and economic forecasts • Eurozone and U.S. “fiscal cliff” concerns • De-risking • Lower trading volumes and volatility • Weak structured debt securitizations market • Cyclical headwinds for Depositary Receipts |
Goldman Sachs Financial Services Conference 2012 Priorities in a Challenging Operating Environment 7 Organic Revenue Growth • Winning new business • Providing client solutions to address increasing regulation • Building on our international presence • Fostering culture of collaboration and innovation Operational Excellence Initiatives • Targeting $650-$700MM in pre-tax savings for 2015 Strong and Liquid Balance Sheet • Excellent credit quality • Significant capital generation • Business model performs well under stress tests • Highest credit ratings among U.S. banks Disciplined Capital Deployment • Investing in business • Returning capital to shareholders through share repurchases and dividends Deliver consistent EPS growth and return capital to shareholders |
Goldman Sachs Financial Services Conference 2012 Cumulative Assets Under Custody Wins LTM ending 9/30/12 Driving Organic Revenue Growth Continuing to win new business ($ billions) Cumulative Long-Term Net Flows LTM ending 9/30/12 ($ billions) 8 $431 $884 $1,198 $1,720 $0 $500 $1,000 $1,500 $2,000 4Q11 1Q12 2Q12 3Q12 $16 $23 $49 $58 $0 $20 $40 $60 $80 4Q11 1Q12 2Q12 3Q12 |
Goldman Sachs Financial Services Conference 2012 As of September 30, 2012 9 Global Collateral Services By the Numbers $2.0 trillion in global collateral assets $40 billion in derivatives collateral assets $100 billion in assets invested through the Liquidity DIRECT investment portal $300 billion average daily outstanding securities on loan Driving Organic Revenue Growth Global Collateral Services – client solutions to address increasing regulation SM Hold / Segregate / Aggregate Manage Inventory / Process Transform / Finance Transparency / Reporting Collateral |
Goldman Sachs Financial Services Conference 2012 BNY Mellon Solutions Emerging Mature Trade Finance Cash & Credit Depositary Receipts Corporate Trust Fund Administration Asset Management Asset Servicing Wealth Management Asset Management Asset Servicing Wealth Management Clearing Services Alternative Investment Services Driving Organic Revenue Growth Building on our international presence China Mexico Russia Brazil Singapore South Africa US UK Japan India Germany France Poland Gulf region Maturity of market Australia/NZ $10-60T $1-10T Canada South Korea SOURCE: McKinsey Global Banking Pools database 10 |
Goldman Sachs Financial Services Conference 2012 Winning Through Collaboration and Innovation Issuer & Treasury Services Investment Management • Embed a culture of ongoing collaboration and innovation – Leverage our product breadth to deliver value- added client solutions – Realize revenue cross- sell opportunities – Enhance operations and technology efficiency 11 Clearing Services Asset Servicing Prime Custody Operations Utility System Consolidation Global Collateral Services D360 Leverage Corporate Infrastructure and Buying Power Platforms – RIA, DC, Managed Accts |
Goldman Sachs Financial Services Conference 2012 Operational Excellence Initiatives Transforming Operations, Technology and Corporate Services 12 $0 $250 $500 Gross Savings Program Costs Net Savings $223 $240 - $260 $120 - $130 $360 - $390 Sept – 2012 YTD 2012 Target $51 $274 Total Targeted Pre-tax Savings for 2015: $650 - $700MM |
Goldman Sachs Financial Services Conference 2012 Continuing to Leverage Our Strengths Strong capital generation and disciplined deployment 13 ($ billions) Basel I Tier 1 Common 60 – 65% 35 – 45% 20 – 25% ~68% Share Repurchases Dividends ~45% ~23% Tangible Capital (cumulative) 9/30/12 YTD Payout Ratio³ Target Annual Payout Ratio Payout Ratio (as a % of Net Income) CCAR 2012 Stress Test Results² Growing capital… Performing well in stress tests… Flexibility to return capital… 1 BK SOURCE: Federal Reserve – CCAR 2012 Methodology and Results for Stress Scenario Projections 0% 2% 4% 6% 8% 10% 12% 14% Ally STI C MET KEYJPM MS USBGS BACPNCWFCFITBBBT RF COF AXPSTT $0.6 $1.3 $1.8 $2.6 $0.0 $1.0 $2.0 $3.0 4Q11 1Q12 2Q12 LTM 3Q12 1 Represents a non-GAAP measure. See Appendix for a reconciliation. Additional disclosure regarding this measure and other non-GAAP measures is available in the Corporation’s reports filed with the SEC, including our Form 10-Q for the quarter ended September 30, 2012, available at www.bnymellon.com/investorrelations. 2 Represents minimum stressed ratios with all proposed capital actions through Q4 2013 from 2012 Comprehensive Capital Analysis and Review (CCAR). 3 9/30/12 YTD payout ratio reflects net income adjusted for the impact of certain litigation expenses. |
