BNY Mellon Reports Fourth Quarter 2023
Earnings Per Common Share of $0.33, or $1.28 as Adjusted (a)
Full-Year 2023 Earnings Per Common Share of $4.00, or $5.05 as Adjusted (a)
NEW YORK, January 12, 2024 – The Bank of New York Mellon Corporation (“BNY Mellon”) (NYSE: BK) today has reported financial results for the fourth quarter 2023.
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| CEO COMMENTARY |
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| The fourth quarter marked the close to a year in which we clarified our strategic priorities and laid a foundation for a multi-year transformation. In 2023 we started to show early evidence that we can deliver stronger financial performance. We exceeded the financial outlook that we communicated at the beginning of last year and today we are announcing further improved financial targets for each of our business segments and the firm overall in the medium-term. |
| Our 2023 financial results also once again highlight BNY Mellon’s characteristic resilience and our ability to perform in challenging operating environments. Against a complex backdrop of macro-economic uncertainty, evolving monetary policies and geopolitical tensions, our earnings per share for the full-year 2023 increased year-over-year by 38% on a reported basis and by 10% on an adjusted basis. Pre-tax margin and ROTCE improved on the back of significant operating leverage generation, and we further strengthened our regulatory capital and liquidity ratios, all while returning $3.9 billion of capital, or 123% of earnings, |
to common shareholders in 2023. We are entering 2024, the year of our 240th anniversary, on a strong footing and with great momentum. Our priorities are clear, and we are moving with speed to be more for our clients, run our company better, and power our culture in 2024 and beyond. | |
– Robin Vince, President and Chief Executive Officer |
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| KEY FINANCIAL INFORMATION |
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| (in millions, except per share amounts and unless otherwise noted) | | 4Q23 vs. |
| 4Q23 | 3Q23 | 4Q22 |
| Selected income statement data: | | | |
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| Total fee revenue | $ | 3,214 | | (1) | % | — | % |
| Investment and other revenue | (4) | | N/M | N/M |
| Net interest revenue | 1,101 | | 8 | | 4 | |
| Total revenue | 4,311 | | (1) | | 10 | |
| Provision for credit losses | 84 | | N/M | N/M |
| Noninterest expense | 3,868 | | 25 | | 20 | |
| Net income applicable to common shareholders | 256 | | (73) | % | (50) | % |
| Diluted EPS | $ | 0.33 | | (73) | % | (47) | % |
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| Selected metrics: | | | |
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AUC/A (in trillions) | $ | 47.8 | | 5 | % | 8 | % |
AUM (in trillions) | $ | 2.0 | | 8 | % | 8 | % |
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| Financial ratios: | 4Q23 | 3Q23 | 4Q22 |
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| Pre-tax operating margin | 8 | % | 29 | % | 17 | % |
| ROE | 2.8 | % | 10.5 | % | 5.7 | % |
ROTCE (a) | 5.6 | % | 20.5 | % | 11.5 | % |
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| Capital ratios: | | | |
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| Tier 1 leverage ratio | 6.0 | % | 6.1 | % | 5.8 | % |
| CET1 ratio | 11.6 | % | 11.4 | % | 11.2 | % |
Results
•Total revenue of $4.3 billion, increased 10%; or
2% excluding notable items (a)
•Noninterest expense of $3.9 billion, increased 20%; or 4% excluding notable items (a)
•Diluted EPS of $0.33, decreased 47%; or
2% excluding notable items (a)
4Q23 Notable items
•Results include $752 million of noninterest expense related to the FDIC special assessment, severance and litigation reserves and a $150 million reduction in investment and other revenue primarily related to a fair value adjustment of a contingent consideration receivable related to a prior year divestiture
Profitability
•Pre-tax operating margin of 8%; or 28% excluding notable items (a)
•ROTCE of 5.6% (a); or 20.9% excluding notable items (a)
Balance sheet
•Average deposits of $273 billion, decreased 4% year-over-year and increased 4% sequentially
•Tier 1 leverage ratio of 6.0%, increased 25 bps year-over-year and decreased 8 bps sequentially
Capital distribution
•Returned $778 million of capital to common shareholders
•$328 million of dividends
•$450 million of share repurchases
•Total payout ratio of 123% for full-year 2023
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$0.33 EPS | $1.28 (a) Adj. EPS | | 8% Pre-tax margin | 28% (a) Adj. Pre-tax margin | | 2.8% ROE | 20.9% (a) Adj. ROTCE |
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| (a) For information on the Non-GAAP measures, see “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11. |
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| Note: Above comparisons are 4Q23 vs. 4Q22, unless otherwise noted. |
Investor Relations: Marius Merz (212) 298-1480 | Media Relations: Garrett Marquis (949) 683-1503 |
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BNY Mellon 4Q23 Financial Results |
CONSOLIDATED FINANCIAL HIGHLIGHTS
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| (in millions, except per share amounts and unless otherwise noted; not meaningful - N/M) | | | | 4Q23 vs. |
| 4Q23 | 3Q23 | 4Q22 | 3Q23 | 4Q22 |
| Fee revenue | $ | 3,214 | | $ | 3,245 | | $ | 3,222 | | (1) | % | — | % |
| Investment and other revenue | (4) | | 113 | | (360) | | N/M | N/M |
| Total fee and other revenue | 3,210 | | 3,358 | | 2,862 | | (4) | | 12 | |
| Net interest revenue | 1,101 | | 1,016 | | 1,056 | | 8 | | 4 | |
| Total revenue | 4,311 | | 4,374 | | 3,918 | | (1) | | 10 | |
| Provision for credit losses | 84 | | 3 | | 20 | | N/M | N/M |
| Noninterest expense | 3,868 | | 3,089 | | 3,213 | | 25 | | 20 | |
| Income before taxes | 359 | | 1,282 | | 685 | | (72) | | (48) | |
| Provision for income taxes | 59 | | 241 | | 142 | | (76) | | (58) | |
| Net income | $ | 300 | | $ | 1,041 | | $ | 543 | | (71) | % | (45) | % |
| Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 256 | | $ | 956 | | $ | 509 | | (73) | % | (50) | % |
Operating leverage (a) | | | | (2,666) | bps | (1,036) | bps |
| Diluted earnings per common share | $ | 0.33 | | $ | 1.22 | | $ | 0.62 | | (73) | % | (47) | % |
Average common shares and equivalents outstanding - diluted (in thousands) | 772,102 | | 781,781 | | 815,846 | | | |
| Pre-tax operating margin | 8 | % | 29 | % | 17 | % | | |
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| Metrics: | | | | | |
| Average loans | $ | 65,677 | | $ | 63,962 | | $ | 67,364 | | 3 | % | (3) | % |
| Average deposits | 273,075 | | 262,108 | | 283,737 | | 4 | | (4) | |
AUC/A at period end (in trillions) (current period is preliminary) | 47.8 | | 45.7 | | 44.3 | | 5 | | 8 | |
AUM (in trillions) (current period is preliminary) | 1.97 | | 1.82 | | 1.84 | | 8 | | 8 | |
Non-GAAP measures, excluding notable items: (b) | | | | | |
| Adjusted total revenue | $ | 4,461 | | $ | 4,372 | | $ | 4,378 | | 2 | % | 2 | % |
| Adjusted noninterest expense | $ | 3,116 | | $ | 3,043 | | $ | 3,000 | | 2 | % | 4 | % |
Adjusted operating leverage (a) | | | | (36) | bps | (197) | bps |
| Adjusted diluted earnings per common share | $ | 1.28 | | $ | 1.27 | | $ | 1.30 | | 1 | % | (2 | %) |
| Adjusted pre-tax operating margin | 28 | % | 30 | % | 31 | % | | |
(a) Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense.
