BNY MELLON REPORTS FOURTH QUARTER 2021 EARNINGS OF $822 MILLION OR $1.01 PER COMMON SHARE
01/18/2022 - 06:30 AM
NEW YORK , Jan. 18, 2022 /PRNewswire/ --
Revenue up 4% (a)
EPS up 28% (a)
ROE 9%
ROTCE 17% (c)
CET1 11.1%
Tier 1 leverage 5.5%
(a)
Excluding notable items revenue up 3% and EPS up 8% . See note (c).
The Bank of New York Mellon Corporation ("BNY Mellon") (NYSE: BK) today reported:
4Q21 vs.
4Q21
3Q21
4Q20
3Q21
4Q20
Net income applicable to common shareholders (in millions)
$ 822
$ 881
$ 702
(7) %
17%
Diluted earnings per common share (b)
$ 1.01
$ 1.04
$ 0.79
(3) %
28%
(b)
Includes impact of notable items of $(0.04) per share in 4Q21, $(0.05) per share in 3Q21 and $(0.18) per share in 4Q20. See note (c).
Fourth Quarter Results
CEO Commentary
Total revenue of $4.0 billion , increased 4% ; or 3% (c)
• Fee revenue increased 4% ; or 8% excluding money market (c)
• Net interest revenue decreased slightly
Provision for credit losses was a benefit of $17 million
Total noninterest expense of $3.0 billion , increased 1% ; or
6% excluding notable items (c)
AUC/A of $46.7 trillion , increased 14%
AUM of $2.4 trillion , increased 10%
Securities Services
• Total revenue increased 5%
• Income before taxes increased 63% ; or 24% excluding (c)
• Pre-tax operating margin of 19%
Market and Wealth Services
• Total revenue increased 1%
• Income before taxes increased 4%
• Pre-tax operating margin of 43%
Investment and Wealth Management
• Total revenue increased 3%
• Income before taxes decreased 11%
• Pre-tax operating margin of 27% ; adjusted pre-tax 29% (c)
"2021 was in many regards a remarkable year for BNY
Mr. Gibbons added, "Full-year EPS of $4.14 was up 8% year-160% of earnings – to our shareholders through
"The pace of innovation across the firm, including in areas Future of and Pershing X – to name just a few – gives me
Media Relations: Garrett Marquis (949) 683-1503
Investor Relations: Marius Merz (212) 298-1480
(c) For information on these Non-GAAP measures, see "Explanation of GAAP and Non-GAAP financial measures" on page 12 .
Note: Above comparisons are 4Q21 vs. 4Q20, unless otherwise noted.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(in millions, except per share amounts and unless otherwise noted; not
4Q21 vs.
meaningful - N/M)
4Q21
3Q21
4Q20
3Q21
4Q20
Fee revenue
$ 3,231
$ 3,265
$ 3,114
(1)%
4%
Investment and other revenue
107
129
49
N/M
N/M
Total fee and other revenue
3,338
3,394
3,163
(2)
6
Net interest revenue
677
641
680
6
—
Total revenue
4,015
4,035
3,843
—
4
Provision for credit losses
(17)
(45)
15
N/M
N/M
Noninterest expense
2,967
2,918
2,925
2
1
Income before income taxes
1,065
1,162
903
(8)
18
Provision for income taxes
196
219
148
(11)
32
Net income
$ 869
$ 943
$ 755
(8)%
15%
Net income applicable to common shareholders of The Bank of New York
$ 822
$ 881
$ 702
(7)%
17%
Operating leverage (a)
(217) bps
304 bps
Diluted earnings per common share
$ 1.01
$ 1.04
$ 0.79
(3)%
28%
Average common shares and equivalents outstanding - diluted (in thousands)
817,345
849,028
891,846
Pre-tax operating margin
27%
29%
24%
(a)
Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense.
bps – basis points.
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 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 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 10% , primarily reflecting higher market values and net inflows. Capital and liquidity
Repurchased 22 million common shares for $1.2 billion $280 million 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. (a) See "Explanation of GAAP and Non-GAAP financial measures" on page 12 for additional information. Note: Throughout this document, sequential growth rates are unannualized.
FULL-YEAR CONSOLIDATED FINANCIAL HIGHLIGHTS
(in millions, except per share amounts and unless otherwise noted; not meaningful - N/M)
2021 vs.
