We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Higher Interest Rates to Aid BNY Mellon's (BK) Q3 Earnings
Read MoreHide Full Article
The Bank of New York Mellon Corporation (BK - Free Report) is scheduled to report third-quarter 2023 results on Oct 17, before market open. While the company’s revenues are expected to have witnessed an increase in the quarter on a year-over-year basis, earnings are likely to have declined.
In the last reported quarter, BK’s earnings surpassed the Zacks Consensus Estimate. Results were aided by a rise in net interest revenues and marginally lower expenses. However, the assets under management (AUM) balance witnessed a decline, which, along with lower fee revenues, hurt the results to some extent.
BNY Mellon has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with a surprise of 8.3%, on average.
The Bank of New York Mellon Corporation Price and EPS Surprise
The Zacks Consensus Estimate for the company’s third-quarter earnings is pegged at $1.15, which has been revised almost 1% lower over the past seven days. The consensus estimate indicates a decline of 5% from the year-ago quarter’s reported number. Our estimate for third-quarter earnings is pinned at $1.14 per share.
The consensus estimate for sales is pegged at $4.31 billion, implying a 0.8% rise from the prior-year quarter’s reported figure. Our estimate for the same is pinned at $4.33 billion.
Key Factors & Estimates for Q3
Fee Revenues: The Zacks Consensus Estimate for total investment services fee (comprising more than 50% of the company’s total revenues) is pegged at $2.22 billion, reflecting a rise of 2.8% from the prior-year quarter’s reported number. Our estimate for the same is $2.27 billion, indicating a year-over-year rise of 5.4%.
The consensus mark for financing-related fees is pegged at $48.94 million, which suggests a 13.8% year-over-year rise. Our estimate for financing-related fees is $48.8 million, indicating a rise of 13.5%.
The consensus estimate for distribution and servicing fees is pegged at $34.84 million, indicating a 5.6% rise from the previous-year quarter’s reported figure. Our estimate for the same is pinned at $34.9 million.
The consensus estimate for foreign exchange revenues is pegged at $150 million, suggesting a decline of 26.1% from the prior-year quarter’s reported figure. Our estimate for the same is pinned at $156.4 million, indicating a 23% decline. The consensus mark for investment and other income of $75 million suggests a year-over-year decline of 35.9%.
Thus, the consensus estimate for total fees and other revenues is pegged at $3.28 billion, suggesting a decline of 2.1% from the prior-year quarter’s reported number. We project the metric to be $3.32 billion.
Net Interest Revenues (NIR): The overall lending scenario remained weak in the to-be-reported quarter amid a challenging macroeconomic backdrop.
Nevertheless, the Federal Reserve continued to tighten its monetary policy, increasing interest rates by another 25 basis points in the third quarter. The policy rate now stands at a 22-year high of 5.25-5.5%. While the inversion of the yield curve and rising funding costs are expected to have weighed on margins to some extent, BK’s interest income is likely to have improved in the quarter, supported by higher rates.
The consensus mark for the third-quarter NIR is pegged at $1.01 billion, indicating 9.3% year-over-year growth. Our estimate for NIR is also pinned at $1.01 billion.
Expenses: Because of higher restructuring charges, BNY Mellon’s expenses have been elevated over the past few years. Nevertheless, overall costs are expected to have been manageable in the quarter under review, given the elimination of unnecessary management layers.
Our estimate for third-quarter non-interest expenses is $3.15 billion, suggesting a year-over-year decline of 14.5%.
What the Zacks Model Unveils
According to our quantitative model, the chances of BNY Mellon beating the Zacks Consensus Estimate this time are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — which is required to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for BNY Mellon is -1.41%.
Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).
Stocks That Warrant a Look
A couple of finance stocks that you may want to consider, as these have the right combination of elements to post an earnings beat in the upcoming releases per our model, are Wells Fargo (WFC - Free Report) and PNC Financial (PNC - Free Report) .
PNC Financial is also scheduled to release third-quarter 2023 earnings on Oct 13. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +1.60%.
