Form 8-K Bank of New York Mellon For: Jul 15
News Release |
BNY MELLON REPORTS SECOND QUARTER 2022 EARNINGS OF
$835 MILLION OR $1.03 PER COMMON SHARE
Revenue up 7% | EPS down 9% (a) | ROE 9% ROTCE 19% (b) | CET1 10.0% Tier 1 leverage 5.2% |
(a) Notable items related to increased litigation reserves reduced EPS by $0.12.
NEW YORK, July 15, 2022 – The Bank of New York Mellon Corporation (“BNY Mellon”) (NYSE: BK) today reported:
2Q22 vs. | |||||||||||||||||
2Q22 | 1Q22 | 2Q21 | 1Q22 | 2Q21 | |||||||||||||
Net income applicable to common shareholders (in millions) | $ | 835 | $ | 699 | $ | 991 | 19 | % | (16) | % | |||||||
Diluted earnings per common share (c) | $ | 1.03 | $ | 0.86 | $ | 1.13 | 20 | % | (9) | % | |||||||
(c) Includes impact of notable items of $(0.12) per share in 2Q22, $(0.08) per share in 1Q22 and $0.00 per share in 2Q21.
Second Quarter Results |
Total revenue of $4.3 billion, increased 7%
•Fee revenue increased 4%
•Net interest revenue increased 28%
Provision for credit losses of $47 million compared with a provision benefit of $86 million in 2Q21
Total noninterest expense of $3.1 billion, increased 12%;
includes 4% increase driven by litigation reserves
AUC/A of $43.0 trillion, decreased 4% primarily driven by market values
AUM of $1.9 trillion, decreased 17% primarily driven by market values
Securities Services
•Total revenue increased 12%
•Income before taxes decreased 24%; includes 40% reduction due to higher litigation reserves and provision for credit losses
•Pre-tax operating margin of 17%; or 21% excluding higher litigation reserves (b)
Market and Wealth Services
•Total revenue increased 10%
•Income before taxes increased 9%
•Pre-tax operating margin of 46%
Investment and Wealth Management
•Total revenue decreased 10%
•Income before taxes decreased 36%
•Pre-tax operating margin of 23%; adjusted pre-tax operating margin – Non-GAAP of 26% (b)
CEO Commentary |
Todd Gibbons, Chief Executive Officer, commented, “Our second quarter results once again demonstrated the strength and resilience of our business model, and we are pleased that our Board of Directors approved an increase of the quarterly cash dividend on our common shares by 9% to $0.37 per share.”
Mr. Gibbons added, “It has been an honor serving BNY Mellon over the last 36 years and I retire at the end of August confident that the company is in great hands.”
Robin Vince, President and CEO-elect, said, “On behalf of the company, I would like to thank Todd for the contributions he has made to our firm throughout the years, and more recently for working so closely with me during this transition.”
Mr. Vince commented on the financial results, “Reported revenue of $4.3 billion was up 7% year-over-year. Our results reflect the benefit of higher interest rates, the strength of our diversified platform, and our exceptional client franchise. We continued to see good sales momentum across most of our businesses, and healthy client volumes tempered the impact of lower market values. We deeply appreciate our employees’ commitment in these more volatile markets. Our clients clearly value our resilience, the quality of our services and insights, and the trusted relationship that they have with BNY Mellon.”
Media Relations: Garrett Marquis (949) 683-1503 | Investor Relations: Marius Merz (212) 298-1480 | ||||
(b) For information on these Non-GAAP measures, see “Explanation of GAAP and Non-GAAP financial measures” on page 10. | |||||
Note: Above comparisons are 2Q22 vs. 2Q21, unless otherwise noted. |
BNY Mellon 2Q22 Earnings Release |
CONSOLIDATED FINANCIAL HIGHLIGHTS
(in millions, except per share amounts and unless otherwise noted; not meaningful - N/M) | 2Q22 vs. | ||||||||||||||||
2Q22 | 1Q22 | 2Q21 | 1Q22 | 2Q21 | |||||||||||||
Fee revenue | $ | 3,339 | $ | 3,158 | $ | 3,224 | 6 | % | 4 | % | |||||||
Investment and other revenue | 91 | 70 | 91 | N/M | N/M | ||||||||||||
Total fee and other revenue | 3,430 | 3,228 | 3,315 | 6 | 3 | ||||||||||||
Net interest revenue | 824 | 698 | 645 | 18 | 28 | ||||||||||||
Total revenue | 4,254 | 3,926 | 3,960 | 8 | 7 | ||||||||||||
Provision for credit losses | 47 | 2 | (86) | N/M | N/M | ||||||||||||
Noninterest expense | 3,112 | 3,006 | 2,778 | 4 | 12 | ||||||||||||
Income before income taxes | 1,095 | 918 | 1,268 | 19 | (14) | ||||||||||||
Provision for income taxes | 231 | 153 | 241 | 51 | (4) | ||||||||||||
Net income | $ | 864 | $ | 765 | $ | 1,027 | 13 | % | (16) | % | |||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 835 | $ | 699 | $ | 991 | 19 | % | (16) | % | |||||||
Operating leverage (a) | 483 | bps | (460) | bps |
Diluted earnings per common share | $ | 1.03 | $ | 0.86 | $ | 1.13 | 20 | % | (9) | % | |||||||
Average common shares and equivalents outstanding - diluted (in thousands) | 813,590 | 813,986 | 873,475 | ||||||||||||||
Pre-tax operating margin | 26 | % | 23 | % | 32 | % |
(a) Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense.
bps – basis points.
KEY DRIVERS (comparisons are 2Q22 vs. 2Q21, unless otherwise stated)
•Total revenue increased 7%, primarily reflecting:
•Fee revenue increased 4%, primarily reflecting lower money market fee waivers, higher client activity and higher foreign exchange revenue, partially offset by the unfavorable impact of a stronger U.S. dollar, lower market values and the impact of lost business in the prior year in both Pershing and Corporate Trust.
•Investment and other revenue was unchanged primarily reflecting higher strategic equity investment gains, offset by lower seed capital results.
•Net interest revenue increased 28%, primarily reflecting higher interest rates on interest-earning assets and a change in asset mix, partially offset by higher funding expense and lower interest-earning assets.
•Provision for credit losses was $47 million compared with a benefit of $86 million primarily reflecting changes in the macroeconomic forecast.
•Noninterest expense increased 12%, including 4% increase due to higher litigation reserves. The remainder of the increase primarily reflects higher investments in growth, infrastructure and efficiency initiatives and higher revenue-related expenses, including the impact of inflation, partially offset by the favorable impact of a stronger U.S. dollar.
•Effective tax rate of 21.1%, includes ~1.5% impact due to increase in litigation reserves.
Assets under custody and/or administration (“AUC/A”) and Assets under management (“AUM”)
•AUC/A of $43.0 trillion, decreased 4%, primarily reflecting lower market values and the unfavorable impact of a stronger U.S. dollar, partially offset by client inflows and net new business.
•AUM of $1.9 trillion, decreased 17%, primarily reflecting lower market values and the unfavorable impact of a stronger U.S. dollar, partially offset by net inflows.
Capital and liquidity
•Dividends of $279 million to common shareholders (including dividend-equivalents on share-based awards).
•Return on common equity (“ROE”) – 9%; Return on tangible common equity (“ROTCE”) – 19% (b).
•Common Equity Tier 1 (“CET1”) ratio – 10.0%.
•Tier 1 leverage ratio – 5.2%.
•Average liquidity coverage ratio (“LCR”) – 111%.
•Total Loss Absorbing Capacity (“TLAC”) ratios exceed minimum requirements.
(b) See “Explanation of GAAP and Non-GAAP financial measures” on page 10 for additional information.
Note: Throughout this document, sequential growth rates are unannualized.
Page - 2 |
BNY Mellon 2Q22 Earnings Release |
SECURITIES SERVICES BUSINESS SEGMENT HIGHLIGHTS
(dollars in millions, unless otherwise noted; not meaningful - N/M) | 2Q22 vs. | |||||||||||||||||||
2Q22 | 1Q22 | 2Q21 | 1Q22 | 2Q21 | ||||||||||||||||
Investment services fees: | ||||||||||||||||||||
Asset Servicing | $ | 995 | $ | 999 | $ | 960 | — | % | 4 | % | ||||||||||
Issuer Services | 309 | 141 | 281 | 119 | 10 | |||||||||||||||
Total investment services fees | 1,304 | 1,140 | 1,241 | 14 | 5 | |||||||||||||||
Foreign exchange revenue | 155 | 148 | 129 | 5 | 20 | |||||||||||||||
Other fees (a) | 54 | 41 | 25 | 32 | 116 | |||||||||||||||
Total fee revenue | 1,513 | 1,329 | 1,395 | 14 | 8 | |||||||||||||||
Investment and other revenue | 36 | 74 | 38 | N/M | N/M | |||||||||||||||
Total fee and other revenue | 1,549 | 1,403 | 1,433 | 10 | 8 | |||||||||||||||
Net interest revenue | 457 | 377 | 354 | 21 | 29 | |||||||||||||||
Total revenue | 2,006 | 1,780 | 1,787 | 13 | 12 | |||||||||||||||
Provision for credit losses | 13 | (10) | (58) | N/M | N/M | |||||||||||||||
Noninterest expense | 1,656 | 1,510 | 1,400 | 10 | 18 | |||||||||||||||
Income before taxes | $ | 337 | $ | 280 | $ | 445 | 20 | % | (24) | % | ||||||||||
Total revenue by line of business: | ||||||||||||||||||||
Asset Servicing | $ | 1,534 | $ | 1,512 | $ | 1,382 | 1 | % | 11 | % | ||||||||||
Issuer Services | 472 | 268 | 405 | 76 | 17 | |||||||||||||||
Total revenue by line of business | $ | 2,006 | $ | 1,780 | $ | 1,787 | 13 | % | 12 | % | ||||||||||
Pre-tax operating margin | 17 | % | (b) | 16 | % | 25 | % | |||||||||||||
Securities lending revenue (c) | $ | 45 | $ | 39 | $ | 42 | 15 | % | 7 | % | ||||||||||
Metrics: | ||||||||||||||||||||
Average loans | $ | 11,386 | $ | 10,150 | $ | 8,485 | 12 | % | 34 | % | ||||||||||
Average deposits | $ | 191,191 | $ | 192,156 | $ | 203,147 | (1) | % | (6) | % | ||||||||||
AUC/A at period end (in trillions) (current period is preliminary) (d) | $ | 31.0 | $ | 33.7 | $ | 33.7 | (8) | % | (8) | % | ||||||||||
Market value of securities on loan at period end (in billions) (e) | $ | 441 | $ | 449 | $ | 456 | (2) | % | (3) | % |
(a) Other fees primarily include financing-related fees.
(b) Excluding higher litigation reserves, adjusted pre-tax operating margin was 21% (Non-GAAP). See “Explanation of GAAP and Non-GAAP financial measures” on page 10 for information on this Non-GAAP measure.
(c) Included in investment services fees in the Asset Servicing business.
(d) Consists of AUC/A primarily from the Asset Servicing business and, to a lesser extent, the Issuer Services 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 $1.5 trillion at June 30, 2022 and $1.7 trillion at March 31, 2022 and June 30, 2021.
(e) 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 $70 billion at June 30, 2022, $78 billion at March 31, 2022 and $63 billion at June 30, 2021.
KEY DRIVERS
•The drivers of the total revenue variances by line of business are indicated below. Also see page 7 for information related to money market fee waivers.
•Asset Servicing – The year-over-year increase primarily reflects higher net interest revenue, lower money market fee waivers, higher foreign exchange revenue and client activity, partially offset by the unfavorable impact of a stronger U.S. dollar and lower market values. The sequential increase was impacted by the same factors and was partially offset by a gain on a strategic equity investment recorded in 1Q22.
•Issuer Services – The year-over-year increase primarily reflects higher net interest revenue in Corporate Trust, higher Depositary Receipts revenue and lower money market fee waivers, partially offset by the impact of lost business in the prior year in Corporate Trust. The sequential increase primarily reflects the accelerated amortization of deferred costs for depositary receipts services related to Russia recorded in 1Q22, higher Depositary Receipts revenue, higher net interest revenue in Corporate Trust and lower money market fee waivers.
•Noninterest expense increased year-over-year, primarily reflecting higher investments in growth, infrastructure and efficiency initiatives, litigation reserves and revenue-related expenses, including the impact of inflation, partially offset by the favorable impact of a stronger U.S. dollar. The sequential increase primarily reflects higher litigation reserves.
Page - 3 |
BNY Mellon 2Q22 Earnings Release |
MARKET AND WEALTH SERVICES BUSINESS SEGMENT HIGHLIGHTS
(dollars in millions, unless otherwise noted; not meaningful - N/M) | 2Q22 vs. | ||||||||||||||||
2Q22 | 1Q22 | 2Q21 | 1Q22 | 2Q21 | |||||||||||||
Investment services fees: | |||||||||||||||||
Pershing | $ | 479 | $ | 433 | $ | 439 | 11 | % | 9 | % | |||||||
Treasury Services | 176 | 170 | 160 | 4 | 10 | ||||||||||||
Clearance and Collateral Management | 240 | 243 | 228 | (1) | 5 | ||||||||||||
Total investment services fees | 895 | 846 | 827 | 6 | 8 | ||||||||||||
Foreign exchange revenue | 22 | 26 | 23 | (15) | (4) | ||||||||||||
Other fees (a) | 46 | 34 | 32 | 35 | 44 | ||||||||||||
Total fee revenue | 963 | 906 | 882 | 6 | 9 | ||||||||||||
Investment and other revenue | 11 | — | 21 | N/M | N/M | ||||||||||||
Total fee and other revenue | 974 | 906 | 903 | 8 | 8 | ||||||||||||
Net interest revenue | 340 | 296 | 289 | 15 | 18 | ||||||||||||
Total revenue | 1,314 | 1,202 | 1,192 | 9 | 10 | ||||||||||||
Provision for credit losses | 4 | (2) | (19) | N/M | N/M | ||||||||||||
Noninterest expense | 702 | 708 | 652 | (1) | 8 | ||||||||||||
Income before taxes | $ | 608 | $ | 496 | $ | 559 | 23 | % | 9 | % | |||||||
Total revenue by line of business: | |||||||||||||||||
Pershing | $ | 636 | $ | 570 | $ | 590 | 12 | % | 8 | % | |||||||
Treasury Services | 373 | 338 | 319 | 10 | 17 | ||||||||||||
Clearance and Collateral Management | 305 | 294 | 283 | 4 | 8 | ||||||||||||
Total revenue by line of business | $ | 1,314 | $ | 1,202 | $ | 1,192 | 9 | % | 10 | % | |||||||
Pre-tax operating margin | 46 | % | 41 | % | 47 | % | |||||||||||
Metrics: | |||||||||||||||||
Average loans | $ | 42,391 | $ | 42,113 | $ | 38,360 | 1 | % | 11 | % | |||||||
Average deposits | $ | 94,716 | $ | 95,704 | $ | 102,896 | (1) | % | (8) | % | |||||||
AUC/A at period end (in trillions) (current period is preliminary) (b) | $ | 11.8 | $ | 11.6 | $ | 11.1 | 2 | % | 6 | % |
(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. Also see page 7 for information related to money market fee waivers.
•Pershing – The year-over-year increase primarily reflects lower money market fee waivers and higher transaction activity, partially offset by the impact of prior year lost business. The sequential increase primarily reflects lower money market fee waivers, partially offset by lower equity markets and lower transaction activity.
•Treasury Services – The year-over-year increase primarily reflects higher net interest revenue, lower money market fee waivers and higher payment volumes. The sequential increase primarily reflects higher net interest revenue and lower money market fee waivers.
•Clearance and Collateral Management – The year-over-year increase primarily reflects higher net interest revenue and clearance volumes. The sequential increase primarily reflects higher net interest revenue.
•Noninterest expense increased year-over-year, primarily reflecting higher investments in growth, infrastructure and efficiency initiatives, including the impact of inflation. The sequential decrease primarily reflects lower staff expense.
