The Bank Of New York Mellon Corporation · NYSE:BNY
The Bank Of New York Mellon — Bank of New York Mellon — Q3 2014 Earnings Presentation
24 slides from The Bank Of New York Mellon's earnings presentation, Oct 17, 2014
Slide 1: BNY Mellon Third Quarter 2014 Financial Highlights
BNY Mellon Third Quarter 2014 Financial Highlights October 17, 2014
Slide 2: Cautionary Statement
2 Third Quarter 2014 – Financial Highlights Cautionary Statement A number of statements in our presentations, the accompanying slides and the responses to your questions are “forward-looking statements.” These statements relate to, among other things, The Bank of New York Mellon Corporation’s (the “
Slide 3: Third Quarter 2014 Financial Highlights
3 Third Quarter 2014 – Financial Highlights Third Quarter 2014 Financial Highlights • Earnings per share of $0.93 including: • $0.29 per common share for previously disclosed gains net of litigation and restructuring charges • Investment management and performance fees +7% year-over-year • Assets un
Slide 4: Third Quarter 2014 Key Performance Drivers
4 Third Quarter 2014 – Financial Highlights Third Quarter 2014 Key Performance Drivers • EPS (Non-GAAP)1 of $0.64, +5% year-over-year and +3% sequentially, driven by growth in Investment Management and Investment Services fees and continued progress on expense control • Investment management and per
Slide 5: Summary Financial Results for the Third Quarter 2014
5 Third Quarter 2014 – Financial Highlights Summary Financial Results for the Third Quarter 2014 Growth vs. $ in millions, except per share data 3Q14 2Q14 3Q13 3Q13 2Q14 Revenue $ 4,611 $ 3,745 $ 3,783 22 % 23 % Provision for credit losses $ (19 ) $ (12 ) $ 2 N/M N/M Expenses $ 2,968 $ 2,946 $ 2,779
Slide 6: Summary Financial Results for the Third Quarter 2014 (Non-GAAP)
6 Third Quarter 2014 – Financial Highlights Summary Financial Results for the Third Quarter 2014 (Non-GAAP) Growth vs. $ in millions, except per share data 3Q14 2Q14 3Q13 3Q13 2Q14 Revenue1 $ 3,752 $ 3,728 $ 3,775 (1)% 1 % Expenses1 $ 2,673 $ 2,640 $ 2,682 —% 1 % Operating leverage1 (27) bps (61) bp
Slide 7: Investment Management Metrics
7 Third Quarter 2014 – Financial Highlights Investment Management Metrics Asset Under Management (AUM)1 $ in billions 3Q14 LTM 9/30/14 Beginning balance of AUM $1,636 $1,532 Net inflows (outflows): Long-Term: Equity (2 ) (12 ) Fixed income — 4 Index (3 ) 1 Liability-driven investments2 18 25 Alterna
Slide 8: Investment Services Metrics
8 Third Quarter 2014 – Financial Highlights Investment Services Metrics Growth vs. 3Q14 3Q13 2Q14 Asset under custody /administration at period end (trillions)1,2 $ 28.3 3 % (1 )% Market value of securities on loan at period end (billions)3 $ 282 11 % 1 % Average loans (millions) $ 33,785 21 % 2 % A
Slide 9: Fee and Other Revenue
9 Third Quarter 2014 – Financial Highlights Fee and Other Revenue Growth vs. Drivers ($ in millions) 3Q14 3Q13 2Q14 Asset servicing1 $ 1,025 6 % — % Asset Servicing YoY: Organic growth, higher market values, net new business and higher collateral management fees QoQ: Organic growth and seasonall
Slide 10: Net Interest Revenue
10 Third Quarter 2014 – Financial Highlights Net Interest Revenue Growth vs. Drivers ($ in millions) 3Q14 3Q13 2Q14 Net interest revenue (non-FTE) $ 721 (7 )% — % Net Interest Revenue YoY: Lower asset yields, lower accretion and higher average interest-earning assets driven by higher deposits Qo
Slide 11: Noninterest Expense
11 Third Quarter 2014 – Financial Highlights Noninterest Expense Growth vs. Drivers ($ in millions) 3Q14 3Q13 2Q14 Staff $ 1,477 (3 )% 3 % YoY: Lower pension, benefits of technology insourcing, streamlining actions, lower business development, annual merit increase and higher professional, legal a
Slide 12: Capital Ratios Highlights
12 Third Quarter 2014 – Financial Highlights Capital Ratios Highlights 9/30/14 6/30/14 9/30/13 Regulatory capital ratios:1,2,3 Capital ratios remain strong Sept. YTD '14: Generated $1.9 billion of net Tier 1 common In 3Q14, purchased 11 million common shares for $431 million; 35 million shares
