The Bank Of New York Mellon Corporation · NYSE:BNY
The Bank Of New York Mellon — Q4 2020 Earnings Presentation
27 slides from The Bank Of New York Mellon's earnings presentation, Jan 20, 2021
Slide 1: Fourth Quarter 2020 Financial Highlights
Fourth Quarter 2020 Financial Highlights January 20, 2021
Slide 2: 4Q20 Financial Highlights
4Q20 Financial Highlights Revenue EPS › Revenue, ex-notable items, down 2% year-over- year(a) due to the low interest rate environment and $3.84 bn $0.79 (a) (a) associated money market fee (“MMF”) waivers ex-notable items: $3.90 bn ex-notable items: $0.96 › Fee revenue, ex-notable items and MMF wai
Slide 3: 2020 Financial Highlights
2020 Financial Highlights › Revenue, ex-notable items, up 1% year-over-year Revenue EPS despite impact of low interest rates(a) $15.81 bn (a) $3.83 (a) › Fee revenue increased 5%, ex-notable items ex-notable items: $15.87 bn ex-notable items: $4.01 and MMF waivers(a) › EPS flat ex-notable items(a) ›
Slide 4: 4Q20 Financial Highlights
4Q20 Financial Highlights ($ millions, except per share data) 4Q20 3Q20 4Q19 TO TAL R E V E N U E $3,843 -% (20)% Fee revenue 3,116 - (22) Net interest revenue 680 (3) (17) Provision for credit losses 15 N/M N/M Noninterest expense 2,925 9 (1) Income before income taxes 903 (22) (50) Net income appl
Slide 5: 4Q20 Key Financial Trends
4Q20 Key Financial Trends (a) IS revenue Adj. I&WM revenue Adj. noninterest ($ millions) ($ millions) e x p e n s e (a) ($ millions) (4)% +2% (1)% 3,014 2,927 2,905 Net interest 971 995 2,778 2,760 778 Net interest 918 50 2,681 revenue 681 670 47 revenue 47 Total fee and Adj. I&WM 924 871 945 other
Slide 6: 2020 Financial Highlights
2020 Financial Highlights ($ millions, except per share data) 2020 2019 TO TAL R E V E N U E $15,808 (4)% Fee revenue 12,714 (4) Net interest revenue 2,977 (7) Provision for credit losses 336 N/M Noninterest expense 11,004 1 Income before income taxes 4,468 (20) Net income applicable to common share
Slide 7: 2020 Key Financial Trends
2020 Key Financial Trends IS revenue I&WM revenue Adj. noninterest ($ millions) ($ millions) (a) expense +1% -% ($ millions) -% 12,052 12,181 3,707 3,692 Net interest 3,126 2,925 Net interest 222 197 10,787 10,839 revenue revenue 3,485 3,495 Total fee and 8,926 9,256 Total fee and other revenue othe
Slide 8: Capital and Liquidity
Capital and Liquidity 4Q20 3Q20 4Q19 Consolidated regulatory capital ratios: (a) Common Equity Tier 1 (“CET1”) ratio 13.1% 13.0% 11.5% Tier 1 capital ratio 15.8 15.7 13.7 Total capital ratio 16.7 16.6 14.4 Tier 1 leverage ratio 6.3 6.5 6.6 (b) (b) Supplementary leverage ratio (“SLR“) 8.6 8.5 6.1 Ave
Slide 9: Net Interest Revenue
Net Interest Revenue DRIVERS OF SEQUENTIAL NIR CHANGE USD LIBOR AVERAGE ($ millions) (%) 0.25 (3)% 0.16 0.22 0.15 703 680 1m 3m + Benefit + Benefit of - Hedging - Impact of US TREASURY AVERAGE of lower higher and other lower (%) 0.86 funding securities interest and balances rates on deposit and bala
Slide 10: Balance Sheet Trends
Balance Sheet Trends (a) AV E R A G E D E P O S I T S AV E R A G E S E C U R I T I E S ($ billions) ($ billions) +32% +10% 307 280 +27% 200.0 -% 5.0 232 180.0 4.5 164 164 160.0 4.0 231 140.0 33 36 3.5 0.73% 129 212 (b) 120.0 Non-HQLA 24 3.0 Interest-bearing deposits 100.0 2.5 182 2.13% (0.05)% (0.06
Slide 11: Credit Risk Profile
Credit Risk Profile › Well collateralized with assets under custody AV E R A G E I N T E R E S T - EARNING ASSETS ($ billions) › $0.6bn services and other; $0.5bn manufacturing; $0.3bn +27% energy and utilities › 92% of exposure and 83% of loans are investment grade +6% 379 (a) › 74% secured loans,
Slide 12: Noninterest Expense
Noninterest Expense ($ millions) 4Q20 3Q20 4Q19 › Noninterest expenses down 1% year-over-year, Staff $1,554 6% (5)% primarily reflecting lower severance expense, partially offset by higher litigation expense and real estate Professional, legal and other purchased services 381 7 4 charges, and down 1
Slide 13: Investment Services
Investment Services FINANCIAL HIGHLIGHTS ($ millions unless otherwise noted) 4Q20 3Q20 4Q19 › Asset Servicing down year-over-year primarily on lower Total revenue by line of business: interest rates and MMF waivers, partially offset by higher Asset Servicing $1,357 -% (4)% market levels and foreign
