Bank of New York Mellon grew its core custody and wealth management businesses while tamping down operating expenses, resulting in solid second-quarter increases in revenue and net income.
The nation's oldest bank reported record revenue of $4.6 billion for the quarter ending June 30. Net income of $1.17 billion rose 9% from the same period in 2023.
The world's largest custodian, BNY reported assets under custody or administration totaling $49.5 trillion on June 30, while assets under administration eclipsed $2 trillion. Both figures represented strong year-over-year increases – 6% and 7% respectively – pushing quarterly fee income to a record $3.4 billion.
On the expense side, the $428.5 billion-asset BNY reported noninterest expenses of $3.07 billion for the three months ending June 30. That total was down 1% year over year and marked just the second time in eight quarters that operating expenses came in below the $3.1 billion threshold.
"We're pleased with the progress we've made so far," Robin Vince, president and CEO-elect of the bank, said on a conference call with reporters. "We're pleased with how it's reflected in both improved financial performance … but also our building momentum. We're in full execution mode as a team."
BNY's second-quarter earnings "give us incremental confidence in our ability to drive positive operating leverage in 2024, which is what the market is really looking for," Chief Financial Officer Dermot McDonough said on the conference call.
In a research note Friday, Evercore ISI Senior Research Analyst Glenn Schorr wrote that BNY continues to make relatively muted revenue gains "go a long way." The bank notched a 2% year-over-year increase in revenue since Q1.
"A bit of a sleepy quarter, but management continues on its plan to have the whole combine to turn modest revenue growth into high-single-digit, low-double-digit earnings-per-share growth," Schorr wrote.
Along with the rise in assets under management, BNY saw revenue generated by its investment management and wealth management businesses jump 1% year over year. Tight expense control helped boost the segment's pretax profits 15%, to $149 million.
Those results come barely 10 days after BNY announced a significant leadership change, giving newly hired Global Head of Investments and Wealth Jose Minaya responsibility for both its asset investment and wealth management functions. "We decided we're going to be able to do an even better job if we bring together our large, top-15 global asset manager and our [top-10] U.S. private bank," Vince said. Minaya's hire "represents an opportunity to do that. He brings deep … retail and institutional experience, retirement wealth planning. He has a great execution track record and he's going to bring a bunch of fresh perspectives."
Minaya joins BNY from TIAA's Nuveen unit, where he had served more than four years as CEO. Minaya succeeds Global Head of Investments
Friday's report appeared to satisfy investors. BNY shares were up more than 5% in midday trading, to $64.75
