The Bank Of New York Mellon Corporation · NYSE:BNY
The Bank Of New York Mellon — Bank of New York Mellon — Q4 2023 Earnings Presentation
29 slides from The Bank Of New York Mellon's earnings presentation, Jan 12, 2024
Slide 1: 4Q23 Financial Highlights
January 12, 2024 4Q FINANCIAL 23 HIGHLIGHTS
Slide 2: Agenda
1 AGENDA PAGE 1 4Q and FY 2023 Financial Results 1 2 Financial Outlook • 2024 Outlook • Medium-term Targets 13 3 Appendix 21
Slide 3: 2023 Financial Results
(a) Note: See page 22 in the Appendix for corresponding footnotes. (b) Represents a non-GAAP measure. See page 24 in the Appendix for the corresponding reconciliation of the non-GAAP measure of ROTCE. (c) Each of the below line items represents a non-GAAP measure. See pages 24 and 25 in the Appendix
Slide 4: Generated Solid Financial Results in 2023
6.0% Generated Solid Financial Results in 2023... Adj. Revenue Growth(a): Adj. Pre-tax Margin(a): Tier 1 Leverage: Adj. ROTCE(b): Adj. EPS Growth(a): ...And Delivered on 2023 Commitments: Net Interest Revenue Growth: Adj. Expense Growth(a): Total Payout Ratio: Adj. Operating Leverage(a): • Revenue G
Slide 5: Strategic Pillars
[DRAFT – 1/11/2024 10:47 PM] 4 STRATEGIC PILLARS POWER OUR CULTURE Be a Top Talent Destination Invest in Our People Elevate Experiences & Sense of Belonging RUN OUR COMPANY BETTER Simplify Processes & Embrace Platforms Embrace New Technologies Prioritize Resilience BE MORE FOR OUR CLIENTS Deliver Mo
Slide 6: 2023 Delivery Against Our Strategic Pillars
5 2023 Delivery Against Our Strategic Pillars POWER OUR CULTURE RUN OUR COMPANY BETTER BE MORE FOR OUR CLIENTS Executing on our commitments and seeding for the future — Wove Wealth advisory platform, Buyside Trading Solutions, Bankify, FedNow, intra- day repo settlement, BondWise and more • Re-imagi
Slide 7: 4Q23 Financial Results
4Q23 vs. $mm, except per share data or unless otherwise noted 4Q23 3Q23 4Q22 3Q23 4Q22 Income Statement Investment services fees $2,242 $2,230 $2,173 1% 3% Investment management and performance fees 743 777 783 (4) (5) Foreign exchange revenue 143 154 190 (7) (25) Other fee revenue 86 84 76 2 13 Tot
Slide 8: Capital and Liquidity
Note: See page 22 in the Appendix for corresponding footnotes. N/M – not meaningful. 4Q23 3Q23 4Q22 Consolidated regulatory capital ratios:(a) Tier 1 capital ($mm) $23,064 $23,093 $22,856 Average assets for Tier 1 leverage ratio ($mm) 383,899 379,630 396,643 Tier 1 leverage ratio 6.0% 6.1% 5.8% Comm
Slide 9: Net Interest Revenue and Balance Sheet Trends
1,056 1,128 1,100 1,016 1,101 4Q22 1Q23 2Q23 3Q23 4Q23 4Q23 vs. 4Q23 3Q23 4Q22 Total assets $402 1% (3)% Total interest-earning assets $344 2% (2)% Cash and reverse repo 145 5 7 Loans 66 3 (3) Investment securities 127 (3) (12) Noninterest-bearing $53 —% (31)% Interest-bearing 220 5 6 Total deposits
Slide 10: Securities Services
4Q23 vs. $mm, unless otherwise noted 4Q23 3Q23 4Q22 Asset Servicing $975 (1)% —% Issuer Services 285 1 5 Total investment services fees $1,260 —% 1% Foreign exchange revenue 118 10 (21) Other fees 54 4 (2) Investment and other revenue 112 N/M N/M Net interest revenue 635 6 (3) Total revenue $2,179 4
Slide 11: Market and Wealth Services
Note: See page 22 in the Appendix for corresponding footnotes. N/M – not meaningful. 4Q23 vs. $mm, unless otherwise noted 4Q23 3Q23 4Q22 Pershing $506 —% 1% Treasury Services 179 4 5 Clearance and Collateral Management 288 4 16 Total investment services fees $973 2% 6% Foreign exchange revenue 21 —
Slide 12: Investment and Wealth Management
4Q23 vs. $mm, unless otherwise noted 4Q23 3Q23 4Q22 Investment management fees $723 (3)% (4)% Performance fees 19 N/M N/M Distribution and servicing fees 66 6 22 Other fees (55) N/M N/M Investment and other revenue (121) N/M N/M Net interest revenue 44 16 (15) Total revenue $676 (18)% (18)% Provisio
Slide 13: Other Segment
$mm, unless otherwise noted 4Q23 3Q23 4Q22 Fee revenue $(17) $6 $12 Investment and other revenue (9) 28 (442) Net interest (expense) (15) (24) (48) Total revenue $(41) $10 $(478) Provision for credit losses (6) (13) 2 Noninterest expense 693 24 153 Income (loss) before income taxes $(728) $(1) $(633
Slide 14: Agenda
13 AGENDA PAGE 1 4Q23 and FY 2023 Financial Results 1 2 Financial Outlook • 2024 Outlook • Medium-term Targets 13 3 Appendix 21
Slide 15: 2024 Financial Outlook