Page - 4 |
BNY Mellon 2Q22 Earnings Release |
INVESTMENT AND WEALTH MANAGEMENT BUSINESS SEGMENT HIGHLIGHTS
(dollars in millions, unless otherwise noted; not meaningful - N/M) | 2Q22 vs. | ||||||||||||||||
2Q22 | 1Q22 | 2Q21 | 1Q22 | 2Q21 | |||||||||||||
Investment management fees | $ | 825 | $ | 848 | $ | 876 | (3) | % | (6) | % | |||||||
Performance fees | 5 | 34 | 14 | N/M | (64) | ||||||||||||
Investment management and performance fees | 830 | 882 | 890 | (6) | (7) | ||||||||||||
Distribution and servicing fees | 51 | 32 | 28 | 59 | 82 | ||||||||||||
Other fees (a) | (31) | 1 | 16 | N/M | N/M | ||||||||||||
Total fee revenue | 850 | 915 | 934 | (7) | (9) | ||||||||||||
Investment and other revenue (b) | (13) | (8) | 18 | N/M | N/M | ||||||||||||
Total fee and other revenue (b) | 837 | 907 | 952 | (8) | (12) | ||||||||||||
Net interest revenue | 62 | 57 | 47 | 9 | 32 | ||||||||||||
Total revenue | 899 | 964 | 999 | (7) | (10) | ||||||||||||
Provision for credit losses | — | (3) | (4) | N/M | N/M | ||||||||||||
Noninterest expense | 691 | 755 | 677 | (8) | 2 | ||||||||||||
Income before taxes | $ | 208 | $ | 212 | $ | 326 | (2) | % | (36) | % | |||||||
Total revenue by line of business: | |||||||||||||||||
Investment Management | $ | 603 | $ | 658 | $ | 700 | (8) | % | (14) | % | |||||||
Wealth Management | 296 | 306 | 299 | (3) | (1) | ||||||||||||
Total revenue by line of business | $ | 899 | $ | 964 | $ | 999 | (7) | % | (10) | % | |||||||
Pre-tax operating margin | 23 | % | 22 | % | 33 | % | |||||||||||
Adjusted pre-tax operating margin – Non-GAAP (c) | 26 | % | 24 | % | 35 | % | |||||||||||
Metrics: | |||||||||||||||||
Average loans | $ | 14,087 | $ | 13,228 | $ | 11,871 | 6 | % | 19 | % | |||||||
Average deposits | $ | 20,802 | $ | 22,501 | $ | 17,466 | (8) | % | 19 | % | |||||||
AUM (in billions) (current period is preliminary) (d) | $ | 1,937 | $ | 2,266 | $ | 2,320 | (15) | % | (17) | % | |||||||
Wealth Management client assets (in billions) (current period is preliminary) (e) | $ | 264 | $ | 305 | $ | 305 | (13) | % | (13) | % |
(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) Net of distribution and servicing expense. See “Explanation of GAAP and Non-GAAP financial measures” on page 10 for information on this Non-GAAP measure.
(d) Excludes assets managed outside of the Investment and Wealth Management business segment.
(e) Includes AUM and AUC/A in the Wealth Management business.
KEY DRIVERS
•The drivers of the total revenue variances by line of business are indicated below. Also see page 7 for information related to money market fee waivers.
•Investment Management – The year-over-year decrease primarily reflects the unfavorable impact of a stronger U.S. dollar, lower seed capital results and market values, an unfavorable change in the mix of AUM and lower equity income, partially offset by lower money market fee waivers. The sequential decrease primarily reflects lower market values, timing of performance fees and the unfavorable impact of a stronger U.S. dollar, partially offset by lower money market fee waivers.
•Wealth Management – The year-over-year and sequential decreases primarily reflect lower market values, partially offset by higher net interest revenue.
•Noninterest expense increased year-over-year, primarily reflecting higher investments in growth initiatives and distribution and servicing expenses, partially offset by favorable impact of a stronger U.S. dollar. The sequential decrease primarily reflects lower staff expense.
Page - 5 |
BNY Mellon 2Q22 Earnings Release |
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.
(in millions) | 2Q22 | 1Q22 | 2Q21 | ||||||||
Fee revenue | $ | 13 | $ | 8 | $ | 13 | |||||
Investment and other revenue | 62 | 12 | 9 | ||||||||
Total fee and other revenue | 75 | 20 | 22 | ||||||||
Net interest (expense) | (35) | (32) | (45) | ||||||||
Total revenue | 40 | (12) | (23) | ||||||||
Provision for credit losses | 30 | 17 | (5) | ||||||||
Noninterest expense | 63 | 33 | 49 | ||||||||
(Loss) before taxes | $ | (53) | $ | (62) | $ | (67) |
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. The year-over-year and sequential increases in total revenue primarily reflect a strategic equity investment gain in 2Q22.
•Provision for credit losses was $30 million in 2Q22 primarily related to changes in the macroeconomic forecast and an increase in cash balances with exposure to Russia.
•Noninterest expense increased year-over-year and sequentially, primarily reflecting higher staff expense.
Page - 6 |
BNY Mellon 2Q22 Earnings Release |
MONEY MARKET FEE WAIVERS
The following table presents the impact of money market fee waivers on our consolidated fee revenue, net of distribution and servicing expense. In 2Q22, the net impact of money market fee waivers was $66 million, down from $199 million in 1Q22, driven by higher interest rates.
Money market fee waivers | |||||||||||||||||||||||
(in millions) | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | YTD22 | YTD21 | ||||||||||||||||
Investment services fees (see table below) | $ | (26) | $ | (126) | $ | (148) | $ | (142) | $ | (148) | $ | (152) | $ | (257) | |||||||||
Investment management and performance fees | (40) | (85) | (116) | (109) | (115) | (125) | (204) | ||||||||||||||||
Distribution and servicing fees | (2) | (11) | (14) | (11) | (13) | (13) | (26) | ||||||||||||||||
Total fee revenue | (68) | (222) | (278) | (262) | (276) | (290) | (487) | ||||||||||||||||
Less: Distribution and servicing expense | 2 | 23 | 35 | 29 | 24 | 25 | 47 | ||||||||||||||||
Net impact of money market fee waivers | $ | (66) | $ | (199) | $ | (243) | $ | (233) | $ | (252) | $ | (265) | $ | (440) | |||||||||
Impact to investment services fees by line of business (a): | |||||||||||||||||||||||
Asset Servicing | $ | — | $ | (19) | $ | (31) | $ | (29) | $ | (30) | $ | (19) | $ | (45) | |||||||||
Issuer Services | (1) | (11) | (18) | (17) | (16) | (12) | (27) | ||||||||||||||||
Pershing | (25) | (90) | (89) | (86) | (91) | (115) | (168) | ||||||||||||||||
Treasury Services | — | (6) | (10) | (10) | (11) | (6) | (17) | ||||||||||||||||
Total impact to investment services fees by line of business | $ | (26) | $ | (126) | $ | (148) | $ | (142) | $ | (148) | $ | (152) | $ | (257) | |||||||||
Impact to fee revenue by line of business (a): | |||||||||||||||||||||||
Asset Servicing | $ | (1) | $ | (28) | $ | (50) | $ | (47) | $ | (50) | $ | (29) | $ | (79) | |||||||||
Issuer Services | (1) | (14) | (24) | (22) | (22) | (15) | (37) | ||||||||||||||||
Pershing | (29) | (107) | (106) | (102) | (99) | (136) | (193) | ||||||||||||||||
Treasury Services | — | (8) | (14) | (13) | (16) | (8) | (25) | ||||||||||||||||
Investment Management | (37) | (63) | (81) | (76) | (85) | (100) | (146) | ||||||||||||||||
Wealth Management | — | (2) | (3) | (2) | (4) | (2) | (7) | ||||||||||||||||
Total impact to fee revenue by line of business | $ | (68) | $ | (222) | $ | (278) | $ | (262) | $ | (276) | $ | (290) | $ | (487) |
(a) The line of business revenue for management reporting purposes reflects the impact of revenue transferred between the businesses.
Page - 7 |
BNY Mellon 2Q22 Earnings Release |
CAPITAL AND LIQUIDITY
Capital and liquidity ratios | June 30, 2022 | March 31, 2022 | Dec. 31, 2021 | ||||||||
Consolidated regulatory capital ratios: (a) | |||||||||||
CET1 ratio | 10.0 | % | 10.1 | % | 11.2 | % | |||||
Tier 1 capital ratio | 12.8 | 12.9 | 14.0 | ||||||||
Total capital ratio | 13.6 | 13.7 | 14.9 | ||||||||
Tier 1 leverage ratio | 5.2 | 5.3 | 5.5 | ||||||||
Supplementary leverage ratio | 6.2 | 6.2 | 6.6 | ||||||||
BNY Mellon shareholders’ equity to total assets ratio | 9.1 | % | 8.8 | % | 9.7 | % | |||||
BNY Mellon common shareholders’ equity to total assets ratio | 8.0 | % | 7.8 | % | 8.6 | % | |||||
Average LCR | 111 | % | 109 | % | 109 | % | |||||
Book value per common share | $ | 44.73 | $ | 45.76 | $ | 47.50 | |||||
Tangible book value per common share – Non-GAAP (b) | $ | 22.02 | $ | 22.76 | $ | 24.31 | |||||
Common shares outstanding (in thousands) | 808,103 | 807,798 | 804,145 |
(a) Regulatory capital ratios for June 30, 2022 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 June 30, 2022 was the Advanced Approaches and for March 31, 2022 and Dec. 31, 2021 was the Standardized Approach.
(b) 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” on page 10 for information on this Non-GAAP measure.
•CET1 capital totaled $17.1 billion and Tier 1 capital totaled $21.8 billion at June 30, 2022, both decreasing approximately $515 million, compared with March 31, 2022. The decreases primarily reflect unrealized losses on securities available-for-sale, foreign currency translation and capital deployed through dividends, partially offset by capital generated through earnings. The Tier 1 leverage ratio decreased compared with March 31, 2022, driven by the decrease in capital, partially offset by lower average assets.
NET INTEREST REVENUE
Net interest revenue | 2Q22 vs. | ||||||||||||||||
(dollars in millions; not meaningful - N/M) | 2Q22 | 1Q22 | 2Q21 | 1Q22 | 2Q21 | ||||||||||||
Net interest revenue | $ | 824 | $ | 698 | $ | 645 | 18% | 28% | |||||||||
Add: Tax equivalent adjustment | 3 | 3 | 3 | N/M | N/M | ||||||||||||
Net interest revenue, on a fully taxable equivalent (“FTE”) basis – Non-GAAP (a) | $ | 827 | $ | 701 | $ | 648 | 18% | 28% | |||||||||
Net interest margin | 0.89 | % | 0.75 | % | 0.67 | % | 14 | bps | 22 | bps | |||||||
Net interest margin (FTE) – Non-GAAP (a) | 0.89 | % | 0.76 | % | 0.67 | % | 13 | bps | 22 | 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” on page 10 for information on this Non-GAAP measure.
bps – basis points.
•Net interest revenue increased year-over-year, primarily reflecting higher interest rates on interest-earning assets and a change in asset mix, partially offset by higher funding expense and lower interest-earning assets.
•Sequentially, the increase primarily reflects higher interest rates on interest-earning assets. This was partially offset by higher funding expense.
Page - 8 |
BNY Mellon 2Q22 Earnings Release |
THE BANK OF NEW YORK MELLON CORPORATION
Condensed Consolidated Income Statement
(in millions) | Quarter ended | Year-to-date | ||||||||||||||||||
June 30, 2022 | March 31, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | ||||||||||||||||
Fee and other revenue | ||||||||||||||||||||
Investment services fees | $ | 2,206 | $ | 1,993 | $ | 2,076 | $ | 4,199 | $ | 4,132 | ||||||||||
Investment management and performance fees | 833 | 883 | 889 | 1,716 | 1,779 | |||||||||||||||
Foreign exchange revenue | 222 | 207 | 184 | 429 | 415 | |||||||||||||||
Financing-related fees | 44 | 45 | 48 | 89 | 99 | |||||||||||||||
Distribution and servicing fees | 34 | 30 | 27 | 64 | 56 | |||||||||||||||
Total fee revenue | 3,339 | 3,158 | 3,224 | 6,497 | 6,481 | |||||||||||||||
Investment and other revenue | 91 | 70 | 91 | 161 | 100 | |||||||||||||||
Total fee and other revenue | 3,430 | 3,228 | 3,315 | 6,658 | 6,581 | |||||||||||||||
Net interest revenue | ||||||||||||||||||||
Interest revenue | 1,159 | 778 | 685 | 1,937 | 1,423 | |||||||||||||||
Interest expense | 335 | 80 | 40 | 415 | 123 | |||||||||||||||
Net interest revenue | 824 | 698 | 645 | 1,522 | 1,300 | |||||||||||||||
Total revenue | 4,254 | 3,926 | 3,960 | 8,180 | 7,881 | |||||||||||||||
Provision for credit losses | 47 | 2 | (86) | 49 | (169) | |||||||||||||||
Noninterest expense | ||||||||||||||||||||
Staff | 1,623 | 1,702 | 1,518 | 3,325 | 3,120 | |||||||||||||||
Software and equipment | 405 | 399 | 365 | 804 | 727 | |||||||||||||||
Professional, legal and other purchased services | 379 | 370 | 363 | 749 | 706 | |||||||||||||||
Sub-custodian and clearing | 131 | 118 | 132 | 249 | 256 | |||||||||||||||
Net occupancy | 125 | 122 | 122 | 247 | 245 | |||||||||||||||
Distribution and servicing | 90 | 79 | 73 | 169 | 147 | |||||||||||||||
Business development | 43 | 30 | 22 | 73 | 41 | |||||||||||||||
Bank assessment charges | 37 | 35 | 35 | 72 | 69 | |||||||||||||||
Amortization of intangible assets | 17 | 17 | 20 | 34 | 44 | |||||||||||||||
Other | 262 | 134 | 128 | 396 | 274 | |||||||||||||||
Total noninterest expense | 3,112 | 3,006 | 2,778 | 6,118 | 5,629 | |||||||||||||||
Income | ||||||||||||||||||||
Income before income taxes | 1,095 | 918 | 1,268 | 2,013 | 2,421 | |||||||||||||||
Provision for income taxes | 231 | 153 | 241 | 384 | 462 | |||||||||||||||
Net income | 864 | 765 | 1,027 | 1,629 | 1,959 | |||||||||||||||
Net loss (income) attributable to noncontrolling interests related to consolidated investment management funds | 5 | 8 | (5) | 13 | (10) | |||||||||||||||
Net income applicable to shareholders of The Bank of New York Mellon Corporation | 869 | 773 | 1,022 | 1,642 | 1,949 | |||||||||||||||
Preferred stock dividends | (34) | (74) | (31) | (108) | (100) | |||||||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 835 | $ | 699 | $ | 991 | $ | 1,534 | $ | 1,849 |
Earnings per share applicable to the common shareholders of The Bank of New York Mellon Corporation | Quarter ended | Year ended | ||||||||||||||||||
June 30, 2022 | March 31, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | ||||||||||||||||
(in dollars) | ||||||||||||||||||||
Basic | $ | 1.03 | $ | 0.86 | $ | 1.14 | $ | 1.89 | $ | 2.11 | ||||||||||
Diluted | $ | 1.03 | $ | 0.86 | $ | 1.13 | $ | 1.88 | $ | 2.10 |
Page - 9 |
BNY Mellon 2Q22 Earnings Release |
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 also 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.
For the reconciliations of these Non-GAAP measures, see “Explanation of GAAP and Non-GAAP Financial Measures” in the Financial Supplement available at www.bnymellon.com.
BNY Mellon has presented pre-tax operating margin, excluding an increase in litigation reserves for the Securities Services business segment. This measure is provided to permit investors to view the financial measures on a basis consistent with how management views the businesses.