Goldman Sachs Financial Services Conference 2012 3,002 2,634 2,516 501 524 836 754 670 0 500 1,000 1,500 2,000 2,500 3,000 3,500 2005 2006 2007 2008 2009 2010 2011 YTD* 2012 6 7 8 9 10 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 0 100 200 300 400 500 600 2011 2012 Operating Environment: Continuing to Pressure Revenue 0.25 0.30 0.35 0.40 0.45 0.50 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 3-Month LIBOR (U.S.) FX Volatility FX Volatility 3Q12 Average 4Q12 Average Source: Bloomberg (Deutsche Bank Index, Ticker = CVIX) 3-Month LIBOR (U.S.) Source: Bloomberg (Ticker = US0003M) Depositary Receipts (DR) Market Drivers (DR Capital Raisings, Non-U.S. Market IPOs & DR Corporate Actions) Source: Renaissance Capital and internal company data; IPO threshold, >US$100MM NOTE: Reflects volumes for Jan. 1 through Nov. 30 of 2011 and 2012. 14 Global Debt Issuance Volume (ABS, MBS, CDOs & CLOs) Source: Thomson Reuters * YTD = year-to-date (11/30/12) NOTE: Reflects ABS, MBS, CDO and CLO issuances only. 474 338 |
Goldman Sachs Financial Services Conference 2012 Our Business Model Drives Value Broadest product breadth to deliver client solutions Benefits from globalization and long-term growth of financial assets Generates recurring core fee revenue that is less reliant on risk- weighted asset growth Generates significant levels of capital that can be returned to shareholders Strong relative performance in challenging markets; significant upside when markets normalize 15 |
Appendix |
Goldman Sachs Financial Services Conference 2012 BNY Mellon Peer Groups Corporate 12-Member Peer Group Top 10 U.S. Banks (by Market Capitalization) American Express BNY Mellon Bank of America Bank of America BlackRock Citigroup Charles Schwab JPMorgan Chase Citigroup Fifth Third JPMorgan Chase Northern Trust Northern Trust PNC Financial PNC Financial State Street Prudential Financial SunTrust State Street U.S. Bancorp U.S. Bancorp Wells Fargo Wells Fargo 18 |
Goldman Sachs Financial Services Conference 2012 Reconciliation Schedule Business – revenue and pretax income ($millions) Revenue 4Q11 1Q12 2Q12 3Q12 LTM 3Q12 Investment Services $2,415 $2,494 $2,488 $2,487 $9,884 Investment Management $822 $907 $913 $924 $3,566 ($millions) Pretax Income 4Q11 1Q12 2Q12 3Q12 LTM 3Q12 Investment Services $709 $699 $405 $756 $2,569 Investment Management $190 $288 $271 $280 $1,029 Note: Pre-tax metrics exclude the impact of historical intangible amortization. LTM = last twelve months ended 9/30/12 19 |
Goldman Sachs Financial Services Conference 2012 Capital Ratio Definitions Tier 1 Capital Represents common shareholders’ equity (excluding certain components of comprehensive income) and qualifying trust preferred securities, adjusted for goodwill and certain intangible assets, deferred tax liabilities associated with non-tax deductible intangible assets and tax deductible goodwill, pensions, securities valuation allowance, merchant banking investments and deferred tax asset. Tier 1 Common Equity Represents Tier 1 capital excluding qualifying trust preferred securities divided by total risk weighted assets. 20 |
Goldman Sachs Financial Services Conference 2012 Reconciliation Schedule Tangible capital generation ($millions) Tangible Net Income 4Q11 1Q12 2Q12 3Q12 LTM 3Q12 Net income – continuing operations¹ $505 $619 $466 $720 $2,310 Intangible amortization – after-tax 66 61 61 60 248 Tangible Net Income $571 $680 $527 $780 $2,558 1 Represents a non-GAAP measure. Additional disclosure regarding this and other non-GAAP measures is available in the Corporation’s reports filed with the SEC, including our current reports on Form 8-K filed on October 17, 2012 and October 19, 2012, particularly page 21 of Exhibit 99.1 (Earnings Review), available at www.bnymellon.com/investorrelations. 21 |
Goldman Sachs Financial Services Conference 2012 Reconciliation Schedule Return on tangible common equity ($millions) Net Income 2012 YTD ($millions) Average Tangible Common Equity 2012 YTD Net income – continuing operations¹ $1,805 Average common shareholder’s equity $34,123 Intangible amortization 182 Less: Average goodwill 17,941 Average intangible assets 5,023 Net Income applicable to common shareholders $1,987 Add: Tax deductible goodwill (DTL) 1,057 Non-tax deductible intangible assets (DTL) 1,339 Average tangible common equity $13,555 Return on tangible common equity (annualized) = 19.6% 1 Represents a non-GAAP measure. Additional disclosure regarding this and other non-GAAP measures is available in the Corporation’s reports filed with the SEC, including our current reports on Form 10-Q filed for quarter ended September 30, 2012, available at www.bnymellon.com/investorrelations. 22 |
Goldman Sachs Financial Services Conference 2012 $MM 2015 Investment Management $40 - $45 Investment Services 375 - 405 Total Business Operations $415 - $450 Technology / Corporate Services 235 - 250 Pre-tax Savings $650 - $700MM Driving Operational Excellence $650MM to $700MM of savings for 2015 23 |
Goldman Sachs Financial Services Conference 2012 Financial Summary 2015 Program Savings • Estimated pre-tax savings of $650 - $700 MM Calendar Year Savings • 2012: $240 – $260 MM • 2013: $400 – $430 MM • 2014: $535 – $575 MM Savings net of program costs / reinvestment 4Q11 Impact • $80-$100 MM of incremental expense Driving Operational Excellence Transforming Operations, Technology and Corporate Services 24 |