(b) See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11 for additional information. bps – basis points.
KEY DRIVERS (comparisons are 4Q23 vs. 4Q22, unless otherwise noted)
•Total revenue increased 10%, primarily reflecting:
•Fee revenue was flat, primarily reflecting lower foreign exchange volatility and volumes and the mix of AUM flows, partially offset by higher market values and the favorable impact of a weaker U.S. dollar.
•Investment and other revenue increased primarily reflecting the 4Q22 net loss from repositioning the securities portfolio, partially offset by the 4Q23 reduction in the fair value of a contingent consideration receivable related to a prior year divestiture.
•Net interest revenue increased 4%, primarily reflecting higher interest rates, partially offset by changes in balance sheet size and mix.
•Provision for credit losses was $84 million, primarily driven by reserve increases related to commercial real estate exposure.
•Noninterest expense increased 20%, primarily related to the FDIC special assessment. Excluding notable items (a), noninterest expense increased 4% primarily reflecting higher investments and the unfavorable impact of a weaker U.S. dollar, as well as inflation, partially offset by efficiency savings.
•Effective tax rate of 16.4%.
Assets under custody and/or administration (“AUC/A”) and Assets under management (“AUM”)
•AUC/A increased 8%, primarily reflecting higher market values.
•AUM increased 8%, primarily reflecting higher market values and the favorable impact of a weaker U.S. dollar, partially offset by cumulative net outflows.
Capital and liquidity
•$328 million of dividends to common shareholders (b); $450 million of common share repurchases.
•Return on common equity (“ROE”) – 2.8%; Adjusted ROE – 10.9% (a).
•Return on tangible common equity (“ROTCE”) – 5.6% (a); Adjusted ROTCE – 20.9% (a).
•Common Equity Tier 1 (“CET1”) ratio – 11.6%.
•Tier 1 leverage ratio – 6.0%.
•Average liquidity coverage ratio (“LCR”) – 117%; Average net stable funding ratio (“NSFR”) – 135%.
•Total Loss Absorbing Capacity (“TLAC”) ratios exceed minimum requirements.
(a) See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11 for additional information. (b) Including dividend-equivalents on share-based awards.
Note: Throughout this document, sequential growth rates are unannualized.
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BNY Mellon 4Q23 Financial Results |
FULL-YEAR CONSOLIDATED FINANCIAL HIGHLIGHTS
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| (in millions, except per share amounts and unless otherwise noted; not meaningful - N/M) | | | 2023 vs. |
| 2023 | 2022 | 2022 |
| Fee revenue | $ | 12,872 | | $ | 12,955 | | (1) | % |
| Investment and other revenue | 285 | | (82) | | N/M |
| Total fee and other revenue | 13,157 | | 12,873 | | 2 | |
| Net interest revenue | 4,345 | | 3,504 | | 24 | |
| Total revenue | 17,502 | | 16,377 | | 7 | |
| Provision for credit losses | 119 | | 39 | | N/M |
| Noninterest expense | 13,168 | | 13,010 | | 1 | |
| Income before taxes | 4,215 | | 3,328 | | 27 | |
| Provision for income taxes | 830 | | 768 | | 8 | |
| Net income | $ | 3,385 | | $ | 2,560 | | 32 | % |
| Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 3,148 | | $ | 2,362 | | 33 | % |
Operating leverage (a) | | | 566 | bps |
| Diluted earnings per common share | $ | 4.00 | | $ | 2.90 | | 38 | % |
Average common shares and equivalents outstanding - diluted (in thousands) | 787,798 | | 814,795 | | |
| Pre-tax operating margin | 24 | % | 20 | % | |
Non-GAAP measures, excluding notable items: (b) | | | |
| Adjusted total revenue | $ | 17,652 | | $ | 16,888 | | 5 | % |
| Adjusted noninterest expense | $ | 12,302 | | $ | 11,981 | | 3 | % |
Adjusted operating leverage (a) | | | 184 | bps |
| Adjusted diluted earnings per common share | $ | 5.05 | | $ | 4.59 | | 10 | % |
| Adjusted pre-tax operating margin | 30 | % | 29 | % | |
(a) Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense.
(b) See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11. bps – basis points.
KEY DRIVERS (comparisons are 2023 vs. 2022, unless otherwise noted)
•Total revenue increased 7%, primarily reflecting:
•Fee revenue decreased 1%, primarily reflecting lower foreign exchange volatility, the mix of AUM flows and the impact of a prior year divestiture, partially offset by the abatement of money market fee waivers, net new business and the 1Q22 accelerated amortization of deferred costs for depositary receipts services related to Russia.
•Investment and other revenue increased primarily reflecting the 4Q22 net loss from repositioning the securities portfolio, partially offset by the 4Q23 reduction in the fair value of a contingent consideration receivable related to a prior year divestiture.
•Net interest revenue increased 24%, primarily reflecting higher interest rates, partially offset by changes in balance sheet size and mix.
•Provision for credit losses was $119 million, primarily driven by reserve increases related to commercial real estate exposure and changes in the macroeconomic forecast.
•Noninterest expense increased 1%, primarily reflecting the 4Q23 FDIC special assessment, higher investments and revenue-related expenses, as well as inflation, partially offset by the impacts of the 3Q22 goodwill impairment in the Investment Management reporting unit, efficiency savings and a prior year divestiture. Excluding notable items, noninterest expense increased 3% (a).
•Effective tax rate of 19.7%.
Capital and liquidity
•Returned $3.9 billion to common shareholders, including dividends of $1.3 billion (including dividend equivalents on share-based awards) and $2.6 billion of share repurchases.
•ROE – 8.8%; Adjusted ROE – 11.1% (a).
•ROTCE – 17.1% (a); Adjusted ROTCE – 21.6% (a).
(a) See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11 for additional information.