Pre-tax operating margin reconciliation - Securities Services business segment | |||||
(dollars in millions) | 2Q22 | ||||
Income before income taxes – GAAP | $ | 337 | |||
Add: Increase in litigation reserves | 92 | ||||
Adjusted income before income taxes, excluding increase in litigation reserves – Non-GAAP | $ | 429 | |||
Total revenue – GAAP | $ | 2,006 | |||
Pre-tax operating margin - GAAP (a) | 17 | % | |||
Adjusted pre-tax operating margin, excluding increase in litigation reserves – Non-GAAP | 21 | % |
(a) Income before taxes divided by total revenue.
CAUTIONARY STATEMENT
A number of statements (i) in this Earnings Release, (ii) in our Financial Supplement, (iii) in our presentations and (iv) in the responses to questions on our conference call discussing our quarterly results and other public events may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about our capital plans, strategic priorities, financial goals, organic growth, performance, organizational quality and efficiency, investments, including in technology and product development, resiliency, capabilities, revenue, net interest revenue, money market fee waivers, fees, expenses, cost discipline, sustainable growth, innovation in products and services, company management, human capital management (including related ambitions, objectives, aims and goals), deposits, interest rates and yield curves, securities portfolio, taxes, business opportunities, divestments, volatility, preliminary business metrics and regulatory capital ratios and statements regarding our aspirations, as well as our overall plans, strategies, goals, objectives, expectations, outlooks, estimates, intentions, targets, opportunities, focus and initiatives, including the potential effects of the coronavirus pandemic on any of the foregoing. These statements may be expressed in a variety of ways, including the use of future or present tense language. Words such as “estimate,” “forecast,” “project,” “anticipate,” “likely,” “target,” “expect,” “intend,” “continue,” “seek,” “believe,” “plan,” “goal,”
Page - 10 |
BNY Mellon 2Q22 Earnings Release |
“could,” “should,” “would,” “may,” “might,” “will,” “strategy,” “synergies,” “opportunities,” “trends,” “ambition,” “objective,” “aim,” “future,” “potentially,” “outlook” and words of similar meaning may signify forward-looking statements. These statements and other forward-looking statements contained in other public disclosures of BNY Mellon which make reference to the cautionary factors described in this Earnings Release are based upon current beliefs and expectations and are subject to significant risks and uncertainties (some of which are beyond BNY Mellon’s control). Actual results may differ materially from those expressed or implied as a result of a number of factors, including, but not limited to, the risk factors and other uncertainties set forth in BNY Mellon’s Annual Report on Form 10-K for the year ended Dec. 31, 2021 and BNY Mellon’s other filings with the Securities and Exchange Commission. Statements about the effects of the current and near-term market and macroeconomic outlook on BNY Mellon, including on its business, operations, financial performance and prospects, may constitute forward-looking statements, and 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 BNY Mellon’s control), including geopolitical risks (including those related to Russia’s invasion of Ukraine), as well as the scope and duration of the pandemic, actions taken by governmental authorities and other third parties in response to the pandemic, the availability, use and effectiveness of vaccines and the direct and indirect impact of the pandemic on us, our clients, customers and third parties. Preliminary business metrics and regulatory capital ratios are subject to change, possibly materially, as BNY Mellon completes its Quarterly Report on Form 10-Q for the quarter ended June 30, 2022. All forward-looking statements in this Earnings Release speak only as of July 15, 2022, 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.
ABOUT BNY MELLON
BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment and wealth management and investment services in 35 countries. As of June 30, 2022, BNY Mellon had $43.0 trillion in assets under custody and/or administration, and $1.9 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.
CONFERENCE CALL INFORMATION
Todd Gibbons, Chief Executive Officer, Robin Vince, President and Chief Executive Officer-Elect and Emily Portney, Chief Financial Officer, will host a conference call and simultaneous live audio webcast at 8:00 a.m. ET on July 15, 2022. 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 July 15, 2022. Replays of the conference call and audio webcast will be available beginning July 15, 2022 at approximately 2:00 p.m. ET through Aug. 15, 2022 by dialing (888) 203-1112 (U.S.) or (719) 457-0820 (International), and using the passcode: 5049084. The archived version of the conference call and audio webcast will also be available at www.bnymellon.com/investorrelations for the same time period.
Page - 11 |
The Bank of New York Mellon Corporation | ||
Financial Supplement | ||
Second Quarter 2022 | ||
Table of Contents | ||||||||
Consolidated Results | Page | |||||||
Consolidated Financial Highlights | ||||||||
Condensed Consolidated Income Statement | ||||||||
Condensed Consolidated Balance Sheet | ||||||||
Fee and Other Revenue | ||||||||
Average Balances and Interest Rates | ||||||||
Capital and Liquidity | ||||||||
Business Segment Results | ||||||||
Securities Services Business Segment | ||||||||
Market and Wealth Services Business Segment | ||||||||
Investment and Wealth Management Business Segment | ||||||||
AUM by Product Type, Changes in AUM and Wealth Management Client Assets | ||||||||
Other Segment | ||||||||
Other | ||||||||
Securities Portfolio | ||||||||
Allowance for Credit Losses and Nonperforming Assets | ||||||||
Supplemental Information | ||||||||
Explanation of GAAP and Non-GAAP Financial Measures | ||||||||
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONSOLIDATED FINANCIAL HIGHLIGHTS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions, except per common share amounts, or unless otherwise noted) | 2Q22 vs. | YTD22 vs. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q22 | 2Q21 | YTD22 | YTD21 | YTD21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected income statement data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fee and other revenue | $ | 3,430 | $ | 3,228 | $ | 3,338 | $ | 3,394 | $ | 3,315 | 6 | % | 3 | % | $ | 6,658 | $ | 6,581 | 1 | % | ||||||||||||||||||||||||||||||||||||||||||
Net interest revenue | 824 | 698 | 677 | 641 | 645 | 18 | 28 | 1,522 | 1,300 | 17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue | 4,254 | 3,926 | 4,015 | 4,035 | 3,960 | 8 | 7 | 8,180 | 7,881 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for credit losses | 47 | 2 | (17) | (45) | (86) | N/M | N/M | 49 | (169) | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest expense | 3,112 | 3,006 | 2,967 | 2,918 | 2,778 | 4 | 12 | 6,118 | 5,629 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Income before income taxes | 1,095 | 918 | 1,065 | 1,162 | 1,268 | 19 | (14) | 2,013 | 2,421 | (17) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for income taxes | 231 | 153 | 196 | 219 | 241 | 51 | (4) | 384 | 462 | (17) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | $ | 864 | $ | 765 | $ | 869 | $ | 943 | $ | 1,027 | 13 | % | (16) | % | $ | 1,629 | $ | 1,959 | (17) | % | ||||||||||||||||||||||||||||||||||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 835 | $ | 699 | $ | 822 | $ | 881 | $ | 991 | 19 | % | (16) | % | $ | 1,534 | $ | 1,849 | (17) | % | ||||||||||||||||||||||||||||||||||||||||||
Diluted earnings per common share | $ | 1.03 | $ | 0.86 | $ | 1.01 | $ | 1.04 | $ | 1.13 | 20 | % | (9) | % | $ | 1.88 | $ | 2.10 | (10) | % | ||||||||||||||||||||||||||||||||||||||||||
Average common shares and equivalents outstanding – diluted (in thousands) | 813,590 | 813,986 | 817,345 | 849,028 | 873,475 | — | % | (7) | % | 813,894 | 879,409 | (7) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Financial ratios (Returns are annualized) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pre-tax operating margin | 26 | % | 23 | % | 27 | % | 29 | % | 32 | % | 25 | % | 31 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Return on common equity | 9.3 | % | 7.6 | % | 8.6 | % | 8.8 | % | 9.8 | % | 8.4 | % | 9.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Return on tangible common equity – Non-GAAP (a) | 19.2 | % | 15.4 | % | 17.2 | % | 16.8 | % | 18.6 | % | 17.2 | % | 17.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Non-U.S. revenue as a percentage of total revenue | 36 | % | 35 | % | 38 | % | 38 | % | 38 | % | 35 | % | 38 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Period end | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets under custody and/or administration (“AUC/A”) (in trillions) (b) | $ | 43.0 | $ | 45.5 | $ | 46.7 | $ | 45.3 | $ | 45.0 | (5) | % | (4) | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Assets under management (“AUM”) (in trillions) | $ | 1.94 | $ | 2.27 | $ | 2.43 | $ | 2.31 | $ | 2.32 | (15) | % | (17) | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Full-time employees | 50,800 | 49,600 | 49,100 | 48,900 | 48,800 | 2 | % | 4 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Book value per common share | $ | 44.73 | $ | 45.76 | $ | 47.50 | $ | 47.30 | $ | 47.20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Tangible book value per common share – Non-GAAP (a) | $ | 22.02 | $ | 22.76 | $ | 24.31 | $ | 24.88 | $ | 25.64 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash dividends per common share | $ | 0.34 | $ | 0.34 | $ | 0.34 | $ | 0.34 | $ | 0.31 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Common dividend payout ratio | 33 | % | 40 | % | 34 | % | 34 | % | 28 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Closing stock price per common share | $ | 41.71 | $ | 49.63 | $ | 58.08 | $ | 51.84 | $ | 51.23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Market capitalization | $ | 33,706 | $ | 40,091 | $ | 46,705 | $ | 42,811 | $ | 44,220 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Common shares outstanding (in thousands) | 808,103 | 807,798 | 804,145 | 825,821 | 863,174 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital ratios at period end (c) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Equity Tier 1 ("CET1") ratio | 10.0 | % | 10.1 | % | 11.2 | % | 11.7 | % | 12.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Tier 1 capital ratio | 12.8 | % | 12.9 | % | 14.0 | % | 14.4 | % | 15.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total capital ratio | 13.6 | % | 13.7 | % | 14.9 | % | 15.2 | % | 16.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Tier 1 leverage ratio | 5.2 | % | 5.3 | % | 5.5 | % | 5.7 | % | 6.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplementary leverage ratio ("SLR") | 6.2 | % | 6.2 | % | 6.6 | % | 7.0 | % | 7.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||
(a) Non-GAAP information, for all periods presented, excludes goodwill and intangible assets, net of deferred tax liabilities. See "Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of Non-GAAP measures. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.5 trillion at June 30, 2022 and $1.7 trillion at March 31, 2022, Dec. 31, 2021, Sept. 30, 2021 and June 30, 2021. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) Regulatory capital ratios for June 30, 2022 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 June 30, 2022 was the Advanced Approaches, for March 31, 2022 and Dec. 31, 2021 was the Standardized Approach, and for Sept. 30, 2021 and June 30, 2021 was the Standardized Approach for the CET1 and Tier 1 capital ratios and the Advanced Approaches for the Total capital ratio. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
N/M – Not meaningful. |
3
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED INCOME STATEMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions, except per share amounts; common shares in thousands) | 2Q22 vs. | YTD22 vs. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q22 | 2Q21 | YTD22 | YTD21 | YTD21 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment services fees | $ | 2,206 | $ | 1,993 | $ | 2,061 | $ | 2,091 | $ | 2,076 | 11 | % | 6 | % | $ | 4,199 | $ | 4,132 | 2 | % | ||||||||||||||||||||||||||||||||||||||||||
Investment management and performance fees | 833 | 883 | 896 | 913 | 889 | (6) | (6) | 1,716 | 1,779 | (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange revenue | 222 | 207 | 199 | 185 | 184 | 7 | 21 | 429 | 415 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing-related fees | 44 | 45 | 47 | 48 | 48 | (2) | (8) | 89 | 99 | (10) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Distribution and servicing fees | 34 | 30 | 28 | 28 | 27 | 13 | 26 | 64 | 56 | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total fee revenue | 3,339 | 3,158 | 3,231 | 3,265 | 3,224 | 6 | 4 | 6,497 | 6,481 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment and other revenue | 91 | 70 | 107 | 129 | 91 | N/M | N/M | 161 | 100 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total fee and other revenue | 3,430 | 3,228 | 3,338 | 3,394 | 3,315 | 6 | 3 | 6,658 | 6,581 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest revenue | 824 | 698 | 677 | 641 | 645 | 18 | 28 | 1,522 | 1,300 | 17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue | 4,254 | 3,926 | 4,015 | 4,035 | 3,960 | 8 | 7 | 8,180 | 7,881 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for credit losses | 47 | 2 | (17) | (45) | (86) | N/M | N/M | 49 | (169) | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest expense | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Staff | 1,623 | 1,702 | 1,633 | 1,584 | 1,518 | (5) | 7 | 3,325 | 3,120 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Software and equipment | 405 | 399 | 379 | 372 | 365 | 2 | 11 | 804 | 727 | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Professional, legal and other purchased services | 379 | 370 | 390 | 363 | 363 | 2 | 4 | 749 | 706 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Sub-custodian and clearing | 131 | 118 | 120 | 129 | 132 | 11 | (1) | 249 | 256 | (3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net occupancy | 125 | 122 | 133 | 120 | 122 | 2 | 2 | 247 | 245 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Distribution and servicing | 90 | 79 | 75 | 76 | 73 | 14 | 23 | 169 | 147 | 15 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Business development | 43 | 30 | 44 | 22 | 22 | 43 | 95 | 73 | 41 | 78 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Bank assessment charges | 37 | 35 | 30 | 34 | 35 | 6 | 6 | 72 | 69 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 17 | 17 | 19 | 19 | 20 | — | (15) | 34 | 44 | (23) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | 262 | 134 | 144 | 199 | 128 | 96 | 105 | 396 | 274 | 45 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total noninterest expense | 3,112 | 3,006 | 2,967 | 2,918 | 2,778 | 4 | 12 | 6,118 | 5,629 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Income before income taxes | 1,095 | 918 | 1,065 | 1,162 | 1,268 | 19 | (14) | 2,013 | 2,421 | (17) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for income taxes | 231 | 153 | 196 | 219 | 241 | 51 | (4) | 384 | 462 | (17) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | 864 | 765 | 869 | 943 | 1,027 | 13 | (16) | 1,629 | 1,959 | (17) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss (income) attributable to noncontrolling interests | 5 | 8 | (6) | 4 | (5) | N/M | N/M | 13 | (10) | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock dividends | (34) | (74) | (41) | (66) | (31) | N/M | N/M | (108) | (100) | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation | $ | 835 | $ | 699 | $ | 822 | $ | 881 | $ | 991 | 19 | % | (16) | % | $ | 1,534 | $ | 1,849 | (17) | % | ||||||||||||||||||||||||||||||||||||||||||