2021
2020
2020
Fee revenue
$ 12,977
$ 12,515
4%
Investment and other revenue
336
316
N/M
Total fee and other revenue
13,313
12,831
4
Net interest revenue
2,618
2,977
(12)
Total revenue
15,931
15,808
1
Provision for credit losses
(231)
336
N/M
Noninterest expense
11,514
11,004
5
Income before income taxes
4,648
4,468
4
Provision for income taxes
877
842
4
Net income
$ 3,771
$ 3,626
4%
Net income applicable to common shareholders of The Bank of New York Mellon Corporation
$ 3,552
$ 3,423
4%
Operating leverage (a)
(386)bps
Diluted earnings per common share
$ 4.14
$ 3.83
8%
Average common shares and equivalents outstanding - diluted (in thousands)
856,359
892,514
Pre-tax operating margin
29%
28%
(a)
Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense.
bps – basis points.
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 $336 million 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 $1.1 billion ROE of 9% ; ROTCE of 17% (a) . (a) See "Explanation of GAAP and Non-GAAP financial measures" on page 12 for additional information.
SECURITIES SERVICES BUSINESS SEGMENT HIGHLIGHTS
(dollars in millions, unless otherwise noted; not meaningful - N/M)
4Q21 vs.
4Q21
3Q21
4Q20
3Q21
4Q20
Investment services fees:
Asset Servicing
$ 984
$ 979
$ 896
1%
10%
Issuer Services
253
281
260
(10)
(3)
Total investment services fees
1,237
1,260
1,156
(2)
7
Foreign exchange revenue
148
125
139
18
6
Other fees (a)
28
30
39
(7)
(28)
Total fee revenue
1,413
1,415
1,334
—
6
Investment and other revenue
53
73
30
N/M
N/M
Total fee and other revenue
1,466
1,488
1,364
(1)
7
Net interest revenue
367
349
378
5
(3)
Total revenue
1,833
1,837
1,742
—
5
Provision for credit losses
(7)
(19)
23
N/M
N/M
Noninterest expense
1,490
1,543
1,504
(3)
(1)
Income before taxes
$ 350
$ 313
$ 215
12%
63%
Total revenue by line of business:
Asset Servicing
$ 1,456
$ 1,437
$ 1,357
1%
7%
Issuer Services
377
400
385
(6)
(2)
Total revenue by line of business
$ 1,833
$ 1,837
$ 1,742
—%
5%
Pre-tax operating margin
19%
17%
12%
Securities lending revenue (b)
$ 45
$ 45
$ 36
—%
25%
Metrics:
Average loans
$ 9,764
$ 8,389
$ 8,498
16%
15%
Average deposits
$ 200,272
$ 198,680
$ 188,151
1%
6%
AUC/A at period end (in trillions) (current period is preliminary) (c)
$ 34.6
$ 33.8
$ 30.6
2%
13%
Market value of securities on loan at period end (in billions) (d)
$ 447
$ 443
$ 435
1%
3%
(a)
Other fees primarily include financing-related fees.
(b)
Included in investment services fees in the Asset Servicing business.
(c)
Consists of AUC/A primarily from the Asset Servicing business and, to a lesser extent, the Issuer Services business. Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.7 trillion at Dec. 31, 2021 and Sept. 30, 2021 and $1.5 trillion at Dec. 31, 2020.
(d)
Represents the total amount of securities on loan in our agency securities lending program. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $71 billion at Dec. 31, 2021 and $68 billion at Sept. 30, 2021 and Dec. 31, 2020.
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) . (a)
Notable items in 4Q21, 3Q21 and 4Q20 include litigation reserves and severance expense. See "Explanation of GAAP and Non-GAAP financial measures" on page 12 for additional information.
MARKET AND WEALTH SERVICES BUSINESS SEGMENT HIGHLIGHTS
(dollars in millions, unless otherwise noted; not meaningful - N/M)
4Q21 vs.
4Q21
3Q21
4Q20
3Q21
4Q20
Investment services fees:
Pershing
$ 412
$ 427
$ 422
(4)%
(2)%
Treasury Services
170
168
163
1
4
Clearance and Collateral Management
236
228
220
4
7
Total investment services fees
818
823
805
(1)
2
Foreign exchange revenue
21
23
24
(9)
(13)
Other fees (a)
31
31
33
—
(6)
Total fee revenue
870
877
862
(1)
1
Investment and other revenue
6
13
9
N/M
N/M
Total fee and other revenue
876
890
871
(2)
1
Net interest revenue
297
283
292
5
2
Total revenue
1,173
1,173
1,163
—
1
Provision for credit losses
(3)
(16)
8
N/M
N/M
Noninterest expense
674
668
670
1
1
Income before taxes
$ 502
$ 521
$ 485
(4)%
4%
Total revenue by line of business:
Pershing
$ 553
$ 566
$ 563
(2)%
(2) %
Treasury Services
331
326
325
2
2
Clearance and Collateral Management
289
281
275
3
5
Total revenue by line of business
$ 1,173
$ 1,173
$ 1,163
—%
1%
Pre-tax operating margin
43%
44%
42%
Metrics:
Average loans
$ 40,812
$ 39,041
$ 32,939
5%
24%
Average deposits
$ 100,653
$ 101,253
$ 98,670
(1)%
2%
AUC/A at period end (in trillions) (current period is preliminary) (b)
$ 11.8
$ 11.2
$ 10.2
5%
16%
(a)
Other fees primarily include financing-related fees.
