BNY Mellon Reports First Quarter 2021 Earnings of $858 Million or $0.97 Per Common Share

NEW YORK, April 16, 2021 /PRNewswire/ --

The Bank of New York Mellon Corporation ("BNY Mellon") (NYSE: BK) today reported:

KEY DRIVERS (comparisons are 1Q21 vs. 1Q20, unless otherwise stated)

• Total revenue decreased 5%, primarily reflecting:
• Fee revenue increased 1% primarily reflecting the positive impact of higher markets, higher client volumes and balances and the favorable impact of a weaker U.S. dollar, partially offset by higher money market fee waivers. Excluding money market fee waivers, fee revenue increased 6% (a).
• Other revenue for 1Q21 includes a $39 million impairment related to a renewable energy investment.
• Net interest revenue decreased 20% primarily reflecting lower interest rates on interest-earning assets. This was partially offset by the benefit of lower deposit and funding rates, higher deposit balances and a larger securities portfolio.
• Provision for credit losses was a benefit of $83 million primarily driven by an improvement in the macroeconomic forecast.
• Noninterest expense increased 5% primarily reflecting higher staff expense, the unfavorable impact of a weaker U.S. dollar and technology-related expenses, partially offset by lower business development (travel and marketing) and distribution and servicing expenses. Staff expense includes the impact of an incentive reversal in 1Q20, the impact of a higher share price on share-based awards and increased expense for awards to retirement eligible employees.
• Effective tax rate of 19.2%.

Assets under custody and/or administration ("AUC/A") and Assets under management ("AUM")

• AUC/A of $41.7 trillion, increased 18%, primarily reflecting higher market values, net new business and the favorable impact of a weaker U.S. dollar.
• AUM of $2.2 trillion, increased 23%, primarily reflecting higher market values, the favorable impact of a weaker U.S. dollar (principally versus the British pound) and net inflows.

Capital and liquidity

• Repurchased 16.8 million common shares for $699 million; Dividends of $277 million to common shareholders (including dividend-equivalents on share-based awards).
• Return on common equity ("ROE") of 9%; Return on tangible common equity ("ROTCE") of 16% (a).
• Common Equity Tier 1 ("CET1") ratio – 12.6%.
• Tier 1 leverage ratio – 5.8%.
• Supplementary leverage ratio ("SLR") – 8.1% (b).
• Average liquidity coverage ratio ("LCR") – 110%.
• Total Loss Absorbing Capacity ("TLAC") ratios exceed minimum requirements.

KEY DRIVERS

• The drivers of the total revenue variances by line of business are indicated below. Also see page 6 for information related to money market fee waivers.
• Asset Servicing – The year-over-year decrease includes lower interest rates and foreign exchange revenue and higher money market fee waivers, partially offset by higher client volumes and market values. Sequentially, higher client and foreign exchange volumes were partially offset by higher money market fee waivers.
• Pershing – The year-over-year decrease primarily reflects the impact of money market fee waivers and a one-time fee recorded in 1Q20, partially offset by higher market values and client volumes. The sequential increase primarily reflects higher clearance volumes and market values.
• Issuer Services – The year-over-year and sequential decreases primarily reflect lower interest rates and higher money market fee waivers in Corporate Trust and lower Depositary Receipts revenue.
• Treasury Services – The year-over-year and sequential decreases primarily reflect lower interest rates and higher money market fee waivers. The year-over-year decrease was partially offset by higher payment volumes and deposit levels.
• Clearance and Collateral Management – The year-over-year decrease primarily reflects lower interest rates and intraday credit fees. The sequential increase primarily reflects higher clearance volumes.
• Noninterest expense increased year-over-year primarily reflecting technology-related expense, higher staff, volume-related and litigation expenses and the unfavorable impact of a weaker U.S. dollar. Sequentially, noninterest expense decreased primarily reflecting lower litigation and severance expenses.

KEY DRIVERS

• The drivers of the total revenue variances by line of business are indicated below. Also see page 6 for information related to money market fee waivers.
• Investment Management – The year-over-year increase primarily reflects the impact of higher market values, equity investment gains, including seed capital, and the favorable impact of a weaker U.S. dollar, partially offset by the impact of money market fee waivers. The sequential decrease primarily reflects the impact of money market fee waivers and lower equity investment gains, including seed capital, partially offset by higher market values and the favorable impact of a weaker U.S. dollar.
• Wealth Management – Total revenue increased year-over-year and sequentially, primarily reflecting the impact of higher market values. The sequential increase also reflects a loss on a business sale recorded in 4Q20.
• Noninterest expense increased year-over-year primarily reflecting higher staff expense and the unfavorable impact of a weaker U.S. dollar, partially offset by lower distribution and servicing and other expenses. Sequentially, the increase in noninterest expense primarily reflects timing of other staff expense, partially offset by lower severance expense.

