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Bank of New York Mellon Corp (BK)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered strong top-line and profitability: total revenue $4.847B (+11% YoY, +4% QoQ), diluted EPS $1.54 (GAAP) and $1.72 adjusted; adjusted pre-tax margin expanded to 34% and ROTCE to 26.1% .
  • Fee revenue rose 9% YoY to $3.513B, Net Interest Income (NII) increased 8% YoY to $1.194B; FX revenue +24% YoY on higher client activity; operating leverage positive on an adjusted basis .
  • Segment strength: Market & Wealth Services revenue +11% YoY with 48% pre-tax margin; Securities Services +7% YoY; Investment & Wealth Management +29% YoY with notable non-GAAP improvements .
  • 2025 outlook: NII expected up mid-single digits YoY; fee revenue up; expenses ex-notables +1–2%; payout ratio ~100% ±; effective tax rate 22–23%; tier 1 leverage target 5.5–6% (managed at upper end) .

What Went Well and What Went Wrong

What Went Well

  • “Record net income of $4.3B on record revenue of $18.6B; ROTCE 23% for the year; significant positive operating leverage” (CEO) .
  • Market & Wealth Services pre-tax margin reached 48% with broad-based fee growth (Pershing +9% YoY, Treasury Services +15% YoY, Clearance & Collateral +13% YoY) .
  • FX revenue and client activity strong; ETF AUCA up >60% YoY; continued wins and onboarding across platforms, plus government Direct Express award in Treasury Services .

What Went Wrong

  • Capital ratios declined sequentially: CET1 11.2% (−70 bps QoQ), Tier 1 leverage 5.7% (−29 bps QoQ) due to AOCI decline and capital returns .
  • Noninterest expense rose 8% QoQ on severance and litigation reserves; notable items totaled $165M in noninterest expense .
  • Provision for credit losses ($20M) driven by reserve increases related to commercial real estate exposure; AUM down 5% sequentially on market/currency .

Financial Results

Consolidated performance vs prior year and quarter

MetricQ4 2023Q3 2024Q4 2024
Total Revenue ($USD Billions)$4.358 $4.648 $4.847
Fee Revenue ($USD Billions)$3.214 $3.404 $3.513
Net Interest Income ($USD Billions)$1.101 $1.048 $1.194
Diluted EPS (GAAP, $)$0.21 $1.50 $1.54
Diluted EPS (Adjusted, $)$1.29 $1.52 $1.72
Pre-tax Margin (%)6% 33% 30%
Pre-tax Margin (Adjusted, %)29% 33% 34%

Segment breakdown

SegmentQ4 2023 Revenue ($MM)Q3 2024 Revenue ($MM)Q4 2024 Revenue ($MM)Q4 2023 Pre-tax MarginQ3 2024 Pre-tax MarginQ4 2024 Pre-tax Margin
Securities Services$2,179 $2,214 $2,324 21% 29% 28%
Market & Wealth Services$1,496 $1,545 $1,667 42% 46% 48%
Investment & Wealth Management$679 $849 $873 (1)% 21% 20%
Other$6 $33 $(19) N/AN/AN/A

KPIs and balance sheet

KPIQ4 2023Q3 2024Q4 2024
AUC/A (trillions)$47.8 $52.1 $52.1
AUM (trillions)$1.97 $2.14 $2.03
Avg Deposits ($BN)$273.1 $284.7 $286.5
Net Interest Margin (%)1.26% 1.16% 1.32%
CET1 Ratio (%)11.5% 11.9% 11.2%
Tier 1 Leverage Ratio (%)6.0% 6.0% 5.7%

Trend vs prior two quarters (EPS and revenue)

MetricQ2 2024Q3 2024Q4 2024
Total Revenue ($USD Billions)$4.597 $4.648 $4.847
Diluted EPS (GAAP, $)$1.52 $1.50 $1.54