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BNY Mellon 4Q23 Financial Results |
SECURITIES SERVICES BUSINESS SEGMENT HIGHLIGHTS
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| (dollars in millions, unless otherwise noted; not meaningful - N/M) | | | | | | | 4Q23 vs. |
| 4Q23 | | 3Q23 | | 4Q22 | | 3Q23 | 4Q22 |
| Investment services fees: | | | | | | | | |
| Asset Servicing | $ | 975 | | | $ | 984 | | | $ | 971 | | | (1) | % | — | % |
| Issuer Services | 285 | | | 281 | | | 271 | | | 1 | | 5 | |
| Total investment services fees | 1,260 | | | 1,265 | | | 1,242 | | | — | | 1 | |
| Foreign exchange revenue | 118 | | | 107 | | | 149 | | | 10 | | (21) | |
Other fees (a) | 54 | | | 52 | | | 55 | | | 4 | | (2) | |
| Total fee revenue | 1,432 | | | 1,424 | | | 1,446 | | | 1 | | (1) | |
| Investment and other revenue | 112 | | | 65 | | | 70 | | | N/M | N/M |
| Total fee and other revenue | 1,544 | | | 1,489 | | | 1,516 | | | 4 | | 2 | |
| Net interest revenue | 635 | | | 600 | | | 656 | | | 6 | | (3) | |
| Total revenue | 2,179 | | | 2,089 | | | 2,172 | | | 4 | | — | |
| Provision for credit losses | 64 | | | 19 | | | 11 | | | N/M | N/M |
| Noninterest expense | 1,653 | | | 1,585 | | | 1,576 | | | 4 | | 5 | |
| Income before taxes | $ | 462 | | | $ | 485 | | | $ | 585 | | | (5) | % | (21) | % |
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| Total revenue by line of business: | | | | | | | | |
| Asset Servicing | $ | 1,675 | | | $ | 1,593 | | | $ | 1,681 | | | 5 | % | — | % |
| Issuer Services | 504 | | | 496 | | | 491 | | | 2 | | 3 | |
| Total revenue by line of business | $ | 2,179 | | | $ | 2,089 | | | $ | 2,172 | | | 4 | % | — | % |
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| Pre-tax operating margin | 21 | % | | 23 | % | | 27 | % | | | |
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Securities lending revenue (b) | $ | 48 | | | $ | 46 | | | $ | 50 | | | 4 | % | (4) | % |
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| Metrics: | | | | | | | | |
| Average loans | $ | 11,366 | | | $ | 11,236 | | | $ | 11,850 | | | 1 | % | (4) | % |
| Average deposits | $ | 171,086 | | | $ | 162,509 | | | $ | 176,541 | | | 5 | % | (3) | % |
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AUC/A at period end (in trillions) (current period is preliminary) (c) | $ | 34.2 | | | $ | 32.3 | | | $ | 31.4 | | | 6 | % | 9 | % |
Market value of securities on loan at period end (in billions) (d) | $ | 450 | | | $ | 406 | | | $ | 449 | | | 11 | % | — | % |
(a) Other fees primarily include financing-related fees.
(b) Included in investment services fees reported in the Asset Servicing line of business.
(c) Consists of AUC/A primarily from the Asset Servicing line of business and, to a lesser extent, the Issuer Services line of business. Includes the AUC/A of CIBC Mellon Global Securities Services Company (“CIBC Mellon”), a joint venture with the Canadian Imperial Bank of Commerce, of $1.7 trillion at Dec. 31, 2023 and $1.5 trillion at Sept. 30, 2023 and Dec. 31, 2022.
(d) Represents the total amount of securities on loan in our agency securities lending program. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $63 billion at Dec. 31, 2023, $63 billion at Sept. 30, 2023 and $68 billion at Dec. 31, 2022.
KEY DRIVERS
•The drivers of the total revenue variances by line of business are indicated below.
•Asset Servicing – Year-over-year was flat, primarily reflecting lower foreign exchange revenue and net interest revenue, partially offset by a strategic equity investment gain and higher market values. The sequential increase primarily reflects improved strategic equity investment results and higher net interest revenue.
•Issuer Services – The year-over-year increase primarily reflects net new business and higher client activity. The sequential increase primarily reflects higher net interest revenue.
•Noninterest expense increased year-over-year, primarily reflecting higher investments and higher revenue-related expenses, as well as inflation, partially offset by efficiency savings.
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BNY Mellon 4Q23 Financial Results |
MARKET AND WEALTH SERVICES BUSINESS SEGMENT HIGHLIGHTS
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| (dollars in millions, unless otherwise noted; not meaningful - N/M) | | | | 4Q23 vs. |
| 4Q23 | 3Q23 | 4Q22 | 3Q23 | 4Q22 |
| Investment services fees: | | | | | |
| Pershing | $ | 506 | | $ | 506 | | $ | 502 | | — | % | 1 | % |
| Treasury Services | 179 | | 172 | | 170 | | 4 | | 5 | |
| Clearance and Collateral Management | 288 | | 277 | | 249 | | 4 | | 16 | |
| Total investment services fees | 973 | | 955 | | 921 | | 2 | | 6 | |
| Foreign exchange revenue | 21 | | 21 | | 20 | | — | | 5 | |
Other fees (a) | 52 | | 51 | | 47 | | 2 | | 11 | |
| Total fee revenue | 1,046 | | 1,027 | | 988 | | 2 | | 6 | |
| Investment and other revenue | 16 | | 16 | | 15 | | N/M | N/M |
| Total fee and other revenue | 1,062 | | 1,043 | | 1,003 | | 2 | | 6 | |
| Net interest revenue | 437 | | 402 | | 396 | | 9 | | 10 | |
| Total revenue | 1,499 | | 1,445 | | 1,399 | | 4 | | 7 | |
| Provision for credit losses | 28 | | 6 | | 6 | | N/M | N/M |
| Noninterest expense | 839 | | 808 | | 785 | | 4 | | 7 | |
| Income before taxes | $ | 632 | | $ | 631 | | $ | 608 | | — | % | 4 | % |
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| Total revenue by line of business: | | | | | |
| Pershing | $ | 711 | | $ | 699 | | $ | 673 | | 2 | % | 6 | % |
| Treasury Services | 408 | | 389 | | 382 | | 5 | | 7 | |
| Clearance and Collateral Management | 380 | | 357 | | 344 | | 6 | | 10 | |
| Total revenue by line of business | $ | 1,499 | | $ | 1,445 | | $ | 1,399 | | 4 | % | 7 | % |
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| Pre-tax operating margin | 42 | % | 44 | % | 43 | % | | |
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| Metrics: | | | | | |
| Average loans | $ | 39,200 | | $ | 37,496 | | $ | 39,843 | | 5 | % | (2) | % |
| Average deposits | $ | 87,695 | | $ | 84,000 | | $ | 86,083 | | 4 | % | 2 | % |
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AUC/A at period end (in trillions) (current period is preliminary) (b) | $ | 13.3 | | $ | 13.1 | | $ | 12.7 | | 2 | % | 5 | % |
(a) Other fees primarily include financing-related fees.
(b) Consists of AUC/A from the Clearance and Collateral Management and Pershing lines of business.
KEY DRIVERS
•The drivers of the total revenue variances by line of business are indicated below.
•Pershing – The year-over-year increase primarily reflects higher net interest revenue, higher market values and higher client activity, partially offset by lost business. The sequential increase primarily reflects higher net interest revenue.
•Treasury Services – The year-over-year and sequential increases primarily reflect higher net interest revenue.
•Clearance and Collateral Management – The year-over-year increase primarily reflects higher clearance volumes and collateral management balances. The sequential increase primarily reflects higher net interest revenue, higher clearance volumes and collateral management balances.
•Noninterest expense increased year-over-year, primarily reflecting higher investments and inflation, partially offset by efficiency savings.
