BNY MELLON REPORTS FOURTH QUARTER 2021 EARNINGS OF $822 MILLION OR $1.01 PER COMMON SHARE

NEW YORK, Jan. 18, 2022 /PRNewswire/ --

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

KEY DRIVERS (comparisons are 4Q21 vs. 4Q20, unless otherwise stated)

• Total revenue increased 4%, or 3% excluding notable items (a) primarily reflecting:
• Fee revenue increased 4% primarily reflecting the positive impact of higher market values and client volumes, partially offset by higher money market fee waivers. Excluding money market fee waivers, fee revenue increased 8% (a).
• Investment and other revenue increased primarily reflecting the 4Q20 losses on business sales.
• Net interest revenue decreased slightly primarily reflecting lower interest rates on interest-earning assets and the impact of hedging activities (primarily offset in fee and other revenue). This was partially offset by the benefit of lower funding and deposits rates and larger deposit and loan balances.
• Provision for credit losses was a benefit of $17 million primarily driven by an improvement in the macroeconomic forecast.
• Noninterest expense increased 1% primarily reflecting higher investments in growth, infrastructure and efficiency initiatives and higher revenue-related expenses, partially offset by lower litigation reserves, severance expense and real estate charges recorded in 4Q20. Excluding the notable items, noninterest expense increased 6% (a).
• Effective tax rate of 18.4%.

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

• AUC/A of $46.7 trillion, increased 14%, primarily reflecting net client inflows and higher market values, partially offset by the unfavorable impact of a stronger U.S. dollar.
• AUM of $2.4 trillion, increased 10%, primarily reflecting higher market values and net inflows.

Capital and liquidity

• Repurchased 22 million common shares for $1.2 billion; Dividends of $280 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 17% (a).
• Common Equity Tier 1 ("CET1") ratio – 11.1%.
• Tier 1 leverage ratio – 5.5%.
• Average liquidity coverage ratio ("LCR") – 109%.
• Total Loss Absorbing Capacity ("TLAC") ratios exceed minimum requirements.

KEY DRIVERS (comparisons are 2021 vs. 2020, unless otherwise stated)

• Total revenue increased 1% primarily reflecting:
• Fee revenue increased 4% primarily reflecting the positive impact of higher market values and client volumes, 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 9% (a).
• Net interest revenue decreased 12% primarily reflecting lower interest rates on interest-earning assets, partially offset by the benefit of lower funding and deposits rates and larger deposit, loan and securities balances.
• Provision for credit losses was a benefit of $231 million compared with a provision of $336 million in 2020. The decrease was primarily driven by an improvement in the macroeconomic forecast.
• Noninterest expense increased 5% primarily reflecting incremental investments in growth, infrastructure and efficiency initiatives, higher revenue-related expenses and the unfavorable impact of a weaker U.S. dollar, partially offset by lower occupancy (including the impact of real estate charges recorded in 2020) and lower severance expense.
• Effective tax rate of 18.9%.

Capital and liquidity

• Repurchased 89.7 million common shares for $4.6 billion; Dividends of $1.1 billion to common shareholders (including dividend-equivalents on share-based awards).
• ROE of 9%; ROTCE of 17% (a).

KEY DRIVERS

• The drivers of the total revenue variances by line of business are indicated below. Also see page 9 for information related to money market fee waivers.
• Asset Servicing – The year-over-year increase primarily reflects higher activity from existing clients, higher market values, strategic equity investment gains and net new business, partially offset by higher money market fee waivers and lower net interest revenue. The sequential increase primarily reflects higher foreign exchange revenue and net interest revenue, partially offset by lower strategic equity investment gains.
• Issuer Services – The year-over-year decrease primarily reflects higher money market fee waivers and lower fees in Corporate Trust, partially offset by higher Depositary Receipts revenue. The sequential decrease primarily reflects seasonally lower Depositary Receipts revenue and lower Corporate Trust fees, partially offset by higher net interest revenue.
• Noninterest expense decreased 1% year-over-year primarily reflecting lower litigation reserves and severance expense, partially offset by higher investments in growth, infrastructure and efficiency initiatives. Excluding the notable items, noninterest expense increased 3%. Sequentially, noninterest expense decreased 3% primarily reflecting lower litigation reserves, partially offset by higher severance. Excluding the notable items, noninterest expense decreased slightly (a).

