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BNY Mellon's (BK) Q1 Earnings Beat, AUM & Fee Income Rise
The Bank of New York Mellon Corporation’s (BK - Free Report) first-quarter 2024 adjusted earnings of $1.29 per share handily outpaced the Zacks Consensus Estimate of $1.19. Also, the figure reflected a rise of 14% from the prior-year quarter.
Further, BK’s total revenues grew 3% year over year to $4.53 billion. The top line also beat the Zacks Consensus Estimate of $4.38 billion.
The primary driver for the increase in top line was an improvement in fee income and assets under custody and/or administration (AUC/A) and assets under management (AUM) balance.
The Bank of New York Mellon Corporation Price, Consensus and EPS Surprise
The Bank of New York Mellon Corporation price-consensus-eps-surprise-chart | The Bank of New York Mellon Corporation Quote
Increase in Fee Income Boosts Revenues
Total fee revenues were $3.31 billion, up 5% from the prior-year quarter. The increase was particularly driven by investment services fees, and investment management and performance fees.
BK’s investment services fees (the largest revenue component) grew 8% to $2.28 billion in the first quarter. Moreover, investment management and performance fees were stable at $776 million.
The rise in both the above-mentioned metrics was driven by improvement in AUM and AUC/A balances. As of Mar 31, 2024, AUM was $2.02 trillion, up 6% year over year, and AUC/A was $48.8 trillion, rising 5%. The growth primarily reflected higher market values driven by a global market rally in the quarter.
Similar to BK, the other two major custodian banks – State Street (STT - Free Report) and Northern Trust Corporation (NTRS - Free Report) – witnessed improvement in AUC and AUM balances in the first quarter. This resulted in a rise in fee income for both companies.
For BK, other fee income components, financing-related fees and distribution and servicing fees jumped 10% and 27%, respectively, in the first quarter of 2024.
On the other hand, higher funding costs hurt BK’s net interest revenues (NIR). NIR, on a fully taxable-equivalent (FTE) basis, declined 8% year over year to $1.04 billion. The fall was due to changes in balance sheet size and mix, partly offset by higher interest rates.
Likewise, STT and NTRS recorded a decline in NIR in the first quarter, with the reasons being the same.
Additionally, total non-interest expenses (GAAP basis) were $3.18 billion for BNY Mellon, rising 2%. Almost all cost components increased.
In the first quarter, this Zacks Rank #3 (Hold) company recorded a provision for credit losses of $27 million, stable year over year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.