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BNY Mellon 4Q23 Financial Results |
INVESTMENT AND WEALTH MANAGEMENT BUSINESS SEGMENT HIGHLIGHTS
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| (dollars in millions, unless otherwise noted; not meaningful - N/M) | | | | | | | 4Q23 vs. | |
| 4Q23 | | 3Q23 | | 4Q22 | | 3Q23 | | 4Q22 | |
| Investment management fees | $ | 723 | | | $ | 746 | | | $ | 754 | | | (3) | % | | (4) | % | |
| Performance fees | 19 | | | 30 | | | 26 | | | N/M | | N/M | |
| Investment management and performance fees | 742 | | | 776 | | | 780 | | | (4) | | | (5) | | |
| Distribution and servicing fees | 66 | | | 62 | | | 54 | | | 6 | | | 22 | | |
Other fees (a) | (55) | | | (50) | | | (58) | | | N/M | | N/M | |
| Total fee revenue | 753 | | | 788 | | | 776 | | | (4) | | | (3) | | |
Investment and other revenue (b) | (121) | | | 1 | | | (3) | | | N/M | | N/M | |
Total fee and other revenue (b) | 632 | | | 789 | | | 773 | | | (20) | | | (18) | | |
| Net interest revenue | 44 | | | 38 | | | 52 | | | 16 | | | (15) | | |
| Total revenue | 676 | | | 827 | | | 825 | | | (18) | | | (18) | | |
| Provision for credit losses | (2) | | | (9) | | | 1 | | | N/M | | N/M | |
| Noninterest expense | 683 | | | 672 | | | 699 | | | 2 | | | (2) | | |
(Loss) income before taxes (c) | $ | (5) | | | $ | 164 | | | $ | 125 | | | (103) | % | | (104) | % | |
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| Total revenue by line of business: | | | | | | | | | | |
| Investment Management | $ | 408 | | | $ | 557 | | | $ | 550 | | | (27) | % | | (26) | % | |
| Wealth Management | 268 | | | 270 | | | 275 | | | (1) | | | (3) | | |
| Total revenue by line of business | $ | 676 | | | $ | 827 | | | $ | 825 | | | (18) | % | | (18) | % | |
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| Pre-tax operating margin | (1) | % | | 20 | % | | 15 | % | | | | | |
Adjusted pre-tax operating margin – Non-GAAP (d) | (1) | % | (e) | 22 | % | | 17 | % | | | | | |
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| Metrics: | | | | | | | | | | |
| Average loans | $ | 13,405 | | | $ | 13,519 | | | $ | 14,404 | | | (1) | % | | (7) | % | |
| Average deposits | $ | 12,039 | | | $ | 13,578 | | | $ | 16,416 | | | (11) | % | | (27) | % | |
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AUM (in billions) (current period is preliminary) (f) | $ | 1,974 | | | $ | 1,821 | | | $ | 1,836 | | | 8 | % | | 8 | % | |
Wealth Management client assets (in billions) (current period is preliminary) (g) | $ | 312 | | | $ | 292 | | | $ | 269 | | | 7 | % | | 16 | % | |
(a) Other fees primarily include investment services fees.
(b) Investment and other revenue and total fee and other revenue are net of income (loss) attributable to noncontrolling interests related to consolidated investment management funds.
(c) Excluding notable items, income before taxes decreased 11% (Non-GAAP) compared with 3Q23 and increased 1% (Non-GAAP) compared with 4Q22. See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11 for information on these Non-GAAP measures. (d) Net of distribution and servicing expense. See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11 for information on this Non-GAAP measure. (e) Excluding notable items and net of distribution and servicing expense, the adjusted pre-tax operating margin was 21% (Non-GAAP) for 4Q23. See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11 for information on this Non-GAAP measure. (f) Excludes assets managed outside of the Investment and Wealth Management business segment.
(g) Includes AUM and AUC/A in the Wealth Management line of business.
KEY DRIVERS
•The drivers of the total revenue variances by line of business are indicated below.
•Investment Management – The year-over-year decrease primarily reflects the 4Q23 reduction in the fair value of a contingent consideration receivable and the impact of the prior year divestiture, as well as the mix of AUM flows, partially offset by higher market values, seed capital gains and the favorable impact of a weaker U.S. dollar. The sequential decrease primarily reflects the reduction in the fair value of a contingent consideration receivable related to a prior year divestiture and the timing of performance fees, partially offset by seed capital gains.
•Wealth Management – The year-over-year decrease primarily reflects changes in product mix, partially offset by higher market values.
•Noninterest expense decreased year-over-year, primarily reflecting efficiency savings and the impact of a prior year divestiture, partially offset by higher investments and the unfavorable impact of a weaker U.S. dollar, as well as inflation.
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BNY Mellon 4Q23 Financial Results |
OTHER SEGMENT
The Other segment primarily includes the leasing portfolio, corporate treasury activities, including our securities portfolio, derivatives and other trading activity, renewable energy and other corporate investments, certain business exits and other corporate revenue and expense items.
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| (in millions) | 4Q23 | 3Q23 | 4Q22 |
| Fee revenue | $ | (17) | | $ | 6 | | $ | 12 | |
| Investment and other revenue | (9) | | 28 | | (442) | |
| Total fee and other revenue | (26) | | 34 | | (430) | |
| Net interest (expense) | (15) | | (24) | | (48) | |
| Total revenue | (41) | | 10 | | (478) | |
| Provision for credit losses | (6) | | (13) | | 2 | |
| Noninterest expense | 693 | | 24 | | 153 | |
| (Loss) before taxes | $ | (728) | | $ | (1) | | $ | (633) | |
KEY DRIVERS
•Total revenue includes corporate treasury and other investment activity, including hedging activity which has an offsetting impact between fee and other revenue and net interest expense. Total revenue increased year-over-year primarily reflecting the net loss from repositioning the securities portfolio recorded in 4Q22. Total revenue decreased sequentially primarily reflecting net securities losses in 4Q23 and debt extinguishment gains in 3Q23.
•Noninterest expense increased year-over-year primarily driven by the FDIC special assessment. The sequential increase in noninterest expense primarily reflects the FDIC special assessment, higher severance expense and litigation reserves.