Non-GAAP adjustments: Q4 adjusted diluted EPS $1.72 (adds back severance, litigation reserves, FDIC assessment impact); notable items reduced GAAP EPS by $0.18 in Q4 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest IncomeFY 2025n/aUp mid-single-digit % YoY New
Fee RevenueFY 2025n/aUp YoY New
Expenses (ex-notables)FY 2025FY 2024: roughly flat (ex-notables) +1–2% YoY Raised modestly vs 2024 framework
Effective Tax RateFY 2025FY 2024 actual 22.3% 22–23% New
Total Payout RatioFY 2025100%+ for 2024 (returned 102%) ~100% ± of earnings; pace calibrated to macro/balance sheet Maintained framework
Tier 1 Leverage TargetOngoing5.5–6.0% Manage to upper end given rate volatility Maintained; emphasis upper end
Medium-term targetsThrough-the-cycle≥33% pre-tax margin, ≥23% ROTCE Reaffirmed; progress in 2024 Maintained
DividendQ1 2025$0.47 declared in Q3 2024 $0.47 per common share declared Jan 15, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Platforms Operating Model~25% employees transitioned by Sep; breakout planned >50% by end of March; ~80% by year-end 2025; benefits accrue over ~1 year post-transition Accelerating adoption
Wove wealth tech platform2024 rev guide $30–40M; strong client demand Exit rate ~$75M; 36 clients live, 41 signed; 2025 incremental $60–70M Ramp-up
Archer acquisition (managed accounts)Announced; strategic fit across lines Closed Nov 1; integration to enhance managed accounts distribution/servicing Integration progress
Treasury Services: Direct Express awardn/aSelected as financial agent (5-year program) starting Jan 3, 2025 Expanding payments franchise
NII trajectory & deposit mix2024 NII guide down 10%; resilience in H1 2025 NII up mid-single digits; noninterest-bearing moderating; QoQ NII growth from reinvestment Improving
FX, clearance, repoElevated activity in Q2/Q3 Continued strength; cleared repo ~5% of NII; pipeline robust Sustained
AI investment“All-in” stance; tech spend elevated ~$3.8B tech spend 2024; ~$0.5B incremental investments; ~35% employees enabled for “Eliza” AI Scaling deployment
Capital ratiosQ2 CET1 11.4%; Q3 CET1 11.9% CET1 11.2%; Tier1 leverage 5.7% (down QoQ) Slightly pressured QoQ

Management Commentary

  • “BNY closed out 2024 with a strong performance, delivering record net income of $4.3 billion on record revenue of $18.6 billion and generating a return on tangible common equity of 23% for the year.” – Robin Vince, President & CEO .
  • “We are entering 2025 with strong momentum... positioned to capture market beta and capitalize on evolving market trends while we remain focused on generating alpha through the continued transformation of the company.” – Robin Vince .
  • “Positive operating leverage continues to be our north star... we expect full-year 2025 NII to be up mid-single-digit percentage points year-over-year... expenses excluding notable items up ~1%–2%.” – Dermot McDonogh, CFO .
  • “We have a unique strength in the tripod between CIO, GLS leadership, and our Treasurer... driving the strength of the franchise and our mid-single-digit NII guide.” – CFO .

Q&A Highlights

  • Operating leverage resilience: Management emphasized delivering positive total and fee operating leverage through-cycle; flexibility across NII, fees, and expenses to defend margins ≥33% .
  • NII cadence and deposit mix: 2025 guide assumes NIB moderation (embedded $44–46B) and continued reinvestment of maturing securities at higher yields; QoQ NII up 14% on reinvestment, offset by deposit margin compression .
  • Pershing net new assets: Q4 net new assets $41B including a large onboarding; mid-single digit NNA growth targeted through-cycle across RIAs, broker-dealers, banks .
  • Platforms Operating Model: Benefits accrue over time; 2025 a milestone year; expectation for improved top-line resilience and efficiency over 2025–2029 .
  • AI investment and tech spend: ~$3.8B 2024 tech spend; ~$0.5B incremental investments in 2025; AI hub with hundreds of employees; deployment accelerating (“Eliza”) .
  • Capital returns and ratios: Payout ~100% ± of earnings in 2025; manage Tier 1 leverage at upper end of 5.5–6.0% in a volatile rate backdrop .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue could not be retrieved due to S&P Global daily request limit. No estimate comparison provided.
  • As a result, we cannot formally flag beats/misses vs consensus for Q4 2024. We recommend re-querying SPGI to update estimate context when access is restored.

Key Takeaways for Investors

  • Mix-driven revenue expansion with broad-based fee growth and QoQ NII uplift from reinvestment suggests continued earnings resilience into 2025; adjusted pre-tax margin already at 34% supports medium-term ≥33% target .
  • Market & Wealth Services remains a high-margin growth engine (48% margin), with Wove ramping (exit ~$75M 2024; +$60–70M incremental in 2025) and Pershing onboarding driving NNA momentum .
  • Securities Services benefits from ETF/alternatives servicing momentum and FX activity; continued asset servicing wins and CLO trustee share gains bolster visibility .
  • Payments optionality increases via the Direct Express award, adding scale to Treasury Services and potentially diversifying fee sources amid macro uncertainty .
  • Capital ratios dipped QoQ on buybacks/AOCI; management will run Tier 1 leverage at upper end of target range while maintaining ~100% payout—expect calibrated repurchases vs macro/balance sheet needs .
  • Watch commercial real estate credit reserves and litigation/severance notable items; absent these, adjusted expense growth is contained (+1–2% in 2025), supporting positive operating leverage .
  • Tactical focus: leverage FX, clearance/collateral volumes, ETF and managed account tailwinds (Archer) while scaling platform operating model and AI to drive both revenue resilience and efficiency .
Note: All quantitative and qualitative claims above reference BNY’s Q4 2024 Form 8‑K earnings materials, financial supplement and quarterly update presentation, and Q4 2024 earnings call transcript. S&P Global consensus estimates were unavailable at time of analysis due to request limits.