The Bank of New York Mellon Corporation’s BK fourth-quarter 2024 adjusted earnings of $1.72 per share surpassed the Zacks Consensus Estimate of $1.56. Also, the bottom line reflected a jump of 33.3% from the prior-year quarter.

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BK shares gained 2.6% in pre-market trading on the better-than-expected results.

Results have been primarily aided by a rise in fee revenues and net interest income (NII) alongside lower provisions and non-interest expenses. Assets under custody and/or administration (AUC/A) and assets under management (AUM) balances grew on a solid market rally. On the other hand, capital position worsened during the quarter.

The results excluded certain non-recurring items. Considering those, net income applicable to common shareholders (GAAP basis) was $1.13 billion or $1.54 per share, up from $162 million or 21 cents per share in the year-ago quarter. We had projected net income applicable to common shareholders of $1.07 billion.

For 2024, adjusted earnings of $6.03 per share surpassed the Zacks Consensus Estimate of $5.87. The bottom line reflects a rise of 18.9% from the prior-year period. Net income applicable to common shareholders (GAAP basis) was $4.34 billion or $5.80 per share, up from $3.07 billion or $3.89 per share recorded in the year-ago period.

BK’s Revenues Increase, Expenses Decline

Total revenues in the fourth quarter increased 11.2% year over year to $4.85 billion. The top line surpassed the Zacks Consensus Estimate of $4.66 billion.

For 2024, revenues were $18.61 billion, up 5.2% year over year. The top line outpaced the Zacks Consensus Estimate of $18.44 billion.

NII was $1.19 billion, up 8.4% year over year. The rise reflected higher investment securities portfolio yields and balance sheet growth, partly offset by changes in the deposit mix. Our estimate for the metric was $1.01 billion.

Net interest margin (NIM) expanded 6 basis points (bps) to 1.32%. Our estimate for NIM was 1.17%.

Total fee and other revenues increased 1.5% year over year to $3.65 billion. The rise was primarily driven by an increase in all the components. Our estimate for the same was $3.58 billion.

Total non-interest expenses (GAAP basis) were $3.36 billion, down 16% from the prior-year quarter. The decline was due to a fall in costs related to staff charges, net occupancy charges, distribution and servicing costs, business development costs and bank assessment charges. We had projected non-interest expenses of $3.10 billion.

BNY Mellon’s Asset Balances Improve

As of Dec. 31, 2024, AUM was $2.03 trillion, up 3% year over year. The rise reflected higher market values, partially offset by the unfavorable impact of a stronger U.S. dollar. Our estimate for AUM was $2.21 trillion.

AUC/A of $52.1 trillion increased 9% year over year, primarily reflecting higher market values, client inflows and net new business, partially offset by an adverse impact of a stronger U.S. dollar.

BK’s Credit Quality Improves

The allowance for loan losses, as a percentage of total loans, was 0.41%, down 4 bps from the prior-year quarter. As of Dec. 31, 2024, non-performing assets were $179 million, down significantly from $237 million in the year-ago quarter.

In the reported quarter, the company recorded $20 million of provision for credit losses. In the prior-year quarter, provisions were $84 million. We had expected the metric to be $7.1 million.

BNY Mellon Capital Position Deteriorates

As of Dec. 31, 2024, the common equity Tier 1 ratio was 11.2%, down from 11.5% as of Dec. 31, 2023. Tier 1 leverage ratio was 5.7%, down from 6% as of Dec. 31, 2023.

BK’s Share Repurchase Update

During the reported quarter, BNY Mellon repurchased shares worth $750 million.

Our Take on BNY Mellon

Relatively higher interest rates, BK’s global expansion efforts and a strong balance sheet position are likely to keep supporting its top-line growth. Also, robust AUM balance is another positive. However, concentration risk due to the company’s higher dependence on fee-based revenues, higher funding costs and elevated expenses are worrisome.

Currently, BNY Mellon carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Release Dates of Other Major Banks

BankUnited, Inc. BKU is scheduled to report quarterly results on Jan. 22. The Zacks Consensus Estimate for BKU’s fourth-quarter earnings has been unchanged over the past seven days.

Truist Financial Corporation TFC is slated to report quarterly results on Jan. 17. The Zacks Consensus Estimate for TFC’s fourth-quarter earnings has been revised 1.1% downward over the past seven days.

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