Slide 14: Investment Services - Revenue Drivers
Investment Services - Revenue Drivers ($ millions) (4)% (3)% 1,411 1,357 (7)% 579 563 (1)% (2)% 415 385 329 325 280 275 4Q19 4Q20 4Q19 4Q20 4Q19 4Q20 4Q19 4Q20 4Q19 4Q20 ASSET ISSUER TREASURY CLEARANCE AND SERVICING PERSHING SERVICES SERVICES C O L L AT E R A L - Interest rates - MMF waivers - Inter
Slide 15: Investment and Wealth Management
Investment and Wealth Management FINANCIAL HIGHLIGHTS ($ millions unless otherwise noted) 4Q20 3Q20 4Q19 › Investment Management up year-over-year primarily on Total revenue by line of business: higher market levels and the weaker U.S. dollar, Investment Management $714 11% 3% partially offset by MM
Slide 16: Other Segment
Other Segment FINANCIAL HIGHLIGHTS ($ millions unless otherwise noted) 4Q20 3Q20 4Q19 › Fee revenue, net securities gains (losses) and net $(23) $11 $817 interest expense include corporate treasury and other Fee (loss) revenue Net securities gains (losses) 6 9 (23) investment activity, including hed
Slide 17: Unique Franchise with Global Scale and Leading Positions
Unique Franchise with Global Scale and Leading Positions Powerful platform and interconnected businesses position us well for future growth › World’s largest custodian at $41tr AUC/A(a) Securities Asset Servicing › 1,000+ clients across our suite of software/IP-based products Servicing › Global fina
Slide 18: 2021 Outlook
2021 Outlook Organic fee growth: expect ~1.5% organic fee growth in 2021 and accelerating in 2022 as benefits of sustained investments become more meaningful Revenue: impacted by headwinds from low-rate environment and associated money market fee waivers, offsetting organic fee growth Expenses: expe
Slide 19: Appendix
Ye BNY MELLON Appendix
Slide 20: Footnotes
Footnotes 4Q20 Financial Highlights, Page 4 a) Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense. b) See page 24 for corresponding reconciliation of this non-GAAP measure. 4Q20 Key Financial Trends, Page 5 a) 4Q19
Slide 21: Fourth Quarter – Impact of Notable Items
Fourth Quarter – Impact of Notable Items 4Q20 4Q19 4Q20 vs 4Q20 vs Results Results 4Q19 4Q19 Results Notable Non- Results Notable Non- Results – Results – ($ millions, except per share amounts and unless otherwise noted) - GAAP i t e m s (a) GAAP - GAAP i t e m s (a) GAAP GAAP Non-GAAP Fee revenue $
Slide 22: Full Year – Impact of Notable Items
Full Year – Impact of Notable Items 2020 2019 2020 vs 2020 vs Results Results 2019 2019 Results Notable Non- Results Notable Non- Results - Results – ($ millions, except per share amounts and unless otherwise noted) - GAAP i t e m s (a) GAAP - GAAP i t e m s (a) GAAP GAAP Non-GAAP Fee revenue $12,71
Slide 23: Money Market Fee Waiver Impact
Money Market Fee Waiver Impact ($ millions) 4Q20 3Q20 2Q20 1Q20 2020 Investment services fees: Asset servicing fees $(13) $(1) $- $- $(14) Clearing services fees (64) (57) (50) (9) (180) Issuer services fees (6) (1) (1) - (8) Treasury services fees (2) (3) (2) - (7) Total investment services fees (8
Slide 24: Return on Common Equity and Tangible Common Equity Reconciliation
Return on Common Equity and Tangible Common Equity Reconciliation ($ millions) 4Q20 3Q20 4Q19 2020 2019 Net income applicable to common shareholders of The Bank of New York Mellon Corporation – GAAP $702 $876 $1,391 $3,423 $4,272 Add: Amortization of intangible assets 26 26 28 104 117 Less: Tax impa
Slide 25: Pre-tax Operating Margin Reconciliation – Investment and Wealth Management Business
Pre-tax Operating Margin Reconciliation – Investment and Wealth Management Business ($ millions) 4Q20 3Q20 4Q19 Income before income taxes – GAAP $311 $245 $240 Total revenue – GAAP $990 $918 $971 Less: Distribution and servicing expense 76 85 93 Adjusted total revenue, net of distribution and servi
Slide 26: Cautionary Statement
Cautionary Statement A number of statements in The Bank of New York Mellon Corporation’s (the “Corporation”) presentations, the accompanying slides and the responses to your questions are “forward-looking statements.” Words such as “estimate,” “forecast,” “project,” “anticipate,” “likely,” “target,”
Slide 27: BNY Mellon
Ye BNY MELLON
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