Average common shares and equivalents outstanding: Basic | 810,903 | 809,469 | 811,463 | 844,088 | 869,460 | — | % | (7) | % | 810,233 | 876,006 | (8) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Diluted | 813,590 | 813,986 | 817,345 | 849,028 | 873,475 | — | % | (7) | % | 813,894 | 879,409 | (7) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per common share: Basic | $ | 1.03 | $ | 0.86 | $ | 1.01 | $ | 1.04 | $ | 1.14 | 20 | % | (10) | % | $ | 1.89 | $ | 2.11 | (10) | % | ||||||||||||||||||||||||||||||||||||||||||
Diluted | $ | 1.03 | $ | 0.86 | $ | 1.01 | $ | 1.04 | $ | 1.13 | 20 | % | (9) | % | $ | 1.88 | $ | 2.10 | (10) | % | ||||||||||||||||||||||||||||||||||||||||||
N/M – Not meaningful. |
4
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEET | ||||||||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||||||||
(in millions) | June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | |||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Cash and due from banks | $ | 5,185 | $ | 6,143 | $ | 6,061 | $ | 6,752 | $ | 5,154 | ||||||||||||||||||||||
Interest-bearing deposits with the Federal Reserve and other central banks | 125,372 | 135,691 | 102,467 | 126,959 | 126,355 | |||||||||||||||||||||||||||
Interest-bearing deposits with banks | 16,639 | 18,268 | 16,630 | 20,057 | 21,270 | |||||||||||||||||||||||||||
Federal funds sold and securities purchased under resale agreements | 22,940 | 27,131 | 29,607 | 28,497 | 29,762 | |||||||||||||||||||||||||||
Securities | 150,844 | 153,396 | 158,705 | 157,274 | 155,906 | |||||||||||||||||||||||||||
Trading assets | 10,759 | 14,703 | 16,577 | 17,854 | 15,520 | |||||||||||||||||||||||||||
Loans | 69,347 | 68,052 | 67,787 | 64,328 | 63,547 | |||||||||||||||||||||||||||
Allowance for loan losses | (181) | (171) | (196) | (233) | (269) | |||||||||||||||||||||||||||
Net loans | 69,166 | 67,881 | 67,591 | 64,095 | 63,278 | |||||||||||||||||||||||||||
Premises and equipment | 3,354 | 3,359 | 3,431 | 3,422 | 3,442 | |||||||||||||||||||||||||||
Accrued interest receivable | 548 | 467 | 457 | 464 | 492 | |||||||||||||||||||||||||||
Goodwill | 17,271 | 17,462 | 17,512 | 17,420 | 17,487 | |||||||||||||||||||||||||||
Intangible assets | 2,934 | 2,968 | 2,991 | 2,941 | 2,964 | |||||||||||||||||||||||||||
Other assets | 27,609 | 26,342 | 22,409 | 24,798 | 25,333 | |||||||||||||||||||||||||||
Total assets | $ | 452,621 | $ | 473,811 | $ | 444,438 | $ | 470,533 | $ | 466,963 | ||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Deposits | $ | 325,813 | $ | 345,565 | $ | 319,694 | $ | 343,139 | $ | 338,670 | ||||||||||||||||||||||
Federal funds purchased and securities sold under repurchase agreements | 11,434 | 13,181 | 11,566 | 11,973 | 12,425 | |||||||||||||||||||||||||||
Trading liabilities | 5,595 | 5,587 | 5,469 | 5,152 | 6,451 | |||||||||||||||||||||||||||
Payables to customers and broker-dealers | 25,769 | 26,608 | 25,150 | 26,002 | 23,704 | |||||||||||||||||||||||||||
Other borrowed funds | 520 | 312 | 749 | 767 | 451 | |||||||||||||||||||||||||||
Accrued taxes and other expenses | 5,011 | 4,534 | 5,767 | 5,609 | 5,213 | |||||||||||||||||||||||||||
Other liabilities | 9,724 | 10,626 | 6,721 | 8,796 | 8,626 | |||||||||||||||||||||||||||
Long-term debt | 27,610 | 25,246 | 25,931 | 25,043 | 25,629 | |||||||||||||||||||||||||||
Total liabilities | 411,476 | 431,659 | 401,047 | 426,481 | 421,169 | |||||||||||||||||||||||||||
Temporary equity | ||||||||||||||||||||||||||||||||
Redeemable noncontrolling interests | 154 | 155 | 161 | 178 | 169 | |||||||||||||||||||||||||||
Permanent equity | ||||||||||||||||||||||||||||||||
Preferred stock | 4,838 | 4,838 | 4,838 | 4,541 | 4,541 | |||||||||||||||||||||||||||
Common stock | 14 | 14 | 14 | 14 | 14 | |||||||||||||||||||||||||||
Additional paid-in capital | 28,316 | 28,258 | 28,128 | 28,075 | 28,006 | |||||||||||||||||||||||||||
Retained earnings | 37,644 | 37,088 | 36,667 | 36,125 | 35,540 | |||||||||||||||||||||||||||
Accumulated other comprehensive loss, net of tax | (5,307) | (3,881) | (2,213) | (2,003) | (1,670) | |||||||||||||||||||||||||||
Less: Treasury stock, at cost | (24,521) | (24,518) | (24,400) | (23,151) | (21,150) | |||||||||||||||||||||||||||
Total The Bank of New York Mellon Corporation shareholders’ equity | 40,984 | 41,799 | 43,034 | 43,601 | 45,281 | |||||||||||||||||||||||||||
Nonredeemable noncontrolling interests of consolidated investment management funds | 7 | 198 | 196 | 273 | 344 | |||||||||||||||||||||||||||
Total permanent equity | 40,991 | 41,997 | 43,230 | 43,874 | 45,625 | |||||||||||||||||||||||||||
Total liabilities, temporary equity and permanent equity | $ | 452,621 | $ | 473,811 | $ | 444,438 | $ | 470,533 | $ | 466,963 |
5
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FEE AND OTHER REVENUE | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2Q22 vs. | YTD22 vs. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q22 | 2Q21 | YTD22 | YTD21 | YTD21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment services fees | $ | 2,206 | $ | 1,993 | $ | 2,061 | $ | 2,091 | $ | 2,076 | 11 | % | 6 | % | $ | 4,199 | $ | 4,132 | 2 | % | ||||||||||||||||||||||||||||||||||||||||||
Investment management and performance fees: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment management fees (a) | 828 | 849 | 864 | 892 | 875 | (2) | (5) | 1,677 | 1,725 | (3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance fees | 5 | 34 | 32 | 21 | 14 | N/M | (64) | 39 | 54 | (28) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total investment management and performance fees (b) | 833 | 883 | 896 | 913 | 889 | (6) | (6) | 1,716 | 1,779 | (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange revenue | 222 | 207 | 199 | 185 | 184 | 7 | 21 | 429 | 415 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing-related fees | 44 | 45 | 47 | 48 | 48 | (2) | (8) | 89 | 99 | (10) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Distribution and servicing fees | 34 | 30 | 28 | 28 | 27 | 13 | 26 | 64 | 56 | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total fee revenue | 3,339 | 3,158 | 3,231 | 3,265 | 3,224 | 6 | 4 | 6,497 | 6,481 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment and other revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Loss) income from consolidated investment management funds | (24) | (20) | 9 | (7) | 13 | N/M | N/M | (44) | 30 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Seed capital (losses) gains (c) | (24) | (8) | 12 | 7 | 18 | N/M | N/M | (32) | 21 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other trading revenue (loss) | 45 | 5 | (6) | 20 | (1) | N/M | N/M | 50 | (8) | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Renewable energy investment (losses) | (44) | (44) | (37) | (42) | (41) | N/M | N/M | (88) | (122) | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate/bank-owned life insurance | 28 | 33 | 45 | 33 | 29 | N/M | N/M | 61 | 62 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other investments gains (d) | 78 | 61 | 55 | 70 | 23 | N/M | N/M | 139 | 34 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal gains | — | — | — | 7 | 6 | N/M | N/M | — | 6 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Expense reimbursements from joint venture | 26 | 27 | 23 | 25 | 25 | N/M | N/M | 53 | 48 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other income | 6 | 12 | 5 | 14 | 17 | N/M | N/M | 18 | 27 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net securities gains | — | 4 | 1 | 2 | 2 | N/M | N/M | 4 | 2 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total investment and other revenue | 91 | 70 | 107 | 129 | 91 | N/M | N/M | 161 | 100 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total fee and other revenue | $ | 3,430 | $ | 3,228 | $ | 3,338 | $ | 3,394 | $ | 3,315 | 6 | % | 3 | % | $ | 6,658 | $ | 6,581 | 1 | % | ||||||||||||||||||||||||||||||||||||||||||
(a) Excludes seed capital gains (losses) related to consolidated investment management funds. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) On a constant currency basis (Non-GAAP), investment management and performance fees decreased 3% compared with 2Q21. See "Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of this Non-GAAP measure. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) Includes gains (losses) on investments in BNY Mellon funds which hedge deferred incentive awards. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(d) Includes strategic equity, private equity and other investments. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
N/M – Not meaningful. |
6
THE BANK OF NEW YORK MELLON CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||
AVERAGE BALANCES AND INTEREST RATES | |||||||||||||||||||||||||||||||||||||||||||||||
2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | |||||||||||||||||||||||||||||||||||||||||||
Average balance | Average rate | Average balance | Average rate | Average balance | Average rate | Average balance | Average rate | Average balance | Average rate | ||||||||||||||||||||||||||||||||||||||
(dollars in millions; average rates are annualized) | |||||||||||||||||||||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits with the Federal Reserve and other central banks | $ | 102,844 | 0.38 | % | $ | 100,303 | 0.01 | % | $ | 105,065 | (0.06) | % | $ | 108,110 | (0.07) | % | $ | 114,564 | (0.09) | % | |||||||||||||||||||||||||||
Interest-bearing deposits with banks (primarily foreign banks) | 18,097 | 0.74 | 17,181 | 0.33 | 18,818 | 0.23 | 20,465 | 0.22 | 22,465 | 0.20 | |||||||||||||||||||||||||||||||||||||
Federal funds sold and securities purchased under resale agreements (a) | 24,212 | 1.91 | 27,006 | 0.56 | 27,780 | 0.45 | 29,304 | 0.44 | 27,857 | 0.36 | |||||||||||||||||||||||||||||||||||||
Loans | 69,036 | 2.15 | 66,810 | 1.57 | 64,650 | 1.55 | 61,206 | 1.55 | 60,520 | 1.57 | |||||||||||||||||||||||||||||||||||||
Securities: | |||||||||||||||||||||||||||||||||||||||||||||||
U.S. government obligations | 41,267 | 1.07 | 40,868 | 0.74 | 39,169 | 0.73 | 36,255 | 0.73 | 33,212 | 0.71 | |||||||||||||||||||||||||||||||||||||
U.S. government agency obligations | 64,939 | 1.59 | 67,055 | 1.46 | 69,691 | 1.35 | 70,199 | 1.34 | 72,809 | 1.34 | |||||||||||||||||||||||||||||||||||||
State and political subdivisions (b) | 2,065 | 2.13 | 2,337 | 2.16 | 2,569 | 2.11 | 2,628 | 2.07 | 2,768 | 1.94 | |||||||||||||||||||||||||||||||||||||
Other securities (b) | 43,635 | 1.31 | 45,541 | 1.02 | 47,493 | 0.97 | 47,334 | 0.94 | 47,451 | 0.95 | |||||||||||||||||||||||||||||||||||||
Total investment securities (b) | 151,906 | 1.37 | 155,801 | 1.15 | 158,922 | 1.10 | 156,416 | 1.09 | 156,240 | 1.10 | |||||||||||||||||||||||||||||||||||||
Trading securities (b) | 4,687 | 1.91 | 6,085 | 1.43 | 6,447 | 0.93 | 5,564 | 0.53 | 6,639 | 0.72 | |||||||||||||||||||||||||||||||||||||
Total securities (b) | 156,593 | 1.39 | 161,886 | 1.16 | 165,369 | 1.09 | 161,980 | 1.07 | 162,879 | 1.08 | |||||||||||||||||||||||||||||||||||||
Total interest-earning assets (b) | $ | 370,782 | 1.25 | % | $ | 373,186 | 0.84 | % | $ | 381,682 | 0.76 | % | $ | 381,065 | 0.73 | % | $ | 388,285 | 0.71 | % | |||||||||||||||||||||||||||
Noninterest-earning assets | 66,841 | 67,016 | 67,956 | 65,696 | 64,044 | ||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 437,623 | $ | 440,202 | $ | 449,638 | $ | 446,761 | $ | 452,329 | |||||||||||||||||||||||||||||||||||||
Liabilities and equity | |||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits | $ | 219,124 | 0.16 | % | $ | 223,243 | (0.07) | % | $ | 231,086 | (0.08) | % | $ | 233,363 | (0.08) | % | $ | 239,466 | (0.08) | % | |||||||||||||||||||||||||||
Federal funds purchased and securities sold under repurchase agreements (a) | 12,610 | 2.47 | 12,864 | 0.36 | 12,421 | 0.07 | 13,415 | 0.08 | 13,773 | (0.17) | |||||||||||||||||||||||||||||||||||||
Trading liabilities | 3,231 | 1.25 | 3,372 | 0.53 | 3,019 | 0.28 | 2,821 | 0.11 | 2,282 | 0.38 | |||||||||||||||||||||||||||||||||||||
Other borrowed funds | 437 | 2.14 | 458 | 2.36 | 517 | 1.80 | 383 | 2.53 | 298 | 2.21 | |||||||||||||||||||||||||||||||||||||
Commercial paper | 5 | 1.61 | 4 | 0.09 | — | — | 11 | 0.07 | — | — | |||||||||||||||||||||||||||||||||||||
Payables to customers and broker-dealers | 16,592 | 0.21 | 16,661 | 0.01 | 16,414 | (0.01) | 16,648 | (0.01) | 16,811 | (0.01) | |||||||||||||||||||||||||||||||||||||
Long-term debt | 26,195 | 2.22 | 25,588 | 1.53 | 25,932 | 1.36 | 25,751 | 1.39 | 25,275 | 1.43 | |||||||||||||||||||||||||||||||||||||
Total interest-bearing liabilities | $ | 278,194 | 0.48 | % | $ | 282,190 | 0.11 | % | $ | 289,389 | 0.07 | % | $ | 292,392 | 0.07 | % | $ | 297,905 | 0.05 | % | |||||||||||||||||||||||||||
Total noninterest-bearing deposits | 91,893 | 90,179 | 91,535 | 85,581 | 85,802 | ||||||||||||||||||||||||||||||||||||||||||
Other noninterest-bearing liabilities | 26,354 | 25,419 | 25,481 | 24,164 | 23,317 | ||||||||||||||||||||||||||||||||||||||||||
Total The Bank of New York Mellon Corporation shareholders’ equity | 41,037 | 42,201 | 42,968 | 44,296 | 44,934 | ||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests | 145 | 213 | 265 | 328 | 371 | ||||||||||||||||||||||||||||||||||||||||||
Total liabilities and equity | $ | 437,623 | $ | 440,202 | $ | 449,638 | $ | 446,761 | $ | 452,329 | |||||||||||||||||||||||||||||||||||||
Net interest margin | 0.89 | % | 0.75 | % | 0.71 | % | 0.67 | % | 0.67 | % | |||||||||||||||||||||||||||||||||||||
Net interest margin (FTE) – Non-GAAP (c) | 0.89 | % | 0.76 | % | 0.71 | % | 0.68 | % | 0.67 | % | |||||||||||||||||||||||||||||||||||||
(a) Includes the average impact of offsetting under enforceable netting agreements of approximately $33 billion for 2Q22, $53 billion for 1Q22, $54 billion for 4Q21, $47 billion for 3Q21 and $41 billion for 2Q21. On a Non-GAAP basis, excluding the impact of offsetting, the yield on federal funds sold and securities purchased under resale agreements would have been 0.80% for 2Q22, 0.19% for 1Q22, 0.15% for 4Q21, 0.17% for 3Q21 and 0.15% for 2Q21. On a Non-GAAP basis, excluding the impact of offsetting, the rate on federal funds purchased and securities sold under repurchase agreements would have been 0.68% for 2Q22, 0.07% for 1Q22, 0.01% for 4Q21, 0.02% for 3Q21 and (0.04)% for 2Q21. We believe providing the rates excluding the impact of netting is useful to investors as it is more reflective of the actual rates earned and paid. | |||||||||||||||||||||||||||||||||||||||||||||||
(b) Average rates were calculated on an FTE basis, at tax rates of approximately 21%. | |||||||||||||||||||||||||||||||||||||||||||||||
(c) See "Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of this Non-GAAP measure. |
7
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||||||||||||||
CAPITAL AND LIQUIDITY | ||||||||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||||||||
(dollars in millions) | June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | |||||||||||||||||||||||||||
Consolidated regulatory capital ratios (a) | ||||||||||||||||||||||||||||||||
Standardized Approach: | ||||||||||||||||||||||||||||||||
CET1 capital | $ | 17,067 | $ | 17,579 | $ | 18,746 | $ | 19,844 | $ | 21,456 | ||||||||||||||||||||||
Tier 1 capital | 21,821 | 22,335 | 23,485 | 24,292 | 25,896 | |||||||||||||||||||||||||||
Total capital | 23,364 | 23,835 | 24,972 | 25,816 | 27,464 | |||||||||||||||||||||||||||
Risk-weighted assets | 169,669 | 173,629 | 167,608 | 169,216 | 169,885 | |||||||||||||||||||||||||||
CET1 ratio | 10.1 | % | 10.1 | % | 11.2 | % | 11.7 | % | 12.6 | % | ||||||||||||||||||||||
Tier 1 capital ratio | 12.9 | 12.9 | 14.0 | 14.4 | 15.2 | |||||||||||||||||||||||||||
Total capital ratio | 13.8 | 13.7 | 14.9 | 15.3 | 16.2 | |||||||||||||||||||||||||||