(b)
Consists of AUC/A primarily from the Clearance and Collateral Management and Pershing businesses.
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. INVESTMENT AND WEALTH MANAGEMENT BUSINESS SEGMENT HIGHLIGHTS
(dollars in millions, unless otherwise noted; not meaningful - N/M)
4Q21 vs.
4Q21
3Q21
4Q20
3Q21
4Q20
Investment management fees
$ 864
$ 893
$ 839
(3)%
3%
Performance fees
32
21
45
N/M
(29)
Investment management and performance fees
896
914
884
(2)
1
Distribution and servicing fees
28
28
29
—
(3)
Other fees (a)
22
20
(6)
N/M
N/M
Total fee revenue
946
962
907
(2)
4
Investment and other revenue (b)
23
23
33
N/M
N/M
Total fee and other revenue (b)
969
985
940
(2)
3
Net interest revenue
51
47
50
9
2
Total revenue
1,020
1,032
990
(1)
3
Provision for credit losses
(6)
(7)
(8)
N/M
N/M
Noninterest expense
748
691
687
8
9
Income before taxes
$ 278
$ 348
$ 311
(20)%
(11)%
Total revenue by line of business:
Investment Management
$ 709
$ 727
$ 714
(2)%
(1)%
Wealth Management
311
305
276
2
13
Total revenue by line of business
$ 1,020
$ 1,032
$ 990
(1)%
3%
Pre-tax operating margin
27%
34%
32%
Adjusted pre-tax operating margin – Non-GAAP (c)
29%
36%
34%
Metrics:
Average loans
$ 12,737
$ 12,248
$ 11,497
4%
11%
Average deposits
$ 18,374
$ 17,270
$ 18,144
6%
1%
AUM (in billions) (current period is preliminary) (d)
$ 2,434
$ 2,310
$ 2,211
5%
10%
Wealth Management client assets (in billions) (current period is preliminary) (e)
$ 321
$ 307
$ 286
5%
12%
(a)
Other fees primarily include investment services fees.
(b)
Investment and other revenue and total fee and other revenue are net of income attributable to noncontrolling interests related to consolidated investment management funds.
(c)
Net of distribution and servicing expense. See "Explanation of GAAP and Non-GAAP financial measures" on page 12 for information on this Non-GAAP measure.
(d)
Excludes assets managed outside of the Investment and Wealth Management business segment.
(e)
Includes AUM and AUC/A in the Wealth Management business.
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.
(in millions)
4Q21
3Q21
4Q20
Fee revenue
$ 2
$ 12
$ 11
Investment and other revenue
19
23
(28)
Total fee and other revenue
21
35
(17)
Net interest (expense)
(38)
(38)
(40)
Total revenue
(17)
(3)
(57)
Provision for credit losses
(1)
(3)
(8)
Noninterest expense
55
16
64
(Loss) before taxes
$ (71)
$ (16)
$ (113)
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. NOTABLE ITEMS BY BUSINESS SEGMENT
Notable items by business (a)
4Q21
4Q20
(in millions)
Securities
Services
Market and
Investment
Other
Total
Securities
Services
Market and
Investment
Other
Total
Fee and other revenue
$ —
$ —
$ —
$ —
$ —
$ —
$ —
$ (5)
$ (56)
$ (61)
Net interest revenue
—
—
—
—
—
—
—
—
—
—
Total revenue
—
—
—
—
—
—
—
(5)
(56)
(61)
Total noninterest expense
21
6
1
9
37
84
15
9
57
165
(Loss) income before
$ (21)
$ (6)
$ (1)
$ (9)
$ (37)
$ (84)
$ (15)
$ (14)
$ (113)
$ (226)
(a)
Notable items in 4Q21 include severance expense and litigation reserves. Notable items in 4Q20 include litigation reserves, severance expense, losses on business sales (reflected in investment and other revenue) and real estate charges.