| | |
BNY Mellon 4Q23 Financial Results |
NOTABLE ITEMS BY BUSINESS SEGMENT
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Notable items by business segment (a) | 4Q23 | | | | 4Q22 |
| (in millions) | Securities
Services | Market and Wealth Services | Investment and Wealth Management | Other | Total | | | | | | | | Securities
Services | Market and Wealth Services | Investment and Wealth Management | Other | Total |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
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| Fee and other revenue | $ | (6) | | $ | — | | $ | (144) | | $ | — | | $ | (150) | | | | | | | | | $ | — | | $ | — | | $ | (11) | | $ | (449) | | $ | (460) | |
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| Noninterest expense | 29 | | 29 | | 12 | | 682 | | 752 | | | | | | | | | 28 | | 41 | | 14 | | 130 | | 213 | |
| (Loss) before taxes | $ | (35) | | $ | (29) | | $ | (156) | | $ | (682) | | $ | (902) | | | | | | | | | $ | (28) | | $ | (41) | | $ | (25) | | $ | (579) | | $ | (673) | |
(a) See pages 12 and 13 for details of notable items and line items impacted.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Notable items by business segment (a) | | | 3Q23 | | |
| (in millions) | | | | | | | Securities
Services | Market and Wealth Services | Investment and Wealth Management | Other | Total | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Fee and other revenue | | | | | | | $ | 2 | | $ | — | | $ | — | | $ | — | | $ | 2 | | | | | | | |
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| Noninterest expense | | | | | | | 22 | | 5 | | 5 | | 14 | | 46 | | | | | | | |
| (Loss) before taxes | | | | | | | $ | (20) | | $ | (5) | | $ | (5) | | $ | (14) | | $ | (44) | | | | | | | |
(a) See pages 12 and 13 for details of notable items and line items impacted.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Notable items by business segment (a) | 2023 | | 2022 |
| (in millions) | Securities
Services | Market and Wealth Services | Investment and Wealth Management | Other | Total | | Securities
Services | Market and Wealth Services | Investment and Wealth Management | Other | Total |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Fee and other revenue | $ | (6) | | $ | — | | $ | (144) | | $ | — | | $ | (150) | | | $ | (45) | | $ | — | | $ | (17) | | $ | (449) | | $ | (511) | |
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| Noninterest expense | 61 | | 39 | | 20 | | 746 | | 866 | | | 141 | | 49 | | 692 | | 147 | | 1,029 | |
| (Loss) before taxes | $ | (67) | | $ | (39) | | $ | (164) | | $ | (746) | | $ | (1,016) | | | $ | (186) | | $ | (49) | | $ | (709) | | $ | (596) | | $ | (1,540) | |
(a) See pages 12 and 13 for details of notable items and line items impacted.
| | |
BNY Mellon 4Q23 Financial Results |
CAPITAL AND LIQUIDITY
| | | | | | | | | | | | | | | |
| Capital and liquidity ratios | | Dec. 31, 2023 | Sept. 30, 2023 | Dec. 31, 2022 | |
Consolidated regulatory capital ratios: (a) | | | | | |
| CET1 ratio | | 11.6 | % | 11.4 | % | 11.2 | % | |
| Tier 1 capital ratio | | 14.3 | | 14.4 | | 14.1 | | |
| Total capital ratio | | 15.0 | | 15.2 | | 14.9 | | |
Tier 1 leverage ratio (a) | | 6.0 | | 6.1 | | 5.8 | | |
Supplementary leverage ratio (a) | | 7.4 | | 7.2 | | 6.8 | | |
| BNY Mellon shareholders’ equity to total assets ratio | | 10.0 | % | 10.1 | % | 10.0 | % | |
| BNY Mellon common shareholders’ equity to total assets ratio | | 8.9 | % | 8.9 | % | 8.8 | % | |
| | | | | |
Average LCR (a) | | 117 | % | 121 | % | 118 | % | |
Average NSFR (a) | | 135 | % | 136 | % | N/A | (b) |
| | | | | |
| Book value per common share | | $ | 48.24 | | $ | 46.98 | | $ | 44.40 | | |
Tangible book value per common share – Non-GAAP (c) | | $ | 25.52 | | $ | 24.66 | | $ | 23.11 | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Common shares outstanding (in thousands) | | 759,344 | | 769,073 | | 808,445 | | |
(a) Regulatory capital and liquidity ratios for Dec. 31, 2023 are preliminary. For our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under the U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches, which for the periods presented, was the Advanced Approaches.
(b) The reporting requirement for the average NSFR became effective in 2Q23.
(c) Tangible book value per common share – Non-GAAP excludes goodwill and intangible assets, net of deferred tax liabilities. See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11 for information on this Non-GAAP measure.
•CET1 capital totaled $18.7 billion at Dec. 31, 2023, and increased compared with Sept. 30, 2023, primarily reflecting a net increase in accumulated other comprehensive income and capital generated through earnings, partially offset by capital deployed through common stock repurchases and dividends. Tier 1 capital totaled $23.1 billion at Dec. 31, 2023, and decreased slightly compared with Sept. 30, 2023, reflecting the redemption of preferred stock. The Tier 1 leverage ratio decreased compared with Sept. 30, 2023, primarily reflecting higher average assets.
NET INTEREST REVENUE
| | | | | | | | | | | | | | | | | |
| Net interest revenue | | | | 4Q23 vs. |
| (dollars in millions; not meaningful - N/M) | 4Q23 | 3Q23 | 4Q22 | 3Q23 | 4Q22 |
| Net interest revenue | $ | 1,101 | | $ | 1,016 | | $ | 1,056 | | 8% | 4% |
| Add: Tax equivalent adjustment | 1 | | — | | 2 | | N/M | N/M |
Net interest revenue, on a fully taxable equivalent (“FTE”) basis – Non-GAAP (a) | $ | 1,102 | | $ | 1,016 | | $ | 1,058 | | 8% | 4% |
| | | | | |
| Net interest margin | 1.26 | % | 1.18 | % | 1.19 | % | 8 | bps | 7 | bps |
Net interest margin (FTE) – Non-GAAP (a) | 1.26 | % | 1.18 | % | 1.19 | % | 8 | bps | 7 | bps |
(a) Net interest revenue (FTE) – Non-GAAP and net interest margin (FTE) – Non-GAAP include the tax equivalent adjustments on tax-exempt income. See “Explanation of GAAP and Non-GAAP financial measures” beginning on page 11 for information on this Non-GAAP measure. bps – basis points.
•Net interest revenue increased year-over-year primarily reflecting higher interest rates, partially offset by changes in balance sheet size and mix.
•The sequential increase in net interest revenue primarily reflects the higher balance sheet size and mix.