14 2024 Financial Outlook 2023 Net Interest Revenue Total Payout Ratio Expenses (excluding notable items) $4.3bn Down ~10% YoY 2024 Key Assumptions 123% $12.3bn ~ Flat YoY ≥100% Higher re-investment yields Deposit margin compression Modest deposit run-off amid continued QT Continued investments Effi
Slide 16: Continued Delivery Against Strategic Pillars Drives Improved Results
15 Continued Delivery Against Strategic Pillars Drives Improved Financial Results in 2024 and Beyond BE MORE FOR OUR CLIENTS RUN OUR COMPANY BETTER POWER OUR CULTURE MEDIUM-TERM FINANCIAL TARGETS ≥33% Pre-tax Margin ≥23% ROTCE 5.5 - 6% Tier 1 Leverage Ratio ~11% CET1 Ratio • Deliver Enhanced Commerc
Slide 17: Securities Services
16 Information Classification: HIGHLY CONFIDENTIAL 2023 Medium-term Target ≥30% 25% Segment Pre-tax Margin Market Positions Securities Services Focus on margin expansion through operational efficiency and profitable growth Strategic Priorities Drive Cost-to-Serve Down #1 Global Custodian #1 Global P
Slide 18: Market and Wealth Services
1 Information Classification: HIGHLY CONFIDENTIAL7 Market and Wealth Services Focus on accelerating growth on the back of self-funded investments 2023 Medium-term Target ~45%45% Segment Pre-tax Margin Market Positions #1 Clearing firm for broker-dealers and Top 3 RIA Custodian #1 Global Provider of
Slide 19: Investment and Wealth Management
18 Information Classification: HIGHLY CONFIDENTIAL Investment and Wealth Management Focus on margin expansion through growth and efficiency initiatives Segment Pre-tax Margin Market Positions Investment Mgmt. Fee Growth (’19-’23 CAGR) Top 15 Global Asset Manager Top 10 U.S. Private Bank Investment a
Slide 20: Capital Management Philosophy
19 Information Classification: HIGHLY CONFIDENTIAL Common Equity Tier 1 Tier 1 leverage Capital Management Philosophy Track record of disciplined capital deployment and significant excess capital generation 2023 Medium-term Target 6.0% 5.5 - 6% 2023 Medium-term Target 11.6% ~11% Capital Deployment •
Slide 21: BNY Mellon Medium-term Targets
20 BNY Mellon Medium-term Targets BE MORE FOR OUR CLIENTS RUN OUR COMPANY BETTER POWER OUR CULTURE MEDIUM-TERM FINANCIAL TARGETS ≥33% Pre-tax Margin ≥23% ROTCE 5.5 - 6% Tier 1 Leverage Ratio ~11% CET1 Ratio Note: Medium-term refers to a 3-5 year time horizon.
Slide 22: Agenda
21 AGENDA PAGE 1 4Q23 and FY 2023 Financial Results 1 2 Financial Outlook • 2024 Outlook • Medium-term Targets 13 3 Appendix 21
Slide 23: Footnotes
Footnotes Page 2 – 2023 Financial Results (a) Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense. Page 6 – 4Q23 Financial Results (a) Operating leverage is the rate of increase (decrease) in total revenue less the
Slide 24: Footnotes
Footnotes Page 17 – Market and Wealth Services Outlook (a) LaRoche Research Partners, “US Broker Clearing Relationship Changes 2022,” based on number of broker-dealer clients. Registered Investment Advisor rankings sourced from “Cerulli Report, U.S. RIA Marketplace 2023,” Cerulli Associates. (b) Fin
Slide 25: Reconciliation of Non-GAAP Measures
$mm 4Q23 3Q23 4Q22 2023 2022 Net income applicable to common shareholders of The Bank of New York Mellon Corporation — GAAP $ 256 $ 956 $ 509 $ 3,148 $ 2,362 Add: Amortization of intangible assets 14 15 16 57 67 Less: Tax impact of amortization of intangible assets 4 3 4 14 16 Adjusted net income ap
Slide 26: Reconciliation of Non-GAAP Measures – Impact of Notable Items
Select Income Statement Data Reconciliation of Non-GAAP Measures – Impact of Notable Items 4Q23 vs. 2023 vs. $mm 4Q23 3Q23 4Q22 3Q23 4Q22 2023 2022 2022 Total revenue – GAAP $ 4,311 $ 4,374 $ 3,918 (1) % 10 % $ 17,502 $ 16,377 7 % Less: Reduction in the fair value of a contingent consideration recei
Slide 27: Reconciliation of Non-GAAP Measures – Investment and Wealth Management
4Q23 vs. $mm 4Q23 3Q23 4Q22 4Q22 2023 2022 Income before income taxes — GAAP $ (5) $ 164 $ 125 (104)% $ 381 $ 48 Less: Reduction in the fair value of a contingent consideration receivable related to a prior year divestiture (144) — — (144) — Disposal (loss) gain — — (11) — (11) Revenue reduction rel
Slide 28: Cautionary Statement
27 Cautionary Statement A number of statements in our presentations, the accompanying slides and the responses to questions on our conference call discussing our quarterly results may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995,
Slide 29: BNY Mellon
MELLON
Bank of New York Mellon — Q4 2023 Earnings Presentation on 6ix