Advanced Approaches: | ||||||||||||||||||||||||||||||||
CET1 capital | $ | 17,067 | $ | 17,579 | $ | 18,746 | $ | 19,844 | $ | 21,456 | ||||||||||||||||||||||
Tier 1 capital | 21,821 | 22,335 | 23,485 | 24,292 | 25,896 | |||||||||||||||||||||||||||
Total capital | 23,110 | 23,582 | 24,722 | 25,534 | 27,183 | |||||||||||||||||||||||||||
Risk-weighted assets | 169,913 | 169,091 | 165,067 | 167,607 | 169,380 | |||||||||||||||||||||||||||
CET1 ratio | 10.0 | % | 10.4 | % | 11.4 | % | 11.8 | % | 12.7 | % | ||||||||||||||||||||||
Tier 1 capital ratio | 12.8 | 13.2 | 14.2 | 14.5 | 15.3 | |||||||||||||||||||||||||||
Total capital ratio | 13.6 | 13.9 | 15.0 | 15.2 | 16.0 | |||||||||||||||||||||||||||
Tier 1 leverage ratio: | ||||||||||||||||||||||||||||||||
Average assets for Tier 1 leverage ratio | $ | 418,463 | $ | 420,778 | $ | 430,102 | $ | 427,461 | $ | 432,954 | ||||||||||||||||||||||
Tier 1 leverage ratio | 5.2 | % | 5.3 | % | 5.5 | % | 5.7 | % | 6.0 | % | ||||||||||||||||||||||
SLR: | ||||||||||||||||||||||||||||||||
Leverage exposure | $ | 352,259 | $ | 361,464 | $ | 354,033 | $ | 347,856 | $ | 346,455 | ||||||||||||||||||||||
SLR | 6.2 | % | 6.2 | % | 6.6 | % | 7.0 | % | 7.5 | % | ||||||||||||||||||||||
Average liquidity coverage ratio | 111 | % | 109 | % | 109 | % | 111 | % | 110 | % | ||||||||||||||||||||||
(a) Regulatory capital ratios for June 30, 2022 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 June 30, 2022 was the Advanced Approaches, for March 31, 2022 and Dec. 31, 2021 was the Standardized Approach, and for Sept. 30, 2021 and June 30, 2021 was the Standardized Approach for the CET1 and Tier 1 capital ratios and the Advanced Approaches for the Total capital ratio. |
8
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SECURITIES SERVICES BUSINESS SEGMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2Q22 vs. | YTD22 vs. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q22 | 2Q21 | YTD22 | YTD21 | YTD21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment services fees: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Servicing | $ | 995 | $ | 999 | $ | 984 | $ | 979 | $ | 960 | — | % | 4 | % | $ | 1,994 | $ | 1,913 | 4 | % | ||||||||||||||||||||||||||||||||||||||||||
Issuer Services | 309 | 141 | 253 | 281 | 281 | 119 | 10 | 450 | 527 | (15) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total investment services fees | 1,304 | 1,140 | 1,237 | 1,260 | 1,241 | 14 | 5 | 2,444 | 2,440 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange revenue | 155 | 148 | 148 | 125 | 129 | 5 | 20 | 303 | 301 | 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other fees (a) | 54 | 41 | 28 | 30 | 25 | 32 | 116 | 95 | 55 | 73 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total fee revenue | 1,513 | 1,329 | 1,413 | 1,415 | 1,395 | 14 | 8 | 2,842 | 2,796 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment and other revenue | 36 | 74 | 53 | 73 | 38 | N/M | N/M | 110 | 68 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total fee and other revenue | 1,549 | 1,403 | 1,466 | 1,488 | 1,433 | 10 | 8 | 2,952 | 2,864 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest revenue | 457 | 377 | 367 | 349 | 354 | 21 | 29 | 834 | 710 | 17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue | 2,006 | 1,780 | 1,833 | 1,837 | 1,787 | 13 | 12 | 3,786 | 3,574 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for credit losses | 13 | (10) | (7) | (19) | (58) | N/M | N/M | 3 | (108) | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest expense (ex. amortization of intangible assets) | 1,647 | 1,502 | 1,481 | 1,535 | 1,393 | 10 | 18 | 3,149 | 2,804 | 12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 9 | 8 | 9 | 8 | 7 | 13 | 29 | 17 | 15 | 13 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total noninterest expense | 1,656 | 1,510 | 1,490 | 1,543 | 1,400 | 10 | 18 | 3,166 | 2,819 | 12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Income before income taxes | $ | 337 | $ | 280 | $ | 350 | $ | 313 | $ | 445 | 20 | % | (24) | % | $ | 617 | $ | 863 | (29) | % | ||||||||||||||||||||||||||||||||||||||||||
Total revenue by line of business: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Servicing | $ | 1,534 | $ | 1,512 | $ | 1,456 | $ | 1,437 | $ | 1,382 | 1 | % | 11 | % | $ | 3,046 | $ | 2,806 | 9 | % | ||||||||||||||||||||||||||||||||||||||||||
Issuer Services | 472 | 268 | 377 | 400 | 405 | 76 | 17 | 740 | 768 | (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue by line of business | $ | 2,006 | $ | 1,780 | $ | 1,833 | $ | 1,837 | $ | 1,787 | 13 | % | 12 | % | $ | 3,786 | $ | 3,574 | 6 | % | ||||||||||||||||||||||||||||||||||||||||||
Financial ratios: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pre-tax operating margin | 17 | % | 16 | % | 19 | % | 17 | % | 25 | % | 16 | % | 24 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Memo: Securities lending revenue (b) | $ | 45 | $ | 39 | $ | 45 | $ | 45 | $ | 42 | 15 | % | 7 | % | $ | 84 | $ | 83 | 1 | % | ||||||||||||||||||||||||||||||||||||||||||
(a) Other fees primarily include financing-related fees. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) Included in investment services fees reported in the Asset Servicing line of business. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
N/M – Not meaningful. |
9
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SECURITIES SERVICES BUSINESS SEGMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2Q22 vs. | YTD22 vs. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions, unless otherwise noted) | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q22 | 2Q21 | YTD22 | YTD21 | YTD21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected balance sheet data: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average loans | $ | 11,386 | $ | 10,150 | $ | 9,764 | $ | 8,389 | $ | 8,485 | 12 | % | 34 | % | $ | 10,772 | $ | 8,430 | 28 | % | ||||||||||||||||||||||||||||||||||||||||||
Average assets (a) | $ | 219,797 | $ | 220,889 | $ | 229,511 | $ | 226,930 | $ | 231,152 | — | % | (5) | % | $ | 220,340 | $ | 229,620 | (4) | % | ||||||||||||||||||||||||||||||||||||||||||
Average deposits | $ | 191,191 | $ | 192,156 | $ | 200,272 | $ | 198,680 | $ | 203,147 | (1) | % | (6) | % | $ | 191,671 | $ | 201,505 | (5) | % | ||||||||||||||||||||||||||||||||||||||||||
Selected metrics: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AUC/A at period end (in trillions) (b)(c) | $ | 31.0 | $ | 33.7 | $ | 34.6 | $ | 33.8 | $ | 33.7 | (8) | % | (8) | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Market value of securities on loan at period end (in billions) (d) | $ | 441 | $ | 449 | $ | 447 | $ | 443 | $ | 456 | (2) | % | (3) | % | ||||||||||||||||||||||||||||||||||||||||||||||||
(a) In business segments where average deposits are greater than average loans, average assets include an allocation of investment securities equal to the difference. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) June 30, 2022 information is preliminary. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(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 of $1.5 trillion at June 30, 2022 and $1.7 trillion at March 31, 2022, Dec. 31, 2021, Sept. 30, 2021 and June 30, 2021. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(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 $70 billion at June 30, 2022, $78 billion at March 31, 2022, $71 billion at Dec. 31, 2021, $68 billion at Sept. 30, 2021 and $63 billion at June 30, 2021. |
10
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MARKET AND WEALTH SERVICES BUSINESS SEGMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2Q22 vs. | YTD22 vs. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q22 | 2Q21 | YTD22 | YTD21 | YTD21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment services fees: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pershing | $ | 479 | $ | 433 | $ | 412 | $ | 427 | $ | 439 | 11 | % | 9 | % | $ | 912 | $ | 898 | 2 | % | ||||||||||||||||||||||||||||||||||||||||||
Treasury Services | 176 | 170 | 170 | 168 | 160 | 4 | 10 | 346 | 324 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Clearance and Collateral Management | 240 | 243 | 236 | 228 | 228 | (1) | 5 | 483 | 454 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total investment services fees | 895 | 846 | 818 | 823 | 827 | 6 | 8 | 1,741 | 1,676 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange revenue | 22 | 26 | 21 | 23 | 23 | (15) | (4) | 48 | 44 | 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other fees (a) | 46 | 34 | 31 | 31 | 32 | 35 | 44 | 80 | 69 | 16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total fee revenue | 963 | 906 | 870 | 877 | 882 | 6 | 9 | 1,869 | 1,789 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment and other revenue | 11 | — | 6 | 13 | 21 | N/M | N/M | 11 | 28 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total fee and other revenue | 974 | 906 | 876 | 890 | 903 | 8 | 8 | 1,880 | 1,817 | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest revenue | 340 | 296 | 297 | 283 | 289 | 15 | 18 | 636 | 578 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue | 1,314 | 1,202 | 1,173 | 1,173 | 1,192 | 9 | 10 | 2,516 | 2,395 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for credit losses | 4 | (2) | (3) | (16) | (19) | N/M | N/M | 2 | (48) | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest expense (ex. amortization of intangible assets) | 700 | 706 | 670 | 665 | 647 | (1) | 8 | 1,406 | 1,320 | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 2 | 2 | 4 | 3 | 5 | — | (60) | 4 | 14 | (71) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total noninterest expense | 702 | 708 | 674 | 668 | 652 | (1) | 8 | 1,410 | 1,334 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Income before income taxes | $ | 608 | $ | 496 | $ | 502 | $ | 521 | $ | 559 | 23 | % | 9 | % | $ | 1,104 | $ | 1,109 | — | % | ||||||||||||||||||||||||||||||||||||||||||
Total revenue by line of business: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pershing | $ | 636 | $ | 570 | $ | 553 | $ | 566 | $ | 590 | 12 | % | 8 | % | $ | 1,206 | $ | 1,195 | 1 | % | ||||||||||||||||||||||||||||||||||||||||||
Treasury Services | 373 | 338 | 331 | 326 | 319 | 10 | 17 | 711 | 636 | 12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Clearance and Collateral Management | 305 | 294 | 289 | 281 | 283 | 4 | 8 | 599 | 564 | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue by line of business | $ | 1,314 | $ | 1,202 | $ | 1,173 | $ | 1,173 | $ | 1,192 | 9 | % | 10 | % | $ | 2,516 | $ | 2,395 | 5 | % | ||||||||||||||||||||||||||||||||||||||||||
Financial ratios: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pre-tax operating margin | 46 | % | 41 | % | 43 | % | 44 | % | 47 | % | 44 | % | 46 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
(a) Other fees primarily include financing-related fees. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
N/M – Not meaningful. |
11
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MARKET AND WEALTH SERVICES BUSINESS SEGMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2Q22 vs. | YTD22 vs. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions, unless otherwise noted) | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q22 | 2Q21 | YTD22 | YTD21 | YTD21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected balance sheet data: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average loans | $ | 42,391 | $ | 42,113 | $ | 40,812 | $ | 39,041 | $ | 38,360 | 1 | % | 11 | % | $ | 42,253 | $ | 36,736 | 15 | % | ||||||||||||||||||||||||||||||||||||||||||
Average assets (a) | $ | 141,952 | $ | 141,183 | $ | 143,816 | $ | 143,630 | $ | 144,297 | 1 | % | (2) | % | $ | 141,570 | $ | 146,546 | (3) | % | ||||||||||||||||||||||||||||||||||||||||||
Average deposits | $ | 94,716 | $ | 95,704 | $ | 100,653 | $ | 101,253 | $ | 102,896 | (1) | % | (8) | % | $ | 95,207 | $ | 104,976 | (9) | % | ||||||||||||||||||||||||||||||||||||||||||
Selected metrics: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AUC/A at period end (in trillions) (b)(c) | $ | 11.8 | $ | 11.6 | $ | 11.8 | $ | 11.2 | $ | 11.1 | 2 | % | 6 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Pershing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AUC/A at period end (in trillions) (b) | $ | 2.2 | $ | 2.5 | $ | 2.6 | $ | 2.6 | $ | 2.8 | (12) | % | (21) | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Net new assets (U.S. platform) (in billions) (d) | $ | 16 | $ | 18 | $ | 69 | $ | 13 | $ | 47 | N/M | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||
Average active clearing accounts (in thousands) | 7,432 | 7,432 | 7,334 | 7,259 | 7,290 | — | % | 2 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Treasury Services | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average daily U.S. dollar payment volumes | 237,763 | 240,403 | 245,634 | 232,144 | 230,346 | (1) | % | 3 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Clearance and Collateral Management | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average tri-party collateral management balances (in billions) | $ | 5,207 | $ | 5,026 | $ | 4,972 | $ | 4,516 | $ | 3,898 | 4 | % | 34 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
(a) In business segments where average deposits are greater than average loans, average assets include an allocation of investment securities equal to the difference. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) June 30, 2022 information is preliminary. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) Consists of AUC/A from the Clearance and Collateral Management and Pershing lines of business. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(d) Net new assets represent net flows of assets (e.g., net cash deposits and net securities transfers, including dividends and interest) in customer accounts in Pershing LLC, a U.S. broker-dealer. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
N/M – Not meaningful. |
12
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT AND WEALTH MANAGEMENT BUSINESS SEGMENT | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2Q22 vs. | YTD22 vs. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q22 | 2Q21 | YTD22 | YTD21 | YTD21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment management fees | $ | 825 | $ | 848 | $ | 864 | $ | 893 | $ | 876 | (3) | % | (6) | % | $ | 1,673 | $ | 1,726 | (3) | % | ||||||||||||||||||||||||||||||||||||||||||
Performance fees | 5 | 34 | 32 | 21 | 14 | N/M | (64) | 39 | 54 | (28) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment management and performance fees (a) | 830 | 882 | 896 | 914 | 890 | (6) | (7) | 1,712 | 1,780 | (4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Distribution and servicing fees | 51 | 32 | 28 | 28 | 28 | 59 | 82 | 83 | 56 | 48 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Other fees (b) | (31) | 1 | 22 | 20 | 16 | N/M | N/M | (30) | 38 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total fee revenue | 850 | 915 | 946 | 962 | 934 | (7) | (9) | 1,765 | 1,874 | (6) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment and other revenue (c) | (13) | (8) | 23 | 23 | 18 | N/M | N/M | (21) | 21 | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total fee and other revenue (c) | 837 | 907 | 969 | 985 | 952 | (8) | (12) | 1,744 | 1,895 | (8) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest revenue | 62 | 57 | 51 | 47 | 47 | 9 | 32 | 119 | 95 | 25 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue | 899 | 964 | 1,020 | 1,032 | 999 | (7) | (10) | 1,863 | 1,990 | (6) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for credit losses | — | (3) | (6) | (7) | (4) | N/M | N/M | (3) | — | N/M | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Noninterest expense (ex. amortization of intangible assets) | 685 | 748 | 741 | 684 | 669 | (8) | 2 | 1,433 | 1,371 | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 6 | 7 | 7 | 7 | 8 | (14) | (25) | 13 | 15 | (13) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total noninterest expense | 691 | 755 | 748 | 691 | 677 | (8) | 2 | 1,446 | 1,386 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Income before income taxes | $ | 208 | $ | 212 | $ | 278 | $ | 348 | $ | 326 | (2) | % | (36) | % | $ | 420 | $ | 604 | (30) | % | ||||||||||||||||||||||||||||||||||||||||||