| | |
BNY Mellon 4Q23 Financial Results |
THE BANK OF NEW YORK MELLON CORPORATION
Condensed Consolidated Income Statement
| | | | | | | | | | | | | | | | | | | | |
| (in millions) | Quarter ended | | Year ended |
| Dec. 31, 2023 | Sept. 30, 2023 | Dec. 31, 2022 | | Dec. 31, 2023 | Dec. 31, 2022 |
|
| Fee and other revenue | | | | | | |
| Investment services fees | $ | 2,242 | | $ | 2,230 | | $ | 2,173 | | | $ | 8,843 | | $ | 8,529 | |
| Investment management and performance fees | 743 | | 777 | | 783 | | | 3,058 | | 3,299 | |
| Foreign exchange revenue | 143 | | 154 | | 190 | | | 631 | | 822 | |
| Financing-related fees | 45 | | 45 | | 43 | | | 192 | | 175 | |
| Distribution and servicing fees | 41 | | 39 | | 33 | | | 148 | | 130 | |
| Total fee revenue | 3,214 | | 3,245 | | 3,222 | | | 12,872 | | 12,955 | |
| Investment and other revenue | (4) | | 113 | | (360) | | | 285 | | (82) | |
| Total fee and other revenue | 3,210 | | 3,358 | | 2,862 | | | 13,157 | | 12,873 | |
| Net interest revenue | | | | | | |
| Interest revenue | 5,963 | | 5,519 | | 3,197 | | | 20,648 | | 7,118 | |
| Interest expense | 4,862 | | 4,503 | | 2,141 | | | 16,303 | | 3,614 | |
| Net interest revenue | 1,101 | | 1,016 | | 1,056 | | | 4,345 | | 3,504 | |
| Total revenue | 4,311 | | 4,374 | | 3,918 | | | 17,502 | | 16,377 | |
| Provision for credit losses | 84 | | 3 | | 20 | | | 119 | | 39 | |
| Noninterest expense | | | | | | |
| Staff | 1,831 | | 1,755 | | 1,802 | | | 7,095 | | 6,800 | |
| Software and equipment | 486 | | 452 | | 432 | | | 1,817 | | 1,657 | |
| Professional, legal and other purchased services | 406 | | 368 | | 415 | | | 1,527 | | 1,527 | |
| Net occupancy | 162 | | 140 | | 143 | | | 542 | | 514 | |
| Sub-custodian and clearing | 117 | | 121 | | 112 | | | 475 | | 485 | |
| Distribution and servicing | 88 | | 87 | | 86 | | | 353 | | 343 | |
| Business development | 61 | | 36 | | 45 | | | 183 | | 152 | |
| Bank assessment charges | 543 | | 37 | | 19 | | | 661 | | 126 | |
| Goodwill impairment | — | | — | | — | | | — | | 680 | |
| Amortization of intangible assets | 14 | | 15 | | 16 | | | 57 | | 67 | |
| Other | 160 | | 78 | | 143 | | | 458 | | 659 | |
| Total noninterest expense | 3,868 | | 3,089 | | 3,213 | | | 13,168 | | 13,010 | |
| Income | | | | | | |
| Income before taxes | 359 | | 1,282 | | 685 | | | 4,215 | | 3,328 | |
| Provision for income taxes | 59 | | 241 | | 142 | | | 830 | | 768 | |
| Net income | 300 | | 1,041 | | 543 | | | 3,385 | | 2,560 | |
| Net (income) loss attributable to noncontrolling interests related to consolidated investment management funds | 2 | | (3) | | — | | | (2) | | 13 | |
| Net income applicable to shareholders of The Bank of New York Mellon Corporation | 302 | | 1,038 | | 543 | | | 3,383 | | 2,573 | |
| Preferred stock dividends | (46) | | (82) | | (34) | | | (235) | | (211) | |
| Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 256 | | $ | 956 | | $ | 509 | | | $ | 3,148 | | $ | 2,362 | |
| | | | | | | | | | | | | | | | | | | | |
| Earnings per share applicable to the common shareholders of The Bank of New York Mellon Corporation | Quarter ended | | Year ended |
| Dec. 31, 2023 | Sept. 30, 2023 | Dec. 31, 2022 | | Dec. 31, 2023 | Dec. 31, 2022 |
| (in dollars) |
| Basic | $ | 0.33 | | $ | 1.23 | | $ | 0.63 | | | $ | 4.01 | | $ | 2.91 | |
| Diluted | $ | 0.33 | | $ | 1.22 | | $ | 0.62 | | | $ | 4.00 | | $ | 2.90 | |
| | |
BNY Mellon 4Q23 Financial Results |
EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES
BNY Mellon has included in this Earnings Release certain Non-GAAP financial measures on a tangible basis as a supplement to GAAP information, which exclude goodwill and intangible assets, net of deferred tax liabilities. We believe that the return on tangible common equity – Non-GAAP is additional useful information for investors because it presents a measure of those assets that can generate income, and the tangible book value per common share – Non-GAAP is additional useful information because it presents the level of tangible assets in relation to shares of common stock outstanding.
Net interest revenue, on a fully taxable equivalent (“FTE”) basis – Non-GAAP and net interest margin (FTE) – Non-GAAP and other FTE measures include the tax equivalent adjustments on tax-exempt income which allows for the comparison of amounts arising from both taxable and tax-exempt sources and is consistent with industry practice. The adjustment to an FTE basis has no impact on net income.
BNY Mellon has included the adjusted pre-tax operating margin – Non-GAAP, which is the pre-tax operating margin for the Investment and Wealth Management business segment, net of distribution and servicing expense that was passed to third parties who distribute or service our managed funds. We believe that this measure is useful when evaluating the performance of the Investment and Wealth Management business segment relative to industry competitors.
See “Explanation of GAAP and Non-GAAP Financial Measures” in the Financial Supplement available at www.bnymellon.com for additional reconciliations of Non-GAAP measures.
BNY Mellon has also included revenue measures excluding notable items, including a net loss from repositioning the securities portfolio, the reduction in the fair value of a contingent consideration receivable related to a prior year divestiture, disposal gains and losses and the revenue reduction related to Russia, primarily accelerated amortization of deferred costs for depositary receipts services. Expense measures, excluding notable items, including goodwill impairment, FDIC special assessment, severance expense and litigation reserves, are also presented. Litigation reserves represent accruals for loss contingencies that are both probable and reasonably estimable, but exclude standard business-related legal fees. Net income applicable to common shareholders of The Bank of New York Mellon Corporation, diluted earnings per share, operating leverage, return on common equity, return on tangible common equity and pre-tax operating margin, excluding the notable items mentioned above, are also provided. These measures are provided to permit investors to view the financial measures on a basis consistent with how management views the businesses.
| | |
BNY Mellon 4Q23 Financial Results |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of Non-GAAP measures, excluding notable items | | | | | | | 4Q23 vs. |
| (dollars in millions) | 4Q23 | | 3Q23 | | 4Q22 | | 3Q23 | 4Q22 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Total revenue – GAAP | $ | 4,311 | | | $ | 4,374 | | | $ | 3,918 | | | (1) | % | 10 | % |
Less: Reduction in the fair value of a contingent consideration receivable related to a prior year divestiture (a) | (144) | | | — | | | — | | | | |
Disposal gain (loss) (a) | (6) | | | 2 | | | (11) | | | | |
Net loss from repositioning the securities portfolio (a) | — | | | — | | | (449) | | | | |
| Adjusted total revenue – Non-GAAP | $ | 4,461 | | | $ | 4,372 | | | $ | 4,378 | | | 2 | % | 2 | % |
| | | | | | | | |
| Noninterest expense – GAAP | $ | 3,868 | | | $ | 3,089 | | | $ | 3,213 | | | 25 | % | 20 | % |
Less: Severance (b) | 200 | | | 41 | | | 184 | | | | |
Litigation reserves (b) | 47 | | | 5 | | | 29 | | | | |
FDIC special assessment (b) | 505 | | | — | | | — | | | | |
| | | | | | | | |
| Adjusted noninterest expense – Non-GAAP | $ | 3,116 | | | $ | 3,043 | | | $ | 3,000 | | | 2 | % | 4 | % |
| | | | | | | | |
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| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | $ | 256 | | | $ | 956 | | | $ | 509 | | | (73) | % | (50) | % |
Less: Reduction in the fair value of a contingent consideration receivable related to a prior year divestiture (a) | (144) | | | — | | | — | | | | |
Disposal gain (loss) (a) | (5) | | | — | | | (41) | | | | |
Net loss from repositioning the securities portfolio (a) | — | | | — | | | (342) | | | | |
Severance (b) | (153) | | | (32) | | | (141) | | | | |
Litigation reserves (b) | (47) | | | (4) | | | (24) | | | | |
FDIC special assessment (b) | (385) | | | — | | | — | | | | |
| | | | | | | | |
| Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation – Non-GAAP | $ | 990 | | | $ | 992 | | | $ | 1,057 | | | — | % | (6) | % |
| | | | | | | | |
| Diluted earnings per common share | $ | 0.33 | | | $ | 1.22 | | | $ | 0.62 | | | (73) | % | (47) | % |
Less: Reduction in the fair value of a contingent consideration receivable related to a prior year divestiture (a) | (0.19) | | | — | | | — | | | | |
Disposal gain (loss) (a) | (0.01) | | | — | | | (0.05) | | | | |
Net loss from repositioning the securities portfolio (a) | — | | | — | | | (0.42) | | | | |
Severance (b) | (0.20) | | | (0.04) | | | (0.17) | | | | |
Litigation reserves (b) | (0.06) | | | (0.01) | | | (0.03) | | | | |
FDIC special assessment (b) | (0.50) | | | — | | | — | | | | |
| Total diluted earnings per common share impact of notable items | (0.95) | | (c) | (0.05) | | | (0.67) | | | | |
| Adjusted diluted earnings per common share – Non-GAAP | $ | 1.28 | | | $ | 1.27 | | | $ | 1.30 | | (c) | 1 | % | (2) | % |
Operating leverage – GAAP (d) | | | | | | | (2,666) | bps | (1,036) | bps |
Adjusted operating leverage – Non-GAAP (d) | | | | | | | (36) | bps | (197) | bps |
(a) Reflected in Investment and other revenue.
