The Bank Of New York Mellon Corporation · NYSE:BNY
The Bank Of New York Mellon — Bank of New York Mellon — Q2 2016 Earnings Presentation
25 slides from The Bank Of New York Mellon's earnings presentation, Jul 21, 2016
Slide 1: BNY Mellon Second Quarter 2016 Financial Highlights
BNY Mellon Second Quarter 2016 Financial Highlights July 21, 2016
Slide 2: Cautionary Statement
2 Second Quarter 2016 – Financial Highlights Cautionary Statement A number of statements in our presentations, the accompanying slides and the responses to your questions are “forward-looking statements.” Words such as “estimate”, “forecast”, “project”, “anticipate”, “target”, “expect”, “intend”, “c
Slide 3: Summary Financial Results for Second Quarter 2016 - GAAP
3 Second Quarter 2016 – Financial Highlights Summary Financial Results for Second Quarter 2016 - GAAP Growth vs. $ in millions, except per share data 2Q16 1Q16 2Q15 1Q16 2Q15 Revenue $ 3,776 $ 3,730 $ 3,886 1 % (3)% Expenses $ 2,620 $ 2,629 $ 2,727 — % (4)% Operating leverage1 157 bps 109 bps Income
Slide 4: Summary Financial Results for Second Quarter 2016 (Non-GAAP)
4 Second Quarter 2016 – Financial Highlights Summary Financial Results for Second Quarter 2016 (Non-GAAP)1 Growth vs. $ in millions, except per share data 2Q16 1Q16 2Q15 1Q16 2Q15 Revenue $ 3,772 $ 3,737 $ 3,849 1 % (2)% Expenses $ 2,554 $ 2,555 $ 2,603 — % (2)% Operating leverage2 98 bps (12) bps I
Slide 5: Second Quarter Financial Highlights
5 Second Quarter 2016 – Financial Highlights Second Quarter Financial Highlights (comparisons are 2Q16 versus 2Q15) • Earnings per common share of $0.76 on an adjusted basis1 • Earnings per common share (1%) on an adjusted basis1 • Continued focus on structural cost reduction and expense control • T
Slide 6: 2016 Key Messages
6 Second Quarter 2016 – Financial Highlights 2016 Key Messages • Executing on our strategic priorities; delivering on our three-year financial goals set at our 2014 Investor Day • Focused on enhancing the client experience and driving profitable revenue growth ◦ Broadening existing client relationsh
Slide 7: Second Quarter 2016 Key Performance Drivers
7 Second Quarter 2016 – Financial Highlights Second Quarter 2016 Key Performance Drivers (comparisons are 2Q16 versus 2Q15) • Earnings per common share of $0.76, (1%) on an adjusted basis1 (Non-GAAP), driven by a challenging revenue environment partially offset by continued execution of our Business
Slide 8: Fee and Other Revenue (Consolidated)
8 Second Quarter 2016 – Financial Highlights Fee and Other Revenue (Consolidated) Growth vs. Year-over-Year Drivers ($ in millions) 2Q16 1Q16 2Q15 Investment services fees: Asset ServicingŸ Net new business and higher money market fees, partially offset by lower market values and the unfavorable imp
Slide 9: Investment Management Metrics
9 Second Quarter 2016 – Financial Highlights Investment Management Metrics Change in Assets Under Management (AUM)1 Growth vs. $ in billions 2Q16 LTM 2Q16 1Q16 2Q15 Beginning balance of AUM $1,639 $1,700 Net inflows (outflows): Long-Term: Equity (2) (18) Fixed income (2) (4) Liability-driven investm
Slide 10: Investment Services Metrics
10 Second Quarter 2016 – Financial Highlights Investment Services Metrics Growth vs. 2Q16 1Q16 2Q15 Assets under custody and/or administration at period end (trillions)1,2 $ 29.5 1 % 3 % Estimated new business wins (AUC/A) (billions)2 $ 167 Market value of securities on loan at period end (billions)
Slide 11: Net Interest Revenue
11 Second Quarter 2016 – Financial Highlights Net Interest Revenue Growth vs. Year-over-Year Drivers ($ in millions) 2Q16 1Q16 2Q15 Net interest revenue (non-FTE) $ 767 —% (2)% Net Interest Revenue Ÿ The negative impact of interest rate hedging activities and higher premium amortization adjustments
Slide 12: Noninterest Expense
12 Second Quarter 2016 – Financial Highlights Noninterest Expense Growth vs. Year-over-Year Drivers ($ in millions) 2Q16 1Q16 2Q15 Staff $ 1,412 (3)% (2)% Ÿ Lower expenses in nearly all categories, primarily driven by the favorable impact of a stronger U.S. dollar, lower litigation, staff and legal
Slide 13: Capital Ratios Highlights