Notable items by business segment (a)
3Q21
(in millions)
Securities
Services
Market and
Investment
Other
Total
Fee and other revenue
$ —
$ —
$ —
$ 9
$ 9
Net interest revenue
—
—
—
—
—
Total revenue
—
—
—
9
9
Total noninterest expense
70
1
1
1
73
(Loss) income before income taxes
$ (70)
$ (1)
$ (1)
$ 8
$ (64)
(a)
Notable items in 3Q21 include litigation reserves, gains on disposals (reflected in investment and other revenue) and severance expense.
Notable items by business segment (a)
2021
2020
(in millions)
Securities
Services
Market and
Investment
Other
Total
Securities
Services
Market and
Investment
Other
Total
Fee and other revenue
$ —
$ —
$ (1)
$ 14
$ 13
$ —
$ —
$ (5)
$ (56)
$ (61)
Net interest revenue
—
—
—
—
—
—
—
—
—
—
Total revenue
—
—
(1)
14
13
—
—
(5)
(56)
(61)
Total noninterest expense
84
23
4
18
129
84
15
9
57
165
(Loss) income before income taxes
$ (84)
$ (23)
$ (5)
$ (4)
$ (116)
$ (84)
$ (15)
$ (14)
$ (113)
$ (226)
(a)
Notable items in 2021 include litigation reserves, severance expense and gains on disposals (reflected in investment and other revenue). Notable items in 2020 include litigation reserves, severance expense, losses on business sales (reflected in investment and other revenue) and real estate charges recorded in 4Q20.
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 $233 million
Money market fee waivers
(in millions)
4Q21
3Q21
2Q21
1Q21
4Q20
FY21
FY20
Investment services fees (see table below)
$ (148)
$ (142)
$ (148)
$ (109)
$ (85)
$ (547)
$ (209)
Investment management and performance fees
(116)
(109)
(115)
(89)
(56)
(429)
(142)
Distribution and servicing fees
(14)
(11)
(13)
(13)
(8)
(51)
(17)
Total fee revenue
(278)
(262)
(276)
(211)
(149)
(1,027)
(368)
Less: Distribution and servicing expense
35
29
24
23
15
111
31
Net impact of money market fee waivers
$ (243)
$ (233)
$ (252)
$ (188)
$ (134)
$ (916)
$ (337)
Impact to investment services fees by line of (a) :
Asset Servicing
$ (31)
$ (29)
$ (30)
$ (15)
$ (9)
$ (105)
$ (10)
Issuer Services
(18)
(17)
(16)
(11)
(7)
(62)
(9)
Pershing
(89)
(86)
(91)
(77)
(65)
(343)
(186)
Treasury Services
(10)
(10)
(11)
(6)
(4)
(37)
(4)
Total impact to investment services fees by
$ (148)
$ (142)
$ (148)
$ (109)
$ (85)
$ (547)
$ (209)
Impact to fee revenue by line of business (a) :
Asset Servicing
$ (50)
$ (47)
$ (50)
$ (29)
$ (13)
$ (176)
$ (18)
Issuer Services
(24)
(22)
(22)
(15)
(10)
(83)
(13)
Pershing
(106)
(102)
(99)
(94)
(85)
(401)
(227)
Treasury Services
(14)
(13)
(16)
(9)
(5)
(52)
(6)
Investment Management
(81)
(76)
(85)
(61)
(34)
(303)
(100)
Wealth Management
(3)
(2)
(4)
(3)
(2)
(12)
(4)
Total impact to fee revenue by line of business
$ (278)
$ (262)
$ (276)
$ (211)
$ (149)
$ (1,027)
$ (368)
(a)
The line of business revenue for management reporting purposes reflects the impact of revenue transferred between the businesses.
CAPITAL AND LIQUIDITY
Capital and liquidity ratios
Dec. 31,
Sept. 30,
Dec. 31,
Consolidated regulatory capital ratios: (a)
CET1 ratio
11.1%
11.7%
13.1%
Tier 1 capital ratio
13.9
14.4
15.8
Total capital ratio
14.8
15.2
16.7
Tier 1 leverage ratio
5.5
5.7
6.3
SLR
6.6
7.0
8.6
(b)
BNY Mellon shareholders' equity to total assets ratio
9.7%
9.3%
9.8%
BNY Mellon common shareholders' equity to total assets ratio
8.6%
8.3%
8.8%
Average LCR
109%
111%
110%
Book value per common share
$ 47.50
$ 47.30
$ 46.53
Tangible book value per common share – Non-GAAP (c)
$ 24.31
$ 24.88
$ 25.44
Common shares outstanding (in thousands)
804,145
825,821
886,764
(a)
Regulatory capital ratios for Dec. 31, 2021 are preliminary. For our CET1, Tier 1 capital and Total capital ratios, our effective capital ratios under the U.S. capital rules are the lower of the ratios as calculated under the Standardized and Advanced Approaches, which for Dec. 31, 2021 was the Standardized Approach, for Sept. 30, 2021 was the Standardized Approach for the CET1 and Tier 1 capital ratios and the Advanced Approaches for the Total capital ratio, and for Dec. 31, 2020, was the Advanced Approaches.