Total revenue by line of business: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Management | $ | 603 | $ | 658 | $ | 709 | $ | 727 | $ | 700 | (8) | % | (14) | % | $ | 1,261 | $ | 1,398 | (10) | % | ||||||||||||||||||||||||||||||||||||||||||
Wealth Management | 296 | 306 | 311 | 305 | 299 | (3) | (1) | 602 | 592 | 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Total revenue by line of business | $ | 899 | $ | 964 | $ | 1,020 | $ | 1,032 | $ | 999 | (7) | % | (10) | % | $ | 1,863 | $ | 1,990 | (6) | % | ||||||||||||||||||||||||||||||||||||||||||
Financial ratios: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pre-tax operating margin | 23 | % | 22 | % | 27 | % | 34 | % | 33 | % | 23 | % | 30 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted pre-tax operating margin – Non-GAAP (d) | 26 | % | 24 | % | 29 | % | 36 | % | 35 | % | 25 | % | 33 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Selected balance sheet data: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average loans | $ | 14,087 | $ | 13,228 | $ | 12,737 | $ | 12,248 | $ | 11,871 | 6 | % | 19 | % | $ | 13,660 | $ | 11,742 | 16 | % | ||||||||||||||||||||||||||||||||||||||||||
Average assets (e) | $ | 33,668 | $ | 35,629 | $ | 31,306 | $ | 30,195 | $ | 30,370 | (6) | % | 11 | % | $ | 34,643 | $ | 31,213 | 11 | % | ||||||||||||||||||||||||||||||||||||||||||
Average deposits | $ | 20,802 | $ | 22,501 | $ | 18,374 | $ | 17,270 | $ | 17,466 | (8) | % | 19 | % | $ | 21,647 | $ | 18,317 | 18 | % | ||||||||||||||||||||||||||||||||||||||||||
(a) On a constant currency basis, investment management and performance fees decreased 3% (Non-GAAP) compared with 2Q21. See "Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of this Non-GAAP measure. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) Other fees primarily include investment services fees. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(d) Net of distribution and servicing expense. See "Explanation of GAAP and Non-GAAP Financial Measures" beginning on page 18 for the reconciliation of this Non-GAAP measure. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(e) In business segments where average deposits are greater than average loans, average assets include an allocation of investment securities equal to the difference. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
N/M – Not meaningful. |
13
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AUM BY PRODUCT TYPE, CHANGES IN AUM AND WEALTH MANAGEMENT CLIENT ASSETS | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2Q22 vs. | YTD22 vs. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in billions) | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q22 | 2Q21 | YTD22 | YTD21 | YTD21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
AUM by product type (a)(b): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity | $ | 139 | $ | 168 | $ | 187 | $ | 180 | $ | 187 | (17) | % | (26) | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Fixed income | 226 | 248 | 267 | 269 | 272 | (9) | (17) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Index | 387 | 440 | 467 | 436 | 440 | (12) | (12) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liability-driven investments | 641 | 812 | 890 | 843 | 841 | (21) | (24) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Multi-asset and alternative investments | 188 | 215 | 228 | 218 | 222 | (13) | (15) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash | 356 | 383 | 395 | 364 | 358 | (7) | (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total AUM | $ | 1,937 | $ | 2,266 | $ | 2,434 | $ | 2,310 | $ | 2,320 | (15) | % | (17) | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Changes in AUM (a)(b): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beginning balance of AUM | $ | 2,266 | $ | 2,434 | $ | 2,310 | $ | 2,320 | $ | 2,214 | $ | 2,434 | $ | 2,211 | ||||||||||||||||||||||||||||||||||||||||||||||||
Net inflows (outflows): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term strategies: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity | (4) | (4) | (4) | (5) | (3) | (8) | (3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fixed income | (1) | (5) | — | 1 | 8 | (6) | 16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liability-driven investments | 12 | 17 | 1 | 16 | 11 | 29 | 19 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Multi-asset and alternative investments | (5) | (4) | 1 | (2) | 1 | (9) | (1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total long-term active strategies inflows (outflows) | 2 | 4 | (2) | 10 | 17 | 6 | 31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Index | 12 | (5) | (2) | (3) | (5) | 7 | (2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total long-term strategies inflows (outflows) | 14 | (1) | (4) | 7 | 12 | 13 | 29 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term strategies: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash | (26) | (11) | 31 | 7 | 13 | (37) | 32 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total net (outflows) inflows | (12) | (12) | 27 | 14 | 25 | (24) | 61 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net market impact | (241) | (130) | 96 | 4 | 79 | (371) | 43 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net currency impact | (76) | (26) | 1 | (28) | 2 | (102) | 5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ending balance of AUM | $ | 1,937 | $ | 2,266 | $ | 2,434 | $ | 2,310 | $ | 2,320 | (15) | % | (17) | % | $ | 1,937 | $ | 2,320 | (17) | % | ||||||||||||||||||||||||||||||||||||||||||
Wealth Management client assets (a)(c) | $ | 264 | $ | 305 | $ | 321 | $ | 307 | $ | 305 | (13) | % | (13) | % | ||||||||||||||||||||||||||||||||||||||||||||||||
(a) June 30, 2022 information is preliminary. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(b) Excludes assets managed outside of the Investment and Wealth Management business segment. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(c) Includes AUM and AUC/A in the Wealth Management line of business. |
14
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||
OTHER SEGMENT | ||||||||||||||||||||||||||||||||||||||||||||
(in millions) | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | YTD22 | YTD21 | |||||||||||||||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||||||||||||||||||
Fee revenue | $ | 13 | $ | 8 | $ | 2 | $ | 12 | $ | 13 | $ | 21 | $ | 22 | ||||||||||||||||||||||||||||||
Investment and other revenue | 62 | 12 | 19 | 23 | 9 | 74 | (27) | |||||||||||||||||||||||||||||||||||||
Total fee and other revenue | 75 | 20 | 21 | 35 | 22 | 95 | (5) | |||||||||||||||||||||||||||||||||||||
Net interest (expense) | (35) | (32) | (38) | (38) | (45) | (67) | (83) | |||||||||||||||||||||||||||||||||||||
Total revenue | 40 | (12) | (17) | (3) | (23) | 28 | (88) | |||||||||||||||||||||||||||||||||||||
Provision for credit losses | 30 | 17 | (1) | (3) | (5) | 47 | (13) | |||||||||||||||||||||||||||||||||||||
Noninterest expense | 63 | 33 | 55 | 16 | 49 | 96 | 90 | |||||||||||||||||||||||||||||||||||||
(Loss) before taxes | $ | (53) | $ | (62) | $ | (71) | $ | (16) | $ | (67) | $ | (115) | $ | (165) | ||||||||||||||||||||||||||||||
Selected balance sheet data: | ||||||||||||||||||||||||||||||||||||||||||||
Average loans and leases | $ | 1,172 | $ | 1,319 | $ | 1,337 | $ | 1,528 | $ | 1,804 | $ | 1,244 | $ | 1,757 | ||||||||||||||||||||||||||||||
Average assets | $ | 42,206 | $ | 42,501 | $ | 45,005 | $ | 46,006 | $ | 46,510 | $ | 42,371 | $ | 48,953 |
15
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||||||||
SECURITIES PORTFOLIO | ||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | March 31, 2022 | 2Q22 change in unrealized gain (loss) | June 30, 2022 | Fair value as a % of amortized cost (a) | Unrealized gain (loss) | % Floating rate (b) | Ratings (c) | |||||||||||||||||||||||||||||||||||||||||||
Amortized cost | Fair value | AAA/ AA- | A+/ A- | BBB+/ BBB- | BB+ and lower | Not rated | ||||||||||||||||||||||||||||||||||||||||||||
Fair value | ||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. Treasury | $ | 39,929 | $ | (271) | $ | 43,707 | $ | 42,547 | 97 | % | $ | (1,160) | 50 | % | 100 | % | — | % | — | % | — | % | — | % | ||||||||||||||||||||||||||
Agency RMBS | 45,780 | (1,244) | 45,448 | 42,241 | 93 | (3,207) | 13 | 100 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Sovereign debt/sovereign guaranteed | 13,131 | (128) | 12,901 | 12,577 | 97 | (324) | 14 | 86 | 4 | 9 | 1 | — | ||||||||||||||||||||||||||||||||||||||
Agency commercial MBS | 12,423 | (196) | 12,798 | 12,257 | 96 | (541) | 37 | 100 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Supranational | 7,802 | (59) | 8,131 | 7,949 | 98 | (182) | 58 | 100 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
CLOs | 5,815 | (144) | 6,230 | 6,046 | 97 | (184) | 100 | 99 | — | — | — | 1 | ||||||||||||||||||||||||||||||||||||||
Foreign covered bonds | 6,252 | (66) | 6,010 | 5,831 | 97 | (179) | 48 | 100 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
U.S. government agencies | 6,297 | (119) | 6,064 | 5,671 | 94 | (393) | 33 | 100 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Non-agency commercial MBS | 3,104 | (101) | 3,270 | 3,045 | 93 | (225) | 49 | 100 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Foreign government agencies | 2,771 | (24) | 2,684 | 2,599 | 97 | (85) | 25 | 92 | 8 | — | — | — | ||||||||||||||||||||||||||||||||||||||
Non-agency RMBS | 2,538 | (82) | 2,447 | 2,346 | 96 | (101) | 50 | 85 | 3 | — | 7 | 5 | ||||||||||||||||||||||||||||||||||||||
State and political subdivisions | 2,161 | (71) | 2,276 | 2,049 | 90 | (227) | 23 | 90 | 9 | — | — | 1 | ||||||||||||||||||||||||||||||||||||||
Other asset-backed securities | 1,880 | (30) | 1,771 | 1,668 | 94 | (103) | 18 | 100 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Corporate bonds | 1,483 | (41) | 1,455 | 1,342 | 92 | (113) | 43 | 17 | 67 | 16 | — | — | ||||||||||||||||||||||||||||||||||||||
Other | 1 | — | 1 | 1 | 100 | — | — | — | — | — | — | 100 | ||||||||||||||||||||||||||||||||||||||
Total securities | $ | 151,367 | (d) | $ | (2,576) | $ | 155,193 | $ | 148,169 | (d)(e) | 95 | % | $ | (7,024) | (d)(f) | 36 | % | 98 | % | 1 | % | 1 | % | — | % | — | % | |||||||||||||||||||||||
(a) Amortized cost reflects historical impairments, and is net of allowance for credit losses. | ||||||||||||||||||||||||||||||||||||||||||||||||||
(b) Includes the impact of hedges. | ||||||||||||||||||||||||||||||||||||||||||||||||||
(c) Represents ratings by S&P, or the equivalent. | ||||||||||||||||||||||||||||||||||||||||||||||||||
(d) Includes net unrealized gains on derivatives hedging securities available-for-sale (including terminated hedges) of $914 million at March 31, 2022 and $1,764 million at June 30, 2022. | ||||||||||||||||||||||||||||||||||||||||||||||||||
(e) The fair value of available-for-sale securities totaled $93,042 million at June 30, 2022, net of hedges, or 63% of the fair value of the securities portfolio, net of hedges. The fair value of the held-to-maturity securities totaled $55,127 million at June 30, 2022, or 37% of the fair value of the securities portfolio, net of hedges. | ||||||||||||||||||||||||||||||||||||||||||||||||||
(f) At June 30, 2022, net unrealized losses of $2,585 million related to available-for-sale securities, net of hedges, and $4,439 million related to held-to-maturity securities. | ||||||||||||||||||||||||||||||||||||||||||||||||||
Note: The amortizable purchase premium (net of discount) relating to securities was $1,486 million at June 30, 2022 and the amortization of that net purchase premium was $98 million in 2Q22. |
16
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||||||||||||||
ALLOWANCE FOR CREDIT LOSSES AND NONPERFORMING ASSETS | ||||||||||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||||||||||
(dollars in millions) | June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | |||||||||||||||||||||||||||
Allowance for credit losses – beginning of period: | ||||||||||||||||||||||||||||||||
Allowance for loan losses | $ | 171 | $ | 196 | $ | 233 | $ | 269 | $ | 327 | ||||||||||||||||||||||
Allowance for lending-related commitments | 53 | 45 | 40 | 50 | 73 | |||||||||||||||||||||||||||
Allowance for other financial instruments (a) | 39 | 19 | 18 | 16 | 19 | |||||||||||||||||||||||||||
Allowance for credit losses – beginning of period | $ | 263 | $ | 260 | $ | 291 | $ | 335 | $ | 419 | ||||||||||||||||||||||
Net (charge-offs) recoveries: | ||||||||||||||||||||||||||||||||
Charge-offs | (1) | — | (16) | — | (1) | |||||||||||||||||||||||||||
Recoveries | 1 | 1 | 2 | 1 | 3 | |||||||||||||||||||||||||||
Total net (charge-offs) recoveries | — | 1 | (14) | 1 | 2 | |||||||||||||||||||||||||||
Provision for credit losses (b) | 47 | 2 | (17) | (45) | (86) | |||||||||||||||||||||||||||
Allowance for credit losses – end of period | $ | 310 | $ | 263 | $ | 260 | $ | 291 | $ | 335 | ||||||||||||||||||||||
Allowance for credit losses – end of period: | ||||||||||||||||||||||||||||||||
Allowance for loan losses | $ | 181 | $ | 171 | $ | 196 | $ | 233 | $ | 269 | ||||||||||||||||||||||
Allowance for lending-related commitments | 62 | 53 | 45 | 40 | 50 | |||||||||||||||||||||||||||
Allowance for other financial instruments (a) | 67 | 39 | 19 | 18 | 16 | |||||||||||||||||||||||||||
Allowance for credit losses – end of period | $ | 310 | $ | 263 | $ | 260 | $ | 291 | $ | 335 | ||||||||||||||||||||||
Allowance for loan losses as a percentage of total loans | 0.26 | % | 0.25 | % | 0.29 | % | 0.36 | % | 0.42 | % | ||||||||||||||||||||||
Nonperforming assets | $ | 114 | $ | 119 | $ | 120 | $ | 108 | $ | 90 | ||||||||||||||||||||||
(a) Includes allowance for credit losses on federal funds sold and securities purchased under resale agreements, available-for-sale securities, accounts receivable, cash and due from banks and interest-bearing deposits with banks. | ||||||||||||||||||||||||||||||||
(b) Includes all other instruments within the scope of ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. |
17
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||
EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||||||||||||||||||||||||||
BNY Mellon has included in this Financial Supplement 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 also 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. | ||||||||||||||||||||||||||||||||||||||||||||
The presentation of the growth rates of investment management and performance fees on a constant currency basis permits investors to assess the significance of changes in foreign currency exchange rates. Growth rates on a constant currency basis were determined by applying the current period foreign currency exchange rates to the prior period revenue. We believe that this presentation, as a supplement to GAAP information, gives investors a clearer picture of the related revenue results without the variability caused by fluctuations in foreign currency exchange rates. | ||||||||||||||||||||||||||||||||||||||||||||
Notes: | ||||||||||||||||||||||||||||||||||||||||||||
Return on common and tangible common equity ratios are annualized. | ||||||||||||||||||||||||||||||||||||||||||||
Return on common equity and tangible common equity reconciliation | ||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | YTD22 | YTD21 | |||||||||||||||||||||||||||||||||||||
Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP | $ | 835 | $ | 699 | $ | 822 | $ | 881 | $ | 991 | $ | 1,534 | $ | 1,849 | ||||||||||||||||||||||||||||||