13 Second Quarter 2016 – Financial Highlights Capital Ratios Highlights 6/30/16 3/31/16 12/31/15 Consolidated regulatory capital ratios:1 Ÿ Repurchased 12.5 million common shares for $509 million in 2Q16 Ÿ In 2Q16, declared a quarterly dividend of $0.17 per common share Ÿ Compliant with fully phased
Slide 14: Capital Ratio Footnotes
14 Second Quarter 2016 – Financial Highlights Capital Ratio Footnotes 1 June 30, 2016 regulatory capital ratios are preliminary. See the “Capital Ratios” section in the earnings release for additional detail. For our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under a
Slide 15: Appendix
APPENDIX
Slide 16: Strategic Priorities
16 Second Quarter 2016 – Financial Highlights Strategic Priorities Strategic Priorities to Drive Growth Driving Profitable Revenue Growth • Leveraging our scale and expertise to create new sources of value • Delivering innovative strategic solutions with strong potential upside Business Improvement
Slide 17: Business Improvement Process
17 Second Quarter 2016 – Financial Highlights Business Improvement Process COMPLETED • Expanded Wealth Management sales force, driving new revenue opportunities backed by a strong pipeline • Established Client Pricing Strategy group to develop, analyze and measure service delivery costs to better al
Slide 18: Total Shareholder Return and EPS Reconciliation
18 Second Quarter 2016 – Financial Highlights Total Shareholder Return and EPS Reconciliation Total Shareholder Return YTD 6/30/16 2015 2014 BNY Mellon (4.9)% 3.3% 18.3% 11-Member Peer Group Median (10.6)% (2.3)% 13.8% S&P 500 Financials (3.1)% (1.6)% 15.2% S&P 500 Index 3.8% 1.4% 13.7% Earnings per
Slide 19: Investment Management
19 Second Quarter 2016 – Financial Highlights Investment Management . Growth vs. ($ in millions) 2Q16 1Q16 2Q15 Investment management and performance fees $ 817 3% (4)% Distribution and servicing 49 7 29 Other1 (10) N/M N/M Net interest revenue 82 (1) 6 Total Revenue 938 5% (5)% Provision for credit
Slide 20: Investment Services
20 Second Quarter 2016 – Financial Highlights Investment Services Growth vs. ($ in millions) 2Q16 1Q16 2Q15 Investment services fees: Asset servicing $ 1,043 3% —% Clearing services 350 1 1 Issuer services 233 (5) — Treasury services 137 6 (3) Total investment services fees 1,763 1 — Foreign exchang
Slide 21: Expense, Pre-Tax Operating Margin & Operating Leverage - Non-GAAP Reconciliations
21 Second Quarter 2016 – Financial Highlights Expense, Pre-Tax Operating Margin & Operating Leverage - Non-GAAP Reconciliations 2Q16 1Q16 2Q15 QoQ Operating Leverage YoY Operating Leverage($ in millions) Total revenue – GAAP $ 3,776 $ 3,730 $ 3,886 1.23 % (2.83)% Less: Net income (loss) attributable
Slide 22: Return on Tangible Common Equity Reconciliation
22 Second Quarter 2016 – Financial Highlights Return on Tangible Common Equity Reconciliation 2Q16 1Q16 2Q15 ($ in millions) Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP $ 825 $ 804 $ 830 Add: Amortization of intangible assets, net of tax 59 57 65 Le
Slide 23: Basel III Capital Components & Ratios
23 Second Quarter 2016 – Financial Highlights Basel III Capital Components & Ratios ($ in millions) 6/30/161 3/31/16 12/31/15 Transitional basis2 Fully Phased-in Non-GAAP3 Transitional basis 2 Fully Phased-in Non- GAAP3 Transitional basis 2 Fully Phased-in Non- GAAP3 CET1: Common shareholders’ equit
Slide 24: Estimated Fully Phased-In SLR
24 Second Quarter 2016 – Financial Highlights Estimated Fully Phased-In SLR ($ in millions) 6/30/16 1 3/31/16 12/31/15 Transitional basis Fully phased-in (Non-GAAP)2 Transitional basis Fully phased-in (Non-GAAP)2 Transitional basis Fully phased-in (Non-GAAP)2 Consolidated: Tier 1 capital $ 20,673 $
Slide 25: Investment Management - Non-GAAP Reconciliations
25 Second Quarter 2016 – Financial Highlights Investment Management - Non-GAAP Reconciliations Pre-tax operating margin 2Q16 1Q16 2Q15($ in millions) Income before income taxes – GAAP $ 234 $ 217 $ 259 Add: Amortization of intangible assets 19 19 25 Provision for credit losses 1 (1) 3 Money market f
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