(b) Severance is reflected in Staff expense, Litigation reserves in Other expense, and FDIC special assessment in Bank assessment charges, respectively.
(c) Does not foot due to rounding.
(d) Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense.
bps - basis points.
| | |
BNY Mellon 4Q23 Financial Results |
| | | | | | | | | | | | | | | | | |
| Reconciliation of Non-GAAP measures, excluding notable items | | | | | 2023 vs. |
| (dollars in millions) | 2023 | | 2022 | | 2022 |
| Total revenue – GAAP | $ | 17,502 | | | $ | 16,377 | | | 7 | % |
Less: Reduction in the fair value of a contingent consideration receivable related to a prior year divestiture (a) | (144) | | | — | | | |
Disposal (loss) gain (a) | (6) | | | 26 | | | |
Revenue reduction related to Russia, primarily accelerated amortization of deferred costs for depositary receipts services (b) | — | | | (88) | | | |
Net loss from repositioning the securities portfolio (a) | — | | | (449) | | | |
| Adjusted total revenue – Non-GAAP | $ | 17,652 | | | $ | 16,888 | | | 5 | % |
| | | | | |
| Total noninterest expense – GAAP | $ | 13,168 | | | $ | 13,010 | | | 1 | % |
Less: Severance (c) | 267 | | | 215 | | | |
Litigation reserves (c) | 94 | | | 134 | | | |
FDIC special assessment (c) | 505 | | | — | | | |
| Goodwill impairment | — | | | 680 | | | |
| Adjusted total noninterest expense – Non-GAAP | $ | 12,302 | | | $ | 11,981 | | | 3 | % |
| | | | | |
Net income applicable to common shareholders of The Bank of New York Mellon
Corporation – GAAP | $ | 3,148 | | | $ | 2,362 | | | 33 | % |
Less: Reduction in the fair value of a contingent consideration receivable related to a prior year divestiture (a) | (144) | | | — | | | |
Disposal (loss) gain (a) | (5) | | | (12) | | | |
Revenue reduction related to Russia, primarily accelerated amortization of deferred costs for depositary receipts services (b) | — | | | (67) | | | |
Net loss from repositioning the securities portfolio (a) | — | | | (343) | | | |
Severance (c) | (205) | | | (166) | | | |
Litigation reserves (c) | (91) | | | (125) | | | |
FDIC special assessment (c) | (385) | | | — | | | |
| Goodwill impairment | — | | | (665) | | | |
| | | | | |
| Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation – Non-GAAP | $ | 3,978 | | | $ | 3,740 | | | 6 | % |
| | | | | |
| Diluted earnings per share – GAAP | $ | 4.00 | | | $ | 2.90 | | | 38 | % |
Less: Reduction in the fair value of a contingent consideration receivable related to a prior year divestiture (a) | (0.18) | | | — | | | |
Disposal (loss) gain (a) | (0.01) | | | (0.01) | | | |
Revenue reduction related to Russia, primarily accelerated amortization of deferred costs for depositary receipts services (b) | — | | | (0.08) | | | |
Net loss from repositioning the securities portfolio (a) | — | | | (0.42) | | | |
Severance (c) | (0.26) | | | (0.20) | | | |
Litigation reserves (c) | (0.12) | | | (0.15) | | | |
FDIC special assessment (c) | (0.49) | | | — | | | |
| Goodwill impairment | — | | | (0.82) | | | |
| Total diluted earnings per common share impact of notable items | $ | (1.05) | | (d) | $ | (1.69) | | (d) | |
| Adjusted diluted earnings per common share – Non-GAAP | $ | 5.05 | | | $ | 4.59 | | | 10 | % |
Operating leverage – GAAP (e) | | | | | 566 | bps |
Adjusted operating leverage – Non-GAAP (e) | | | | | 184 | bps |
(a) Reflected in Investment and other revenue.
(b) Primarily reflected in Investment services fees.
(c) Severance is reflected in Staff expense, Litigation reserves in Other expense, and FDIC special assessment in Bank assessment charges, respectively.
(d) Does not foot due to rounding.
(e) Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense.
bps – basis points
| | |
BNY Mellon 4Q23 Financial Results |
| | | | | | | | | | | | | | | | | | | | |
| Return on common equity and return on tangible common equity reconciliation | | | | | | |
| (dollars in millions) | 4Q23 | 3Q23 | 4Q22 | | 2023 | 2022 |
| Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | $ | 256 | | $ | 956 | | $ | 509 | | | $ | 3,148 | | $ | 2,362 | |
| Add: Amortization of intangible assets | 14 | | 15 | | 16 | | | 57 | | 67 | |
| Less: Tax impact of amortization of intangible assets | 4 | | 3 | | 4 | | | 14 | | 16 | |
| Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets – Non-GAAP | $ | 266 | | $ | 968 | | $ | 521 | | | $ | 3,191 | | $ | 2,413 | |
Impact of notable items (a) | (734) | | (36) | | (548) | | | (830) | | (1,378) | |
| Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets and notable items – Non-GAAP | $ | 1,000 | | $ | 1,004 | | $ | 1,069 | | | $ | 4,021 | | $ | 3,791 | |
| | | | | | |
| Average common shareholders’ equity | $ | 36,158 | | $ | 35,983 | | $ | 35,259 | | | $ | 35,880 | | $ | 36,175 | |
| Less: Average goodwill | 16,199 | | 16,237 | | 16,229 | | | 16,204 | | 17,060 | |
| Average intangible assets | 2,858 | | 2,875 | | 2,905 | | | 2,880 | | 2,939 | |
| Add: Deferred tax liability – tax deductible goodwill | 1,205 | | 1,197 | | 1,181 | | | 1,205 | | 1,181 | |
| Deferred tax liability – intangible assets | 657 | | 657 | | 660 | | | 657 | | 660 | |
| Average tangible common shareholders’ equity – Non-GAAP | $ | 18,963 | | $ | 18,725 | | $ | 17,966 | | | $ | 18,658 | | $ | 18,017 | |
| | | | | | |
Return on common equity – GAAP (b) | 2.8 | % | 10.5 | % | 5.7 | % | | 8.8 | % | 6.5 | % |
Adjusted return on common equity – Non-GAAP (b) | 10.9 | % | 10.9 | % | 11.9 | % | | 11.1 | % | 10.3 | % |
| | | | | | |
Return on tangible common equity – Non-GAAP (b) | 5.6 | % | 20.5 | % | 11.5 | % | | 17.1 | % | 13.4 | % |
Adjusted return on tangible common equity – Non-GAAP (b) | 20.9 | % | 21.2 | % | 23.6 | % | | 21.6 | % | 21.0 | % |
(a) See pages 12 and 13 for details of notable items and line items impacted.