Add: Amortization of intangible assets | 17 | 17 | 19 | 19 | 20 | 34 | 44 | |||||||||||||||||||||||||||||||||||||
Less: Tax impact of amortization of intangible assets | 4 | 4 | 5 | 4 | 5 | 8 | 11 | |||||||||||||||||||||||||||||||||||||
Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets – Non-GAAP | $ | 848 | $ | 712 | $ | 836 | $ | 896 | $ | 1,006 | $ | 1,560 | $ | 1,882 | ||||||||||||||||||||||||||||||
Average common shareholders’ equity | $ | 36,199 | $ | 37,363 | $ | 37,941 | $ | 39,755 | $ | 40,393 | $ | 36,778 | $ | 40,556 | ||||||||||||||||||||||||||||||
Less: Average goodwill | 17,347 | 17,490 | 17,481 | 17,474 | 17,517 | 17,418 | 17,506 | |||||||||||||||||||||||||||||||||||||
Average intangible assets | 2,949 | 2,979 | 2,988 | 2,953 | 2,975 | 2,964 | 2,987 | |||||||||||||||||||||||||||||||||||||
Add: Deferred tax liability – tax deductible goodwill | 1,187 | 1,184 | 1,178 | 1,173 | 1,163 | 1,187 | 1,163 | |||||||||||||||||||||||||||||||||||||
Deferred tax liability – intangible assets | 668 | 673 | 676 | 673 | 675 | 668 | 675 | |||||||||||||||||||||||||||||||||||||
Average tangible common shareholders’ equity – Non-GAAP | $ | 17,758 | $ | 18,751 | $ | 19,326 | $ | 21,174 | $ | 21,739 | $ | 18,251 | $ | 21,901 | ||||||||||||||||||||||||||||||
Return on common equity – GAAP | 9.3 | % | 7.6 | % | 8.6 | % | 8.8 | % | 9.8 | % | 8.4 | % | 9.2 | % | ||||||||||||||||||||||||||||||
Return on tangible common equity – Non-GAAP | 19.2 | % | 15.4 | % | 17.2 | % | 16.8 | % | 18.6 | % | 17.2 | % | 17.3 | % |
18
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||||||||||||||
EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||||||||||||||
Book value and tangible book value per common share reconciliation | 2022 | 2021 | ||||||||||||||||||||||||||||||
(dollars in millions, except common shares and unless otherwise noted) | June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | |||||||||||||||||||||||||||
BNY Mellon shareholders’ equity at period end – GAAP | $ | 40,984 | $ | 41,799 | $ | 43,034 | $ | 43,601 | $ | 45,281 | ||||||||||||||||||||||
Less: Preferred stock | 4,838 | 4,838 | 4,838 | 4,541 | 4,541 | |||||||||||||||||||||||||||
BNY Mellon common shareholders’ equity at period end – GAAP | 36,146 | 36,961 | 38,196 | 39,060 | 40,740 | |||||||||||||||||||||||||||
Less: Goodwill | 17,271 | 17,462 | 17,512 | 17,420 | 17,487 | |||||||||||||||||||||||||||
Intangible assets | 2,934 | 2,968 | 2,991 | 2,941 | 2,964 | |||||||||||||||||||||||||||
Add: Deferred tax liability – tax deductible goodwill | 1,187 | 1,184 | 1,178 | 1,173 | 1,163 | |||||||||||||||||||||||||||
Deferred tax liability – intangible assets | 668 | 673 | 676 | 673 | 675 | |||||||||||||||||||||||||||
BNY Mellon tangible common shareholders’ equity at period end – Non-GAAP | $ | 17,796 | $ | 18,388 | $ | 19,547 | $ | 20,545 | $ | 22,127 | ||||||||||||||||||||||
Period-end common shares outstanding (in thousands) | 808,103 | 807,798 | 804,145 | 825,821 | 863,174 | |||||||||||||||||||||||||||
Book value per common share – GAAP | $ | 44.73 | $ | 45.76 | $ | 47.50 | $ | 47.30 | $ | 47.20 | ||||||||||||||||||||||
Tangible book value per common share – Non-GAAP | $ | 22.02 | $ | 22.76 | $ | 24.31 | $ | 24.88 | $ | 25.64 | ||||||||||||||||||||||
Net interest margin reconciliation | ||||||||||||||||||||||||||||||||
(dollars in millions) | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | |||||||||||||||||||||||||||
Net interest revenue – GAAP | $ | 824 | $ | 698 | $ | 677 | $ | 641 | $ | 645 | ||||||||||||||||||||||
Add: Tax equivalent adjustment | 3 | 3 | 4 | 3 | 3 | |||||||||||||||||||||||||||
Net interest revenue (FTE) – Non-GAAP | $ | 827 | $ | 701 | $ | 681 | $ | 644 | $ | 648 | ||||||||||||||||||||||
Average interest-earning assets | $ | 370,782 | $ | 373,186 | $ | 381,682 | $ | 381,065 | $ | 388,285 | ||||||||||||||||||||||
Net interest margin – GAAP (a) | 0.89 | % | 0.75 | % | 0.71 | % | 0.67 | % | 0.67 | % | ||||||||||||||||||||||
Net interest margin (FTE) – Non-GAAP (a) | 0.89 | % | 0.76 | % | 0.71 | % | 0.68 | % | 0.67 | % | ||||||||||||||||||||||
(a) Net interest margin is annualized. |
19
THE BANK OF NEW YORK MELLON CORPORATION | ||||||||||||||||||||||||||||||||||||||||||||
EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES | ||||||||||||||||||||||||||||||||||||||||||||
Pre-tax operating margin reconciliation - Investment and Wealth Management business segment | ||||||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | YTD22 | YTD21 | |||||||||||||||||||||||||||||||||||||
Income before income taxes – GAAP | $ | 208 | $ | 212 | $ | 278 | $ | 348 | $ | 326 | $ | 420 | $ | 604 | ||||||||||||||||||||||||||||||
Total revenue – GAAP | $ | 899 | $ | 964 | $ | 1,020 | $ | 1,032 | $ | 999 | $ | 1,863 | $ | 1,990 | ||||||||||||||||||||||||||||||
Less: Distribution and servicing expense | 91 | 79 | 75 | 76 | 74 | 170 | 149 | |||||||||||||||||||||||||||||||||||||
Adjusted total revenue, net of distribution and servicing expense – Non-GAAP | $ | 808 | $ | 885 | $ | 945 | $ | 956 | $ | 925 | $ | 1,693 | $ | 1,841 | ||||||||||||||||||||||||||||||
Pre-tax operating margin – GAAP (a) | 23 | % | 22 | % | 27 | % | 34 | % | 33 | % | 23 | % | 30 | % | ||||||||||||||||||||||||||||||
Adjusted pre-tax operating margin, net of distribution and servicing expense – Non-GAAP (a) | 26 | % | 24 | % | 29 | % | 36 | % | 35 | % | 25 | % | 33 | % | ||||||||||||||||||||||||||||||
(a) Income before income taxes divided by total revenue. | ||||||||||||||||||||||||||||||||||||||||||||
Constant currency reconciliations | 2Q22 vs. | |||||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | 2Q22 | 2Q21 | 2Q21 | |||||||||||||||||||||||||||||||||||||||||
Consolidated: | ||||||||||||||||||||||||||||||||||||||||||||
Investment management and performance fees – GAAP | $ | 833 | $ | 889 | (6) | % | ||||||||||||||||||||||||||||||||||||||
Impact of changes in foreign currency exchange rates | — | (33) | ||||||||||||||||||||||||||||||||||||||||||
Adjusted investment management and performance fees – Non-GAAP | $ | 833 | $ | 856 | (3) | % | ||||||||||||||||||||||||||||||||||||||
Investment and Wealth Management business segment: | ||||||||||||||||||||||||||||||||||||||||||||
Investment management and performance fees – GAAP | $ | 830 | $ | 890 | (7) | % | ||||||||||||||||||||||||||||||||||||||
Impact of changes in foreign currency exchange rates | — | (33) | ||||||||||||||||||||||||||||||||||||||||||
Adjusted investment management and performance fees – Non-GAAP | $ | 830 | $ | 857 | (3) | % |
20
2Q22 Financial Highlights J U L Y 1 5 , 2 0 2 2
2 2Q22 Financial Highlights Revenue $4,254mm $1.03 Pre-tax income $1,095mm Pre-tax margin 26% Returns Capital ratios ROE: 9.3% ROTCE: 19.2% T1L: 5.2% CET1: 10.0% • Revenue up 7% YoY – Fee revenue up 4% YoY – Net interest revenue up 28% YoY • Expense up 12% YoY, up 8%(b) excluding the impact of notable items • Provision for credit losses of $47mm compared with a provision benefit of $86mm in 2Q21 • Average loans up 14% YoY and up 3% QoQ • Average deposits down 4% YoY and down 1% QoQ • Returned $0.3bn to common shareholders in dividends and increased quarterly dividend by 9% to $0.37 per common share in 3Q22 (a) Represents a non-GAAP measure. See page 14 in the Appendix for the corresponding reconciliation of the non-GAAP measure of earnings per share excluding notable items. (b) Represents a non-GAAP measure. See page 14 in the Appendix for the corresponding reconciliation of the non-GAAP measure of consolidated expense growth excluding notable items. (c) Represents a non-GAAP measure. See page 16 in the Appendix for the corresponding reconciliation of the non-GAAP measure of ROTCE. $1.15 EPS EPS (excluding notable items) (a) (c)
3 2Q22 vs. $mm, except per share data or unless otherwise noted 2Q22 1Q22 2Q21 1Q22 2Q21 Fee revenue $3,339 $3,158 $3,224 6% 4% Investment and other revenue 91 70 91 N/M N/M Net interest revenue 824 698 645 18% 28% Total revenue $4,254 $3,926 $3,960 8% 7% Provision for credit losses 47 2 (86) N/M N/M Noninterest expense 3,112 3,006 2,778 4% 12% Income before income taxes $1,095 $918 $1,268 19% (14)% Net income applicable to common shareholders $835 $699 $991 19% (16)% EPS $1.03 $0.86 $1.13 20% (9)% Avg. common shares and equivalents outstanding (mm) – diluted 814 814 873 — (7)% Operating leverage (b) 483 bps (460) bps Pre-tax margin 26% 23% 32% (627) bps 235 bps ROE 9.3% 7.6% 9.8% (59) bps 167 bps ROTCE (c) 19.2% 15.4% 18.6% 376 bps 58 bps (a) Represents a non-GAAP measure. See page 14 in the Appendix for the corresponding reconciliation of the non-GAAP measure of consolidated expense growth excluding notable items. (b) Note: See page 12 in the Appendix for corresponding footnotes. (c) Represents a non-GAAP measure. See page 16 in the Appendix for the corresponding reconciliation of the non-GAAP measure of ROTCE. N/M – not meaningful. Increase / (decrease) Revenue Expense EPS 2Q22 — 103 $(0.12) 1Q22 (88) (1) $(0.08) 2Q21 6 5 $0.00 2Q22 Financial Results Notable items impacting the quarter Impact of higher litigation reserves Revenue reduction related to Russia Impact of disposal gains and severance expense Up 8%(a) excluding notable items Flat(a) excluding notable items
4 2Q22 1Q22 2Q21 Consolidated regulatory capital ratios: (a) Tier 1 leverage ratio 5.2% 5.3% 6.0% Supplementary leverage ratio ("SLR") 6.2 6.2 7.5 Common Equity Tier 1 ratio – Advanced Approaches 10.0 10.4 12.7 Common Equity Tier 1 ratio – Standardized Approach 10.1 10.1 12.6 Consolidated regulatory liquidity ratios: Liquidity coverage ratio ("LCR") 111% 109% 110% Cash dividends per common share $0.34 $0.34 $0.31 Common stock dividends ($mm) $279 $278 $273 Common stock repurchases ($mm) 3 118 618 Book value per common share $44.73 $45.76 $47.20 Tangible book value per common share (b) 22.02 22.76 25.64 Common shares outstanding (mm) 808 808 863 Capital and Liquidity Note: See page 12 in the Appendix for corresponding footnotes.
5 2Q22 vs. $bn, avg. 2Q22 1Q22 2Q21 Deposits: Noninterest-bearing $92 2% 7% Interest-bearing 219 (2)% (8)% Total deposits $311 (1)% (4)% Interest-earning assets: Cash and reverse repo 145 — (12)% Loans 69 3% 14% Investment securities: HQLA 124 (3)% (2)% Non-HQLA 28 (2)% (5)% Total investment securities $152 (2)% (3)% Total interest-earning assets $371 (1)% (5)%2Q21 1Q22 2Q22 Net Interest Revenue and Balance Sheet Trends N e t I n t e r e s t R e v e n u e ( $ m m ) 645 698 824 +18% +28% • Avg. deposits of $311bn down 1% QoQ • Avg. interest-earning assets of $371bn down 1% QoQ • Net interest revenue of $824mm up 18% QoQ, primarily reflects higher interest rates on interest-earning assets, partially offset by higher funding expense
6 2Q22 vs. $mm, unless otherwise noted 2Q22 1Q22 2Q21 Staff $1,623 (5)% 7% Software and equipment 405 2% 11% Professional, legal and other purchased services 379 2% 4% Sub-custodian and clearing 131 11% (1)% Net occupancy 125 2% 2% Distribution and servicing 90 14% 23% Business development 43 43% 95% Bank assessment charges 37 6% 6% Amortization of intangible assets 17 — (15)% Other 262 96% 105% Total noninterest expense $3,112 4% 12% Noninterest Expense • Noninterest expense up 12% YoY, of which 4% was due to higher litigation reserves. The remainder of the increase primarily reflects higher investments in growth, infrastructure and efficiency initiatives and higher revenue-related expenses, including the impact of inflation, partially offset by the favorable impact of a stronger U.S. dollar – Staff expense up 7%, driven by investments and an increase in annual employee merit, which in the prior year was effective in the third quarter – Distribution and servicing expense up 23%, driven by higher distribution costs associated with money market funds – Business development expense increase driven by some normalization of travel and entertainment – Other expense increase largely driven by higher litigation reserves • Noninterest expense up 4% QoQ, primarily driven by higher litigation reserves Up 8%(a) excluding notable items Flat(a) excluding notable items (a) Represents a non-GAAP measure. See page 14 in the Appendix for the corresponding reconciliation of the non-GAAP measures of consolidated expense growth excluding notable items.
7 2Q22 vs. $mm, unless otherwise noted 2Q22 1Q22 2Q21 Total revenue by line of business: Asset Servicing $1,534 1% 11% Issuer Services 472 76% 17% Total revenue $2,006 13% 12% Provision for credit losses 13 N/M N/M Noninterest expense 1,656 10% 18% Income before income taxes $337 20% (24)% Fee revenue 1,513 14% 8% Net interest revenue 457 21% 29% Foreign exchange revenue 155 5% 20% Securities lending revenue(b) 45 15% 7% Financial ratios, balance sheet data and metrics: Pre-tax margin 17% 111 bps (800) bps AUC/A ($trn, period end)(c)(d) $31.0 (8)% (8)% Deposits ($bn, avg.) $191 (1)% (6)% Market value of securities on loan ($bn, period end)(e) $441 (2)% (3)% • Total revenue of $2,006mm up 12% YoY – Asset Servicing up 11% YoY, primarily reflecting higher net interest revenue, lower money market fee waivers and higher foreign exchange revenue and client activity, partially offset by the unfavorable impact of a stronger U.S. dollar and lower market levels – Issuer Services up 17% YoY, primarily reflecting higher net interest revenue in Corporate Trust, higher Depositary Receipts revenue and lower money market fee waivers, partially offset by the impact of lost business in the prior year in Corporate Trust • Noninterest expense of $1,656mm up 18% YoY, primarily reflecting higher investments in growth, infrastructure and efficiency initiatives, litigation reserves and revenue-related expenses, including the impact of inflation, partially offset by the favorable impact of a stronger U.S. dollar. Excluding the impact of notable items, noninterest expense increased 11%(a) • Income before income taxes of $337mm down 24% YoY; includes 40% reduction due to higher litigation reserves and provision for credit losses Securities Services (a) Represents a non-GAAP measure. See page 15 in the Appendix for corresponding reconciliation of the non-GAAP measures of pre-tax margin and noninterest expense growth excluding notable items. Note: See page 12 in the Appendix for the corresponding footnotes (b), (c), (d), and (e). N/M – not meaningful. 21% excluding notable items (a)
8 2Q22 vs. $mm, unless otherwise noted 2Q22 1Q22 2Q21 Total revenue by line of business: Pershing $636 12% 8% Treasury Services 373 10% 17% Clearance and Collateral Management 305 4% 8% Total revenue $1,314 9% 10% Provision for credit losses 4 N/M N/M Noninterest expense 702 (1)% 8% Income before income taxes $608 23% 9% Fee revenue 963 6% 9% Net interest revenue 340 15% 18% Financial ratios, balance sheet data and metrics: Pre-tax margin 46% 493 bps (71) bps AUC/A ($trn, end of period)(a)(b) $11.8 2% 6% Deposits ($bn, avg.) $95 (1)% (8)% Pershing: Net new assets (U.S. platform) ($bn)(c) $16 N/M N/M Avg. active clearing accounts ('000) 7,432 — 2% Treasury Services: Avg. daily U.S. dollar payment volumes ('000) 238 (1)% 3% Clearance and Collateral Management: Avg. tri-party collateral management balances ($bn) $5,207 4% 34% Market and Wealth Services • Total revenue of $1,314mm up 10% YoY – Pershing up 8% YoY, primarily reflecting lower money market fee waivers and higher transaction activity, partially offset by the impact of prior year lost business – Treasury Services up 17% YoY, primarily reflecting higher net interest revenue, lower money market fee waivers and higher payment volumes – Clearance and Collateral Management up 8% YoY, primarily reflecting higher net interest revenue and clearance volumes • Noninterest expense of $702mm up 8% YoY, primarily reflecting higher investments in growth, infrastructure and efficiency initiatives, including the impact of inflation • Income before income taxes of $608mm up 9% YoY Note: See page 12 in the Appendix for the corresponding footnotes. N/M – not meaningful.
