January 21, 2016
KEY FACTS – Fourth Quarter 2015
Delivering for Shareholders
Total Shareholder Return | 2013 | 2014 | 2015 |
BNY Mellon | 38.6% | 18.3% | 3.3% |
11-Member Peer Group Median (a) | 38.9% | 13.8% | (2.3)% |
S&P 500 Financials | 35.6% | 15.2% | (1.6)% |
S&P 500 Index | 32.4% | 13.7% | 1.4% |
Strategic Priorities to Drive Growth | |
Driving Profitable Revenue Growth | • Delivered total revenue growth year-over-year, as adjusted (b) • Continued growth in Global Collateral and Broker-Dealer Services |
Business Improvement Process | • Continued expense control discipline • Positive results reflect benefits in areas where we have been investing in enhanced capabilities for our clients • Strengthened footprint in fast growing U.S. wealth market |
Being a Strong, Safe, Trusted Counterparty | • Strong liquidity and capital positions |
Generating Excess Capital and Deploying Capital Effectively | • Executing on capital plan and returning value to shareholders o More than $600MM returned in common share repurchases and dividends in 4Q15 |
Attracting and Retaining Top Talent | • Further improving expertise in Investment Services, Investment Management and Client Technology Solutions |
Revenue Growth
• | Total revenue increased 2%, as adjusted (b) |
• | Stable fee income trends despite challenging revenue environment |
◦ | Investment Services fees were flat |
◦ | Investment Management and performance fees decreased 2%, or increased 1% on a constant currency basis, as adjusted (b) |
• | Combination of Investment Management and Investment Services positions us well for future revenue growth |
Expense Control and Significant Positive Operating Leverage
• | Continued progress on Business Improvement Process expense control discipline |
◦ | Expenses decreased 2%, as adjusted (b) |
• | Generated more than 300 basis points of positive operating leverage1, as adjusted (b) |
AUC/A and AUM (c)
• | AUC/A of $28.9 trillion increased 1% |
◦ | $49 billion of estimated new business wins in 4Q15 |
• | AUM of $1.63 trillion decreased 4% |
◦ | $11 billion of net long-term AUM outflows in 4Q15 |
NOTE: Comparisons above are 4Q15 versus 4Q14 unless otherwise stated.
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Managing Technology as a Strategic Asset
• | Focusing on enhancing the client experience |
• | Optimizing our infrastructure to create efficiencies and cost savings |
• | Converting clients to Strategic Platforms, retiring legacy systems |
• | 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 |
◦ | Nexen Gateway, API Store, App Store |
• | Insourcing application development to retain talent and expertise |
• | Shifting our investments from tactical to strategic |
Business Improvement Process
Revenue initiatives | Expense Initiatives |
o Strengthened footprint in one of fastest growing U.S. wealth markets | o Implementing Bring-Your-Own-Device strategy as well as Smart Technology, leveraging robotics and machine learning |
o Expanded scope of Client Pricing Strategy group to include reviewing balance sheet-related business practices and standardizing pricing across business units | o Relocated to new, more cost-efficient headquarters and rationalizing other locations across real estate footprint |
o Strategic Platform Investments (T Rowe Price, Deutsche Bank Real Estate / Private Equity Administration, etc.) | o Developed tools to reduce costs and improve the delivery of market data |
o Extending private banking solutions to Pershing clients | o Exited separately managed account solutions business in Asia; divested Meriten asset manager in Germany |
• | Numerous ongoing initiatives focused on: Business Excellence; Continuous Process Improvement; Client Technology Solutions; Corporate Services; and Business Partner Activity Process |
Resilient Capital Position and Returning Value to Shareholders
• | Developed tools to reduce costs and improve the delivery of market data |
• | Resilient capital and strong liquidity positions |
• | Estimated common equity tier 1 ratio, fully phased-in (Non-GAAP) under the Advanced Approach of 9.5% (b) |
• | Compliant with fully phased-in requirements of U.S. LCR2 |
• | 2015 Capital Plan3: authorized to repurchase up to $3.1 billion in common stock and maintain strong dividend payout ratio |
◦ | Repurchased 10.1 million common shares for $431 million in 4Q15 and 55.6 million common shares for $2.4 billion in full-year 2015 |
• | Delivered adjusted return on tangible common equity of 19% in 4Q15 and 21% in FY15 (b) |
Three-Year Financial Goals4 — Operating Basis: 2015 through 2017
Flat | Normalizing | |
Revenue Growth5 | 3.5 - 4.5% | 6 - 8% |
EPS Growth5 | 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 |
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AUC/A = Assets Under Custody/Administration; AUM = Assets Under Management; API = Application Programming Interface
(a) | For information about our 11-Member Peer Group, see page 46 of our Proxy Statement dated |
March 13, 2015.
(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 January 21, 2016, filed as an exhibit to the Current Report on Form 8-K to which this fact sheet is furnished as an exhibit. |
(c) | Preliminary. |
1 Pre-tax operating leverage is the rate of increase in total revenue less the rate of increase in total noninterest expense. The year-over-year pre-tax operating leverage (Non-GAAP) is based on growth in total revenue, as adjusted (Non-GAAP), of 153 basis points, and a decrease in total noninterest expense excluding amortization of intangible assets, M&I, litigation and restructuring charges, as adjusted (Non-GAAP), of 155 basis points.
2 Estimated U.S. Liquidity Coverage Ratio (LCR) is compliant with the fully phased-in requirements as
of December 31, 2015 based on our current understanding of the U.S. LCR rules.
3 The 2015 Capital Plan covers five fiscal quarters and includes $700MM of the common stock repurchases, contingent on the prior issuance of $1B of qualifying preferred stock, and a quarterly common dividend of $0.17 cents per common share. On April 28, 2015, the Company completed a $1B preferred stock offering.
4 | Additional information regarding Financial Goals is available in the company’s 2014 Investor Day presentation available at www.bnymellon.com/investorrelations. |
5 Represents compound annual growth rates (CAGR).
NOTE: Normalizing environment represents market consensus on rates; Flat environment assumes no rate increase from present. Financial projections are reflected on a non-GAAP basis - excludes merger and integration, restructuring and litigation expenses, and other non-recurring items. Additional disclosure regarding non-GAAP measures is available in the Corporation’s reports filed with the SEC, available at www.bnymellon.com/investorrelations. Actual results may vary materially.
This fact sheet may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including our estimated capital ratios, preliminary business metrics and our strategic priorities, technology, streamlining initiatives, capital plans and financial goals. These statements, which may be expressed in a variety of ways, include the use of future or present tense language. These statements and other forward-looking statements contained in other public disclosures of BNY Mellon, are based upon current beliefs and expectations and are subject to significant risks and uncertainties (some of which are beyond BNY Mellon’s control). Factors that could cause BNY Mellon’s results to differ materially from those described in the forward-looking statements can be found in the risk factors set forth in BNY Mellon’s Annual Report on Form 10-K for the year ended Dec. 31, 2014 and its other filings with the Securities and Exchange Commission. All forward-looking statements in this fact sheet speak only as of January 21, 2016 and BNY Mellon undertakes no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.
Additional information about BNY Mellon is available in our annual report on Form 10-K, proxy statement, quarterly reports on Form 10-Q and our current reports on Form 8-K filed with the SEC, available at www.sec.gov.
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