(b) Quarterly returns are annualized.
| | | | | | | | | | | | | | | | | | | | |
| Pre-tax operating margin reconciliation | | | | | | |
| (dollars in millions) | 4Q23 | 3Q23 | 4Q22 | | 2023 | 2022 |
| Income before taxes – GAAP | $ | 359 | | $ | 1,282 | | $ | 685 | | | $ | 4,215 | | $ | 3,328 | |
Impact of notable items (a) | (902) | | (44) | | (673) | | | (1,016) | | (1,540) | |
| Adjusted income before taxes, excluding notable items – Non-GAAP | $ | 1,261 | | $ | 1,326 | | $ | 1,358 | | | $ | 5,231 | | $ | 4,868 | |
| | | | | | |
| Total revenue – GAAP | $ | 4,311 | | $ | 4,374 | | $ | 3,918 | | | $ | 17,502 | | $ | 16,377 | |
Impact of notable items (a) | (150) | | 2 | | (460) | | | (150) | | (511) | |
| Adjusted total revenue, excluding notable items – Non-GAAP | $ | 4,461 | | $ | 4,372 | | $ | 4,378 | | | $ | 17,652 | | $ | 16,888 | |
| | | | | | |
Pre-tax operating margin – GAAP (b) | 8 | % | 29 | % | 17 | % | | 24 | % | 20 | % |
Adjusted pre-tax operating margin – Non-GAAP (b) | 28 | % | 30 | % | 31 | % | | 30 | % | 29 | % |
(a) See pages 12 and 13 for details of notable items and line items impacted.
(b) Income before taxes divided by total revenue.
| | |
BNY Mellon 4Q23 Financial Results |
| | | | | | | | | | | | | | | | | |
| Reconciliation of Non-GAAP measures, excluding notable items - Investment and Wealth Management | | | | 4Q23 vs. |
| (dollars in millions) | 4Q23 | 3Q23 | 4Q22 | 3Q23 | 4Q22 |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| (Loss) income before taxes – GAAP | $ | (5) | | $ | 164 | | $ | 125 | | (103) | % | (104) | % |
Impact of notable items (a) | (156) | | (5) | | (25) | | | |
| Adjusted income before taxes – Non-GAAP | $ | 151 | | $ | 169 | | $ | 150 | | (11) | % | 1 | % |
| | | | | |
| Total revenue – GAAP | $ | 676 | | $ | 827 | | $ | 825 | | (18) | % | (18) | % |
| Less: Distribution and servicing expense | 89 | | 87 | | 87 | | | |
| Adjusted total revenue, net of distribution and servicing expense – Non-GAAP | $ | 587 | | $ | 740 | | $ | 738 | | (21) | % | (20 | %) |
Impact of notable items (a) | (144) | | | | | |
| Adjusted total revenue, excluding notable items and net of distribution and servicing expense – Non-GAAP | $ | 731 | | | | | |
| | | | | |
Pre-tax operating margin – GAAP (b) | (1) | % | | | | |
Adjusted pre-tax operating margin, net of distribution and servicing expense (b) | (1) | % | | | | |
Adjusted pre-tax operating margin, net of distribution and servicing expense and excluding notable items – Non-GAAP (b) | 21 | % | | | | |
(a) Notable items in 4Q23 include the reduction in the fair value of a contingent consideration receivable related to a prior year divestiture (reflected in investment and other revenue) and severance expense. Notable items in 3Q23 include severance expense. Notable items in 4Q22 include severance expense and a disposal loss (reflected in investment and other revenue).
(b) Income before taxes divided by total revenue.
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
A number of statements in this Earnings Release and in our Financial Supplement may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about our strategic priorities, financial performance and financial targets. Preliminary business metrics and regulatory capital ratios are subject to change, possibly materially, as we complete our Annual Report on Form 10-K for the year ended Dec. 31, 2023. Forward-looking statements are not guarantees of future results or occurrences, are inherently uncertain and are based upon current beliefs and expectations of future events, many of which are, by their nature, difficult to predict, outside of our control and subject to change.
By identifying these statements for you in this manner, we are alerting you to the possibility that our actual results may differ, possibly materially, from the anticipated results expressed or implied in these forward-looking statements as a result of a number of important factors, including the risk factors and other uncertainties set forth in our Annual Report on Form 10-K for the year ended Dec. 31, 2022 and our other filings with the Securities and Exchange Commission.
You should not place undue reliance on any forward-looking statement. All forward-looking statements speak only as of the date on which they were made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after such date or to reflect the occurrence of unanticipated events.
ABOUT BNY MELLON
Established in 1784, BNY Mellon is America’s oldest bank and the first company listed on the New York Stock Exchange (NYSE: BK). Today, BNY Mellon powers capital markets around the world through comprehensive solutions that help clients manage and service their financial assets throughout the investment life cycle. BNY Mellon had $47.8 trillion in assets under custody and/or administration and $2.0 trillion in assets under management as of Dec. 31, 2023. BNY Mellon has been named among Fortune’s World’s Most Admired Companies and Fast Company’s Best Workplaces for Innovators. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation. Additional information is available on www.bnymellon.com. Follow us on LinkedIn or visit our Newsroom for the latest company news.
CONFERENCE CALL INFORMATION
Robin Vince, President and Chief Executive Officer, and Dermot McDonogh, Chief Financial Officer, will host a conference call and simultaneous live audio webcast at 1:00 p.m. ET on Jan. 12, 2024. This conference call and audio webcast will include forward-looking statements and may include other material information.
Investors and analysts wishing to access the conference call and audio webcast may do so by dialing (800) 390-5696 (U.S.) or (720) 452-9082 (International), and using the passcode: 200200, or by logging onto www.bnymellon.com/investorrelations. Earnings materials will be available at www.bnymellon.com/investorrelations beginning at approximately 6:30 a.m. ET on Jan. 12, 2024. An archived version of the fourth quarter conference call and audio webcast will be available beginning on Jan. 12, 2024 at approximately 5:00 p.m. ET through Feb. 12, 2024 at www.bnymellon.com/investorrelations.