OTHER SEGMENT primarily includes leasing operations, certain corporate treasury activities, derivatives, business exits and other corporate revenue and expense items.

KEY DRIVERS

• Total revenue includes corporate treasury and other investment activity, including hedging activity which offsets between fee and other revenue and net interest expense. Other revenue decreased year-over-year and sequentially, primarily reflecting an impairment of a renewable energy investment. The sequential decrease in other revenue was partially offset by a loss on a sale of a business recorded in 4Q20.
• Noninterest expense increased year-over-year primarily reflecting higher staff expense. The sequential decrease primarily reflects real estate charges and severance expense both recorded in 4Q20, partially offset by higher other staff expense.

MONEY MARKET FEE WAIVERS

The following table presents the impact of money market fee waivers on our consolidated fee revenue, net of distribution and servicing expense.  In 1Q21, the net impact of money market fee waivers was $188 million, up from $134 million in 4Q20, driven by low short-term interest rates and higher money market balances. 

• CET1 capital totaled $21.1 billion at March 31, 2021, a decrease of $785 million compared with Dec. 31, 2020.  The decrease primarily reflects unrealized losses on securities available-for-sale and capital deployed through common stock repurchases and dividends, partially offset by capital generated through earnings.

• Net interest revenue decreased year-over-year, primarily reflecting lower interest rates on interest-earning assets. This was partially offset by the benefit of lower deposit and funding rates, higher deposit balances and a larger securities portfolio.
• Sequentially, the decrease was primarily driven by lower interest rates on interest-earning assets. This was partially offset by the benefit of lower deposit and funding rates, and higher deposit and loan balances.

REPORTING CHANGES

In order to combine items of a similar nature within total revenue and to simplify our income statement presentation, in 1Q21 we made the following reporting changes.  The reclassifications had no impact on consolidated total revenue or total revenue for the business segments.  Prior periods were reclassified to be comparable with the current period presentation.

• Other trading revenue was reclassified from foreign exchange and other trading revenue to investment and other income.
• Foreign exchange and other trading revenue was renamed foreign exchange revenue.
• The impact of foreign currency remeasurement was reclassified from investment and other income to foreign exchange revenue.
• Income (loss) from consolidated investment management funds was reclassified to investment and other income.
• Investment and other income was reclassified from fee revenue to other revenue. Other revenue includes investment and other income and net securities gains (losses).

In addition, the assets and liabilities of consolidated investment management funds were reclassified to other assets and other liabilities, respectively, on the consolidated balance sheet.  The reclassifications had no impact on total assets or total liabilities.  Prior periods were reclassified to be comparable with the current period presentation.

See "Reporting Changes" in the Financial Supplement available at www.bnymellon.com for additional information.

The table below summarizes the effects of the reclassifications on the consolidated financial statements. 

The table below summarizes the effects of the reclassifications on the Investment Services business and the Other segment.

SUPPLEMENTAL INFORMATION – EXPLANATION OF GAAP AND NON-GAAP FINANCIAL MEASURES

BNY Mellon has included in this Earnings Release certain Non-GAAP financial measures on a tangible basis as a supplement to GAAP information, which exclude goodwill and intangible assets, net of deferred tax liabilities.  We believe that the return on tangible common equity is additional useful information for investors because it presents a measure of those assets that can generate income, and the tangible book value per common share is additional useful information because it presents the level of tangible assets in relation to shares of common stock outstanding. 

Net interest revenue, on a fully taxable equivalent ("FTE") basis – Non-GAAP and net interest margin (FTE) – Non-GAAP and other FTE measures include the tax equivalent adjustments on tax-exempt income which allows for the comparison of amounts arising from both taxable and tax-exempt sources and is consistent with industry practice.  The adjustment to an FTE basis has no impact on net income.

BNY Mellon has also included the adjusted pre-tax operating margin – Non-GAAP, which is the pre-tax operating margin for the Investment and Wealth Management business net of distribution and servicing expense that was passed to third parties who distribute or service our managed funds.  We believe that this measure is useful when evaluating the performance of the Investment and Wealth Management business relative to industry competitors.