Slide 13: Investment Management
13 Third Quarter 2014 – Financial Highlights Investment Management . Growth vs. Drivers ($ in millions) 3Q14 3Q13 2Q14 Investment management and performance fees $ 877 8 % — % Investment management fees YoY & QoQ: Higher equity markets and currency impact Performance fees YoY +$10MM: Strong perf
Slide 14: Investment Services
14 Third Quarter 2014 – Financial Highlights Investment Services Growth vs. Drivers ($ in millions) 3Q14 3Q13 2Q14 Investment services fees: Asset Servicing YoY: Organic growth, higher market values, net new business and higher collateral management fees QoQ: Organic growth and seasonally lower
Slide 15: Appendix
APPENDIX
Slide 16: Expense & Pre-Tax Operating Margin - Non-GAAP Reconciliation
16 Third Quarter 2014 – Financial Highlights Expense & Pre-Tax Operating Margin - Non-GAAP Reconciliation 3Q14 2Q14 3Q13 ($ in millions) Total revenue – GAAP $ 4,611 $ 3,745 $ 3,783 Less: Net income attributable to noncontrolling interests of consolidated investment management funds 23 17 8 Gain on
Slide 17: Return on Tangible Common Equity Reconciliation
17 Third Quarter 2014 – Financial Highlights Return on Tangible Common Equity Reconciliation 3Q14 2Q14 3Q13 ($ in millions) Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP $ 1,070 $ 554 $ 962 Add: Amortization of intangible assets, net of tax 49 49 52 N
Slide 18: Earnings Per Share Reconciliation
18 Third Quarter 2014 – Financial Highlights Earnings Per Share Reconciliation Growth vs. ($ in dollars) 3Q14 2Q14 3Q13 3Q13 2Q14 GAAP results $ 0.93 $ 0.48 0.82 Add: Charge related to investment management funds, net of incentives — 0.07 — Litigation and restructuring charges 0.16 0.06 0.01 Benefit
Slide 19: 3Q14 3Q13 2Q14 Asset servicing1 $ 1,025 $ $ 1,022 Clearing services 337 315
19 Third Quarter 2014 – Financial Highlights ($ in millions) 3Q14 3Q13 2Q14 Asset servicing1 $ 1,025 $ 964 $ 1,022 Clearing services 337 315 326 Issuer services 315 322 231 Treasury services 142 137 141 Total investment services fees 1,819 1,738 1,720 Investment management and performance fees 881 8
Slide 20: Operating leverage (ex. investment and other income & net securities gains)
20 Third Quarter 2014 – Financial Highlights Operating leverage (ex. investment and other income & net securities gains) 1 Non-GAAP excludes M&I, litigation and restructuring charges, the gain on the sale of our investment in Wing Hang, the gain on the sale of the One Wall Street building, a charge
Slide 21: Capital Ratio Footnotes
21 Third Quarter 2014 – Financial Highlights Capital Ratio Footnotes 1 Sept. 30, 2014 regulatory capital ratios are preliminary. Please reference slides 22 and 23. See the “Capital Ratios” section in the Earnings Release for additional detail. 2 Beginning with June 30, 2014, risk-based capital ratio
Slide 22: Estimated Fully Phased-In Basel III CET1 Ratio - Non-GAAP
22 Third Quarter 2014 – Financial Highlights Estimated Fully Phased-In Basel III CET1 Ratio - Non-GAAP1 9/30/14 6/30/14 9/30/13 ($ in millions) Total Tier 1 capital $ 21,019 $ 20,669 $ 18,074 Adjustments to determine estimated fully phased-in Basel III CET1: Deferred tax liability – tax deductible i
Slide 23: Basel I CET1 Ratio & Estimated SLR - Non-GAAP Reconciliation
23 Third Quarter 2014 – Financial Highlights Basel I CET1 Ratio & Estimated SLR - Non-GAAP Reconciliation Basel I CET1 ratio ($ in millions) 9/30/13 Total Tier 1 capital – Basel I $ 18,074 Less: Trust preferred securities 324 Preferred stock 1,562 Total CET1 – Basel I $ 16,188 Total risk-weighted as
Slide 24: Pre-Tax Operating Margin – Investment Management Reconciliation
24 Third Quarter 2014 – Financial Highlights Pre-Tax Operating Margin – Investment Management Reconciliation 3Q14 2Q14 3Q13 ($ in millions) Income before income taxes – GAAP $ 245 $ 171 $ 225 Add: Amortization of intangible assets 31 31 35 Money market fee waivers 29 28 30 Charge related to investme
Bank of New York Mellon — Q3 2014 Earnings Presentation on 6ix