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Higher Fee Income to Aid BNY Mellon (BK) Q2 Earnings, NII to Hurt
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The Bank of New York Mellon Corporation (BK - Free Report) is scheduled to report second-quarter 2024 results on Jul 12, before market open. The company’s revenues and earnings are expected to have witnessed increases in the quarter on a year-over-year basis.
In the last reported quarter, BK’s earnings surpassed the Zacks Consensus Estimate. Results were primarily aided by a rise in fee revenues, particularly investment services fees. The assets under custody and/or administration and assets under management balance grew year over year. However, higher expenses and a decline in net interest revenues (NIR) hurt results.
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 11.8%, on average.
The Bank of New York Mellon Corporation Price and EPS Surprise
The consensus estimate for the company’s second-quarter earnings is pegged at $1.43 per share, which has been revised marginally upward over the past seven days. The consensus estimate indicates a rise of 3.6% from the year-ago quarter’s reported number.
The consensus estimate for sales is pegged at $4.53 billion, implying a 1.8% rise from the prior-year quarter’s reported figure.
Key Factors & Estimates for Q2
Fee Revenues: The Zacks Consensus Estimate for total investment services fees (comprising more than 50% of the company’s total revenues) is pegged at $2.34 billion, suggesting a rise of 4% from the year-ago quarter’s reported number. Our estimate for the same is pinned at $2.31 billion.
The consensus mark for financing-related fees is pegged at $51 million, which suggests a 2% year-over-year rise. Our estimate for financing-related fees is $52.2 million.
The consensus estimate for distribution and servicing fees is pegged at $41 million, implying a 17.1% rise from the year-ago quarter’s reported figure. Our estimate for the same is pinned at $40.3 million.
In the second quarter, foreign exchange (FX) trading activity was driven by heightened market volatility and increased hedging demand amid global economic uncertainties. Thus, increased FX trading volumes are likely to have had a positive impact on BNY Mellon’s FX revenues. The consensus estimate for foreign exchange revenues is pegged at $150 million, suggesting a decline of 5.1% from the prior-year quarter’s reported figure. Our estimate for the same is pinned at $155.8 million.
The consensus estimate for total fees and other revenues is pegged at $3.52 billion, suggesting a rise of 4.8% from the year-ago quarter’s reported number. We project the metric to be $3.48 billion.
Net Interest Revenues: The demand for loans was decent in the second quarter. The stabilizing macroeconomic backdrop and expectations of Fed easing later this year are likely to have offered support to the overall lending scenario.
The Federal Reserve kept interest rates steady during the quarter (at a 22-year high of 5.25-5.5%), and because of this, BK is less likely to have recorded significant improvement in NIR. Also, the inverted yield curve in the June-ended quarter and high funding costs are expected to have weighed on interest income growth.
Thus, despite decent loan growth and high rates, BNY Mellon’s NIR is expected to have declined in the quarter.
The consensus mark for second-quarter NIR is pegged at $1.01 billion, indicating an 8.3% year-over-year decline. Our estimate for NIR is pinned at $1 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 second-quarter non-interest expenses is $3.11 billion, suggesting a marginal year-over-year rise.
What the Zacks Model Unveils
According to our quantitative model, the chances of BNY Mellon beating the Zacks Consensus Estimate this time are high. This is because it has 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 +0.65%.
Zacks Rank: The company currently carries a Zacks Rank of 3.
Other Stocks That Warrant a Look
A couple of other finance stocks, which also have the right combination of elements to post an earnings beat in the upcoming releases per our model, are BlackRock, Inc. (BLK - Free Report) and Ally Financial Inc. (ALLY - Free Report) .
The Earnings ESP for BLK is +3.78% and it carries a Zacks Rank of 3 at present. The company is slated to report second-quarter 2024 results on Jul 15.
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Higher Fee Income to Aid BNY Mellon (BK) Q2 Earnings, NII to Hurt
The Bank of New York Mellon Corporation (BK - Free Report) is scheduled to report second-quarter 2024 results on Jul 12, before market open. The company’s revenues and earnings are expected to have witnessed increases in the quarter on a year-over-year basis.
In the last reported quarter, BK’s earnings surpassed the Zacks Consensus Estimate. Results were primarily aided by a rise in fee revenues, particularly investment services fees. The assets under custody and/or administration and assets under management balance grew year over year. However, higher expenses and a decline in net interest revenues (NIR) hurt results.
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 11.8%, 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 consensus estimate for the company’s second-quarter earnings is pegged at $1.43 per share, which has been revised marginally upward over the past seven days. The consensus estimate indicates a rise of 3.6% from the year-ago quarter’s reported number.
The consensus estimate for sales is pegged at $4.53 billion, implying a 1.8% rise from the prior-year quarter’s reported figure.
Key Factors & Estimates for Q2
Fee Revenues: The Zacks Consensus Estimate for total investment services fees (comprising more than 50% of the company’s total revenues) is pegged at $2.34 billion, suggesting a rise of 4% from the year-ago quarter’s reported number. Our estimate for the same is pinned at $2.31 billion.
The consensus mark for financing-related fees is pegged at $51 million, which suggests a 2% year-over-year rise. Our estimate for financing-related fees is $52.2 million.
The consensus estimate for distribution and servicing fees is pegged at $41 million, implying a 17.1% rise from the year-ago quarter’s reported figure. Our estimate for the same is pinned at $40.3 million.
In the second quarter, foreign exchange (FX) trading activity was driven by heightened market volatility and increased hedging demand amid global economic uncertainties. Thus, increased FX trading volumes are likely to have had a positive impact on BNY Mellon’s FX revenues. The consensus estimate for foreign exchange revenues is pegged at $150 million, suggesting a decline of 5.1% from the prior-year quarter’s reported figure. Our estimate for the same is pinned at $155.8 million.
The consensus estimate for total fees and other revenues is pegged at $3.52 billion, suggesting a rise of 4.8% from the year-ago quarter’s reported number. We project the metric to be $3.48 billion.
Net Interest Revenues: The demand for loans was decent in the second quarter. The stabilizing macroeconomic backdrop and expectations of Fed easing later this year are likely to have offered support to the overall lending scenario.
The Federal Reserve kept interest rates steady during the quarter (at a 22-year high of 5.25-5.5%), and because of this, BK is less likely to have recorded significant improvement in NIR. Also, the inverted yield curve in the June-ended quarter and high funding costs are expected to have weighed on interest income growth.
Thus, despite decent loan growth and high rates, BNY Mellon’s NIR is expected to have declined in the quarter.
The consensus mark for second-quarter NIR is pegged at $1.01 billion, indicating an 8.3% year-over-year decline. Our estimate for NIR is pinned at $1 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 second-quarter non-interest expenses is $3.11 billion, suggesting a marginal year-over-year rise.
What the Zacks Model Unveils
According to our quantitative model, the chances of BNY Mellon beating the Zacks Consensus Estimate this time are high. This is because it has 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 +0.65%.
Zacks Rank: The company currently carries a Zacks Rank of 3.
Other Stocks That Warrant a Look
A couple of other finance stocks, which also have the right combination of elements to post an earnings beat in the upcoming releases per our model, are BlackRock, Inc. (BLK - Free Report) and Ally Financial Inc. (ALLY - Free Report) .
The Earnings ESP for BLK is +3.78% and it carries a Zacks Rank of 3 at present. The company is slated to report second-quarter 2024 results on Jul 15.
ALLY is scheduled to release second-quarter 2024 earnings on Jul 17. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +2.99%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.