For the reconciliations of these Non-GAAP measures, see "Supplemental Information – Explanation of GAAP and Non-GAAP Financial Measures" in the Financial Supplement available at www.bnymellon.com.

BNY Mellon has presented the measure of fee revenue, excluding money market fee waivers – Non-GAAP.  We believe that this measure is useful information for investors on the impact of current interest rates and market conditions on fee revenue growth rates and the performance of our business.

CAUTIONARY STATEMENT

A number of statements (i) in this Earnings Release, (ii) in our Financial Supplement, (iii) in our presentations and (iv) in the responses to questions on our conference call discussing our quarterly results and other public events may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about our capital plans, strategic priorities, financial goals, organic growth, performance, organizational quality and efficiency, investments, including in technology and product development, resiliency, capabilities, revenue, net interest revenue, money market fee waivers, fees, expenses, cost discipline, sustainable growth, company management, human capital management (including related ambitions, objectives, aims and goals), deposits, interest rates and yield curves, securities portfolio, taxes, business opportunities, divestments, volatility, preliminary business metrics and regulatory capital ratios and statements regarding our aspirations, as well as our overall plans, strategies, goals, objectives, expectations, outlooks, estimates, intentions, targets, opportunities, focus and initiatives, including the potential effects of the coronavirus pandemic on any of the foregoing.  These statements may be expressed in a variety of ways, including the use of future or present tense language.  Words such as "estimate," "forecast," "project," "anticipate," "likely," "target," "expect," "intend," "continue," "seek," "believe," "plan," "goal," "could," "should," "would," "may," "might," "will," "strategy," "synergies," "opportunities," "trends," "ambition," "objective," "aim," "future," "potentially," "outlook" and words of similar meaning may signify forward-looking statements.  These statements and other forward-looking statements contained in other public disclosures of BNY Mellon which make reference to the cautionary factors described in this Earnings Release are based upon current beliefs and expectations and are subject to significant risks and uncertainties (some of which are beyond BNY Mellon's control).  Actual results may differ materially from those expressed or implied as a result of a number of factors, including, but not limited to, the risk factors and other uncertainties set forth in BNY Mellon's Annual Report on Form 10-K for the year ended Dec. 31, 2020 and BNY Mellon's other filings with the Securities and Exchange Commission.  Statements about the effects of the current and near-term market and macroeconomic outlook on BNY Mellon, including on its business, operations, financial performance and prospects, may constitute forward-looking statements, and are based on assumptions that involve risks and uncertainties and that are subject to change based on various important factors (some of which are beyond BNY Mellon's control), including the scope and duration of the pandemic, actions taken by governmental authorities and other third parties in response to the pandemic, the availability, use and effectiveness of vaccines and the direct and indirect impact of the pandemic on us, our clients, customers and third parties.  Preliminary business metrics and regulatory capital ratios are subject to change, possibly materially, as BNY Mellon completes its Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.  All forward-looking statements in this Earnings Release speak only as of April 16, 2021, and BNY Mellon undertakes no obligation to update any forward-looking statement to reflect events or circumstances after that date or to reflect the occurrence of unanticipated events.

ABOUT BNY MELLON

BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle.  Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment and wealth management and investment services in 35 countries.  As of March 31, 2021, BNY Mellon had $41.7 trillion in assets under custody and/or administration, and $2.2 trillion in assets under management.  BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments.  BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK).  Additional information is available on www.bnymellon.com.  Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.

CONFERENCE CALL INFORMATION

Todd Gibbons, Chief Executive Officer, and Emily Portney, Chief Financial Officer, will host a conference call and simultaneous live audio webcast at 8:00 a.m. ET on April 16, 2021.  This conference call and audio webcast will include forward-looking statements and may include other material information. 

Investors and analysts wishing to access the conference call and audio webcast may do so by dialing (800) 390-5696 (U.S.) or (720) 452-9082 (International), and using the passcode: 444308, or by logging onto www.bnymellon.com/investorrelations.  Earnings materials will be available at www.bnymellon.com/investorrelations beginning at approximately 6:30 a.m. ET on April 16, 2021.  Replays of the conference call and audio webcast will be available beginning April 16, 2021 at approximately 2:00 p.m. ET through May 16, 2021 by dialing (888) 203-1112 (U.S.) or (719) 457-0820 (International), and using the passcode: 3619155.  The archived version of the conference call and audio webcast will also be available at www.bnymellon.com/investorrelations for the same time period.

SOURCE BNY Mellon

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