9 2Q22 vs. $mm, unless otherwise noted 2Q22 1Q22 2Q21 Total revenue by line of business: Investment Management $603 (8)% (14)% Wealth Management 296 (3)% (1)% Total revenue $899 (7)% (10)% Provision for credit losses — N/M N/M Noninterest expense 691 (8)% 2% Income before income taxes $208 (2)% (36)% Fee revenue 850 (7)% (9)% Net interest revenue 62 9% 32% Financial ratios, balance sheet data and metrics: Pre-tax margin 23% 97 bps (962) bps Adjusted pre-tax operating margin - Non-GAAP (a) 26% 157 bps (964) bps AUM ($bn, end of period)(b) $1,937 (15)% (17)% Loans ($bn, avg.) $14 6% 19% Deposits ($bn, avg.) 21 (8)% 19% Wealth Management: Client assets ($bn, end of period)(c) $264 (13)% (13)% • Total revenue of $899mm down 10% YoY – Investment Management revenue of $603mm down 14% YoY, primarily reflecting the unfavorable impact of a stronger U.S. dollar, lower seed capital results and market values, an unfavorable change in the mix of AUM and lower equity income, partially offset by lower money market fee waivers – Wealth Management revenue of $296mm down 1% YoY, primarily reflecting lower market values, partially offset by higher net interest revenue • Noninterest expense of $691mm up 2% YoY, primarily reflecting higher investments in growth initiatives and distribution and servicing expenses, partially offset by the favorable impact of a stronger U.S. dollar • Income before income taxes of $208mm down 36% YoY • AUM of $1.9trn down 17% YoY, driven by lower market values and the unfavorable impact of a stronger U.S. dollar, partially offset by net inflows • Wealth Management client assets of $264bn down 13% YoY primarily driven by lower markets Investment and Wealth Management (a) Adjusted pre-tax operating margin is net of distribution and servicing expense. Represents a non-GAAP measure. See page 17 in the Appendix for corresponding reconciliation of the non-GAAP measure of adjusted pre-tax operating margin. Note: See page 12 in the Appendix for the corresponding footnotes (b) and (c). N/M – not meaningful.
10 $mm, unless otherwise noted 2Q22 1Q22 2Q21 Fee revenue $13 $8 $13 Investment and other revenue 62 12 9 Net interest (expense) (35) (32) (45) Total revenue $40 $(12) $(23) Provision for credit losses 30 17 (5) Noninterest expense 63 33 49 (Loss) before income taxes $(53) $(62) $(67) • 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 – YoY and QoQ increases in total revenue primarily reflect a strategic equity investment gain in 2Q22 • Provision for credit losses was $30mm primarily related to changes in the macroeconomic forecast and an increase in cash balances with exposure to Russia • Noninterest expense increased YoY and QoQ primarily reflecting higher staff expense Other Segment
Appendix
12 Footnotes Page 3 – 2Q22 Financial Results (b) Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense. Page 4 – Capital and Liquidity (a) Regulatory capital ratios for June 30, 2022 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 June 30, 2022 was the Advanced Approaches, for March 31, 2022 was the Standardized Approach, and for June 30, 2021 was the Standardized Approach for the CET1 and Tier 1 capital ratios and the Advanced Approaches for the Total capital ratio. (b) Tangible book value per common share excludes goodwill and intangible assets, net of deferred tax liabilities. See page 16 for corresponding reconciliation of this non-GAAP measure. Page 7 – Securities Services (b) Included in investment services fees in the Asset Servicing business. (c) June 30, 2022 information is preliminary. (d) Consists of AUC/A primarily from the Asset Servicing business and, to a lesser extent, the Issuer Services 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 $1.5trn at June 30, 2022 and $1.7trn at March 31, 2022 and June 30, 2021. (e) 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 $70bn at June 30, 2022, $78bn at March 31, 2022 and $63bn at June 30, 2021. Page 8 – Market and Wealth Services (a) June 30, 2022 information is preliminary. (b) Consists of AUC/A from the Clearance and Collateral Management and Pershing lines of business. (c) Net new assets represent net flows of assets (e.g., net cash deposits and net securities transfers, including dividends and interest) in customer accounts in Pershing LLC, a U.S. broker-dealer. Page 9 – Investment and Wealth Management (b) June 30, 2022 information is preliminary. Excludes assets managed outside of the Investment and Wealth Management business segment. (c) June 30, 2022 information is preliminary. Includes AUM and AUC/A in the Wealth Management business.
13 Money Market Fee Waivers Impact (a) The line of business revenue for management reporting purposes reflects the impact of revenue transferred between the businesses. 2Q22 1Q22 4Q21 3Q21 2Q21 Investment services fees (see table below) $(26) $(126) $(148) $(142) $(148) Investment management and performance fees (40) (85) (116) (109) (115) Distribution and servicing fees (2) (11) (14) (11) (13) Total fee revenue (68) (222) (278) (262) (276) Less: Distribution and servicing expense 2 23 35 29 24 Net impact of money market fee waivers $(66) $(199) $(243) $(233) $(252) Impact to investment services fees by line of business (a) Asset Servicing — $(19) $(31) $(29) $(30) Issuer Services (1) (11) (18) (17) (16) Pershing (25) (90) (89) (86) (91) Treasury Services — (6) (10) (10) (11) Total impact to investment services fees by line of business $(26) $(126) $(148) $(142) $(148) Impact to revenue by line of business (a) Asset Servicing $(1) $(28) $(50) $(47) $(50) Issuer Services (1) (14) (24) (22) (22) Pershing (29) (107) (106) (102) (99) Treasury Services — (8) (14) (13) (16) Investment Management (37) (63) (81) (76) (85) Wealth Management — (2) (3) (2) (4) Total impact to revenue by line of business $(68) $(222) $(278) $(262) $(276)
14 (a) Notable items in 2Q22 include increased litigation reserves. Notable items in 1Q22 include decreased litigation reserves. Notable items in 2Q21 include disposal gains and severance expense. Earnings per Share Reconciliation – Impact of Notable Items 2Q22 Results – GAAP Notable items (b) Results – Non-GAAP ex. notable items Total revenue $4,254 — $4,254 Provision for credit losses 47 — 47 Noninterest expense 3,112 103 3,009 Income before income taxes $1,095 $(103) $1,198 Net income applicable to common shareholders 835 $(100) 935 Avg. common shares and equivalents outstanding (mm) — diluted 814 — 814 EPS $1.03 $(0.12) $1.15 Noninterest Expense Reconciliation – Impact of Notable Items 2Q22 1Q22 2Q21 1Q22 2Q21 Noninterest expense — GAAP $3,112 $3,006 $2,778 4% 12% Notable items (a) 103 (1) 5 Noninterest expense, ex-notables — Non-GAAP $3,009 $3,007 $2,773 — 8% 2Q22 vs
15 (a) Income before income taxes divided by total revenue. (b) Notable items in 2Q22 include increased litigation reserves. Notable items in 1Q22 include decreased litigation reserves. Notable items in 2Q21 include disposal gains and severance expense. Securities Services Segment Noninterest Expense Reconciliation – Impact of Notable Items 2Q22 Results – GAAP Notable items (b) Results – Non-GAAP ex. notable items Total revenue $4,254 — $4,254 Provision for credit losses 47 — 47 Noninterest expense 3,112 103 3,009 Income before income taxes $1,095 $(103) $1,198 Pre-tax operating margin (a) 26% 28% Securities Services segment, total revenue $2,006 — $2,006 Provision for credit losses 13 — 13 Noninterest expense 1,656 92 1,564 Income before income taxes $337 $(92) $429 Securities Services segment, pre-tax operating margin (a) 17% 21% Pre-tax Operating Margin Reconciliation – Impact of Notable Items 2Q22 vs 2Q22 2Q21 2Q21 Securities Services segment, noninterest expense — GAAP $1,656 $1,400 18% Notable items (b) 92 (6) Securities Services segment, noninterest expense, ex-notables — Non-GAAP $1,564 $1,406 11%
16 2Q22 1Q22 2Q21 Net income applicable to common shareholders of The Bank of New York Mellon Corporation — GAAP $835 $699 $991 Add: Amortization of intangible assets 17 17 20 Less: Tax impact of amortization of intangible assets 4 4 5 Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets — Non-GAAP $848 $712 $1,006 Average common shareholders’ equity $36,199 $37,363 $40,393 Less: Average goodwill 17,347 17,490 17,517 Average intangible assets 2,949 2,979 2,975 Add: Deferred tax liability — tax deductible goodwill 1,187 1,184 1,163 Deferred tax liability — intangible assets 668 673 675 Average tangible common shareholders’ equity — Non-GAAP $17,758 $18,751 $21,739 Return on common equity (annualized) — GAAP 9.3% 7.6% 9.8% Return on tangible common equity (annualized) — non-GAAP 19.2% 15.4% 18.6% 2021 Jun. 30 Mar. 31 Jun. 30 BNY Mellon shareholders’ equity at period end — GAAP $40,984 $41,799 $45,281 Less: Preferred stock 4,838 4,838 4,541 BNY Mellon common shareholders’ equity at period end — GAAP 36,146 36,961 40,740 Less: Goodwill 17,271 17,462 17,487 Intangible assets 2,934 2,968 2,964 Add: Deferred tax liability — tax deductible goodwill 1,187 1,184 1,163 Deferred tax liability — intangible assets 668 673 675 BNY Mellon tangible common shareholders’ equity at period end — Non-GAAP 17,796 18,388 22,127 Period-end common shares outstanding (in thousands) 808,103 807,798 863,174 Book value per common share — GAAP $44.73 $45.76 $47.20 Tangible book value per common share — Non-GAAP $22.02 $22.76 $25.64 2022 Return on Common Equity and Tangible Common Equity Reconciliation Book Value and Tangible Book Value Per Common Share Reconciliation
17 Return on Common Equity and Tangible Common Equity Reconciliation – Impact of Notable Items 2Q22 Results Notable items (a) Non-GAAP ex. notable items Net income applicable to common shareholders of The Bank of New York Mellon Corporation — GAAP $835 $(100) $935 Add: Amortization of intangible assets 17 — 17 Less: Tax impact of amortization of intangible assets 4 — 4 Adjusted net income applicable to common shareholders of The Bank of New York Mellon Corporation, excluding amortization of intangible assets — Non-GAAP $848 $(100) $948 Average common shareholders’ equity $36,199 — $36,199 Less: Average goodwill 17,347 — 17,347 Average intangible assets 2,949 — 2,949 Add: Deferred tax liability — tax deductible goodwill 1,187 — 1,187 Deferred tax liability — intangible assets 668 — 668 Average tangible common shareholders’ equity — Non-GAAP $17,758 — $17,758 Return on tangible common equity (annualized) — Non-GAAP 19.2% 21.4% 2Q22 1Q22 2Q21 Income before income taxes — GAAP $208 $212 $326 Total revenue — GAAP $899 $964 $999 Less: Distribution and servicing expense 91 79 74 Adjusted total revenue, net of distribution and servicing expense — non-GAAP $808 $885 $925 Pre-tax operating margin — GAAP (b) 23% 22% 33% Adjusted pre-tax operating margin, net of distribution and servicing expense — non-GAAP (b) 26% 24% 35% Pre-tax Operating Margin Reconciliation – Investment and Wealth Management Business (a) Notable items in 2Q22 related to increased litigation reserves. (b) Income before income taxes divided by total revenue.
18 A number of statements in The Bank of New York Mellon Corporation’s (the “Corporation”) presentations, the accompanying slides and the responses to your questions are “forward-looking statements.” Words such as “estimate,” “forecast,” “project,” “anticipate,” “likely,” “target,” “expect,” “intend,” “continue,” “seek,” “believe,” “plan,” “goal,” “could,” “should,” “would,” “may,” “might,” “will,” “strategy,” “synergies,” “opportunities,” “trends,” “ambition,” “objective,” “aim,” “future,” “potentially,” “outlook” and words of similar meaning may signify forward-looking statements. These statements relate to, among other things, the Corporation’s expectations regarding: capital plans, strategic priorities, financial goals, organic growth, performance, organizational quality and efficiency, investments, including in technology and product development, capabilities, resiliency, revenue, net interest revenue, money market fee waivers, fees, expenses, cost discipline, sustainable growth, innovation in products and services, company management, human capital management (including related ambitions, objectives, aims and goals), deposits, interest rates and yield curves, securities portfolio, taxes, business opportunities, divestments, volatility, preliminary business metrics and regulatory capital ratios and statements regarding the Corporation’s aspirations, as well as the Corporation’s overall plans, strategies, goals, objectives, expectations, outlooks, estimates, intentions, targets, opportunities, focus and initiatives, including the potential effects of the coronavirus pandemic on any of the foregoing. 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 outcomes may differ materially from those expressed or implied as a result of a number of factors, including, but not limited to, those discussed in “Risk Factors” in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”) and in other filings of the Corporation with the Securities and Exchange Commission (the “SEC”). Statements about the effects of the current and near-term market and macroeconomic outlook on the Corporation, including on its business, operations, financial performance and prospects, may constitute forward-looking statements, and 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), including geopolitical risks (including those related to Russia’s invasion of Ukraine), as well as the scope and duration of the pandemic, actions taken by governmental authorities and other third parties in response to the pandemic, the availability, use and effectiveness of vaccines, and the direct and indirect impact of the pandemic on the Corporation, its clients, customers and third parties. Preliminary business metrics and regulatory capital ratios are subject to change, possibly materially, as the Corporation completes its Quarterly Report on Form 10-Q for the quarter ended June 30, 2022. All forward-looking statements speak only as of July 15, 2022, 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. For additional information regarding the Corporation, please refer to the Corporation's SEC filings available at www.bnymellon.com/investorrelations. Non-GAAP Measures: In this presentation we discuss certain non-GAAP measures in detailing the Corporation’s performance, which exclude certain items or otherwise include components that differ from GAAP. 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 the Corporation’s management monitors financial performance. Additional disclosures relating to non-GAAP measures are contained in the Corporation’s reports filed with the SEC, including the 2021 Annual Report, and the second quarter 2022 earnings release and the second quarter 2022 financial supplement are available at www.bnymellon.com/investorrelations. Cautionary Statement
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