Image: Bigstock
Higher Interest Rates to Aid BNY Mellon's (BK) Q3 Earnings
The Bank of New York Mellon Corporation (BK - Free Report) is scheduled to report third-quarter 2023 results on Oct 17, before market open. While the company’s revenues are expected to have witnessed an increase in the quarter on a year-over-year basis, earnings are likely to have declined.
In the last reported quarter, BK’s earnings surpassed the Zacks Consensus Estimate. Results were aided by a rise in net interest revenues and marginally lower expenses. However, the assets under management (AUM) balance witnessed a decline, which, along with lower fee revenues, hurt the results to some extent.
BNY Mellon has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with a surprise of 8.3%, on average.
The Bank of New York Mellon Corporation Price and EPS Surprise
The Bank of New York Mellon Corporation price-eps-surprise | The Bank of New York Mellon Corporation Quote
The Zacks Consensus Estimate for the company’s third-quarter earnings is pegged at $1.15, which has been revised almost 1% lower over the past seven days. The consensus estimate indicates a decline of 5% from the year-ago quarter’s reported number. Our estimate for third-quarter earnings is pinned at $1.14 per share.
The consensus estimate for sales is pegged at $4.31 billion, implying a 0.8% rise from the prior-year quarter’s reported figure. Our estimate for the same is pinned at $4.33 billion.
Key Factors & Estimates for Q3
Fee Revenues: The Zacks Consensus Estimate for total investment services fee (comprising more than 50% of the company’s total revenues) is pegged at $2.22 billion, reflecting a rise of 2.8% from the prior-year quarter’s reported number. Our estimate for the same is $2.27 billion, indicating a year-over-year rise of 5.4%.
The consensus mark for financing-related fees is pegged at $48.94 million, which suggests a 13.8% year-over-year rise. Our estimate for financing-related fees is $48.8 million, indicating a rise of 13.5%.
The consensus estimate for distribution and servicing fees is pegged at $34.84 million, indicating a 5.6% rise from the previous-year quarter’s reported figure. Our estimate for the same is pinned at $34.9 million.
The consensus estimate for foreign exchange revenues is pegged at $150 million, suggesting a decline of 26.1% from the prior-year quarter’s reported figure. Our estimate for the same is pinned at $156.4 million, indicating a 23% decline. The consensus mark for investment and other income of $75 million suggests a year-over-year decline of 35.9%.
Thus, the consensus estimate for total fees and other revenues is pegged at $3.28 billion, suggesting a decline of 2.1% from the prior-year quarter’s reported number. We project the metric to be $3.32 billion.
Net Interest Revenues (NIR): The overall lending scenario remained weak in the to-be-reported quarter amid a challenging macroeconomic backdrop.
Nevertheless, the Federal Reserve continued to tighten its monetary policy, increasing interest rates by another 25 basis points in the third quarter. The policy rate now stands at a 22-year high of 5.25-5.5%. While the inversion of the yield curve and rising funding costs are expected to have weighed on margins to some extent, BK’s interest income is likely to have improved in the quarter, supported by higher rates.
The consensus mark for the third-quarter NIR is pegged at $1.01 billion, indicating 9.3% year-over-year growth. Our estimate for NIR is also pinned at $1.01 billion.
Expenses: Because of higher restructuring charges, BNY Mellon’s expenses have been elevated over the past few years. Nevertheless, overall costs are expected to have been manageable in the quarter under review, given the elimination of unnecessary management layers.
Our estimate for third-quarter non-interest expenses is $3.15 billion, suggesting a year-over-year decline of 14.5%.
What the Zacks Model Unveils
According to our quantitative model, the chances of BNY Mellon beating the Zacks Consensus Estimate this time are low. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — which is required to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for BNY Mellon is -1.41%.
Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).
Stocks That Warrant a Look
A couple of finance stocks that you may want to consider, as these have the right combination of elements to post an earnings beat in the upcoming releases per our model, are Wells Fargo (WFC - Free Report) and PNC Financial (PNC - Free Report) .
The Earnings ESP for Wells Fargo is +2.11% and it carries a Zacks Rank #3 at present. The company is slated to report third-quarter 2023 results on Oct 13. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PNC Financial is also scheduled to release third-quarter 2023 earnings on Oct 13. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +1.60%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.