KEY DRIVERS

• The drivers of the total revenue variances by line of business are indicated below. Also see page 9 for information related to money market fee waivers.
• Pershing – The year-over-year decrease primarily reflects higher money market fee waivers and the impact of lost business, partially offset by higher market values, client balances and activity from existing clients. The sequential decrease primarily reflects the impact of lost business.
• Treasury Services – The year-over-year increase primarily reflects higher payment volumes and higher net interest revenue driven by higher deposit balances, partially offset by higher money market fee waivers. The sequential increase primarily reflects higher net interest revenue and payment volumes.
• Clearance and Collateral Management – The year-over-year increase primarily reflects higher collateral management fees driven by balances and higher clearance volumes. The sequential increase primarily reflects higher clearance volumes.
• Noninterest expense increased year-over-year primarily reflecting higher investments in growth, infrastructure and efficiency initiatives and revenue-related expenses, partially offset by lower severance expense. The sequential increase in noninterest expense primarily reflects higher severance expense.

KEY DRIVERS

• The drivers of the total revenue variances by line of business are indicated below. Also see page 9 for information related to money market fee waivers.
• Investment Management – The year-over-year decrease primarily reflects higher money market fee waivers, lower seed capital gains and lower performance fees, partially offset by higher market values and net inflows. The sequential decrease primarily reflects lower equity income, the unfavorable impact of a stronger U.S. dollar and higher money market fee waivers, partially offset by the timing of performance fees.
• Wealth Management – The year-over-year increase primarily reflects higher market values, the loss on a business sale in 4Q20 and higher net interest revenue. The sequential increase primarily reflects higher market values and net interest revenue.
• Noninterest expense increased year-over-year and sequentially primarily reflecting higher revenue-related expenses and investments in growth initiatives, partially offset by lower severance expense. The sequential increase was also partially offset by the favorable impact of a stronger U.S. dollar.

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 has an offsetting impact between fee and other revenue and net interest expense. The increase in total revenue year-over-year primarily reflects the 4Q20 losses on business sales. The decrease in total revenue sequentially primarily reflects disposal gains recorded in 3Q21.
• Noninterest expense decreased year-over-year primarily reflecting the 4Q20 real estate charges and severance expense, partially offset by higher staff expense. The sequential increase primarily reflects higher staff expense, non-staff-related expenses and severance 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 4Q21, the net impact of money market fee waivers was $243 million, up from $233 million in 3Q21, driven by higher money market balances. 

• CET1 capital totaled $18.7 billion at Dec. 31, 2021, a decrease of $1.1 billion compared with Sept. 30, 2021. The decrease primarily reflects capital deployed through common stock repurchases, unrealized losses on securities available-for-sale and dividends, partially offset by capital generated through earnings and a favorable adjustment to the pension liability.
• During 4Q21, we had net issuances of preferred stock of $297 million which benefited Tier 1 capital at Dec. 31, 2021.

• Net interest revenue decreased slightly year-over-year primarily reflecting lower interest rates on interest-earning assets and the impact of hedging activities (primarily offset in fee and other revenue). This was partially offset by the benefit of lower funding and deposit rates and larger deposit and loan balances.
• Sequentially, the increase primarily reflects the impact of larger deposit, loan and securities balances and higher short-term rates.

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 – Non-GAAP 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 – Non-GAAP 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 segment, 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 segment relative to industry competitors.

For the reconciliations of these Non-GAAP measures, see "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 for evaluating the impact of current interest rates and market conditions on fee revenue growth rates and the performance of our business.

BNY Mellon has presented revenue measures excluding notable items, including losses on business sales.  Expense measures, excluding notable items, including litigation reserves, severance expense and real estate charges are also presented.  Litigation reserves represents accruals for loss contingencies that are both probable and reasonably estimable, but exclude standard business-related legal fees.  Income before tax measures, excluding the notable items mentioned above are provided.  These measures are provided to permit investors to view the financial measures on a basis consistent with how management views the businesses.

Note:  In 4Q21, we disaggregated our former Investment Services business segment into two new business segments, Securities Services and Market and Wealth Services.  See the Current Report for Form 8-K dated Dec. 8, 2021 for additional information.

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, innovation in products and services, 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 Annual Report on Form 10-K for the year ended Dec. 31, 2021.  All forward-looking statements in this Earnings Release speak only as of Jan. 18, 2022, 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 Dec. 31, 2021, BNY Mellon had $46.7 trillion in assets under custody and/or administration, and $2.4 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 Jan. 18, 2022.  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 Jan. 18, 2022.  Replays of the conference call and audio webcast will be available beginning Jan. 18, 2022 at approximately 2:00 p.m. ET through Feb. 18, 2022 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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