(b)
Reflects the temporary exclusion of U.S. Treasury securities from the leverage exposure used in the SLR calculation which increased our consolidated SLR by 72 basis points at Dec. 31, 2020. The temporary exclusion ceased to apply beginning April 1, 2021.
(c)
Tangible book value per common share – Non-GAAP excludes goodwill and intangible assets, net of deferred tax liabilities. See "Explanation of GAAP and Non-GAAP financial measures" on page 12 for information on this Non-GAAP measure.
CET1 capital totaled $18.7 billion Dec. 31, 2021 , a decrease of $1.1 billion 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 Dec. 31, 2021 .
NET INTEREST REVENUE
Net interest revenue
4Q21 vs.
(dollars in millions; not meaningful - N/M)
4Q21
3Q21
4Q20
3Q21
4Q20
Net interest revenue
$ 677
$ 641
$ 680
6%
—%
Add: Tax equivalent adjustment
4
3
3
N/M
N/M
Net interest revenue, on a fully taxable equivalent ("FTE") basis – Non-GAAP (a)
$ 681
$ 644
$ 683
6%
—%
Net interest margin
0.71%
0.67%
0.72%
4 bps
(1) bps
Net interest margin (FTE) – Non-GAAP (a)
0.71%
0.68%
0.72%
3 bps
(1) bps
(a)
Net interest revenue (FTE) – Non-GAAP and net interest margin (FTE) – Non-GAAP include the tax equivalent adjustments on tax-exempt income. See "Explanation of GAAP and Non-GAAP financial measures" on page 12 for information on this Non-GAAP measure.
bps – basis points.
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. THE BANK OF NEW YORK MELLON CORPORATION
Condensed Consolidated Income Statement
(in millions)
Quarter ended
Year ended
Dec. 31,
Sept. 30,
Dec. 31,
Dec. 31,
Dec. 31,
Fee and other revenue
Investment services fees
$ 2,061
$ 2,091
$ 1,969
$ 8,284
$ 8,047
Investment management and performance fees
896
913
884
3,588
3,367
Foreign exchange revenue
199
185
187
799
774
Financing-related fees
47
48
46
194
212
Distribution and servicing
28
28
28
112
115
Total fee revenue
3,231
3,265
3,114
12,977
12,515
Investment and other revenue
107
129
49
336
316
Total fee and other revenue
3,338
3,394
3,163
13,313
12,831
Net interest revenue
Interest revenue
729
693
776
2,845
4,109
Interest expense
52
52
96
227
1,132
Net interest revenue
677
641
680
2,618
2,977
Total revenue
4,015
4,035
3,843
15,931
15,808
Provision for credit losses
(17)
(45)
15
(231)
336
Noninterest expense
Staff
1,633
1,584
1,554
6,337
5,966
Software and equipment
379
372
359
1,478
1,370
Professional, legal and other purchased services
390
363
381
1,459
1,403
Sub-custodian and clearing
120
129
116
505
460
Net occupancy
133
120
173
498
581
Distribution and servicing
75
76
75
298
336
Bank assessment charges
30
34
24
133
124
Business development
44
22
26
107
105
Amortization of intangible assets
19
19
26
82
104
Other
144
199
191
617
555
Total noninterest expense
2,967
2,918
2,925
11,514
11,004
Income
Income before income taxes
1,065
1,162
903
4,648
4,468
Provision for income taxes
196
219
148
877
842
Net income
869
943
755
3,771
3,626
Net (income) loss attributable to noncontrolling interests related to consolidated
(6)
4
(5)
(12)
(9)
Net income applicable to shareholders of The Bank of New York Mellon
863
947
750
3,759
3,617
Preferred stock dividends
(41)
(66)
(48)
(207)
(194)
Net income applicable to common shareholders of The Bank of New York
$ 822
$ 881
$ 702
$ 3,552
$ 3,423
Earnings per share applicable to the common shareholders of The Bank of
Quarter ended
Year ended
Dec. 31,
Sept. 30,
Dec. 31,
Dec. 31,
Dec. 31,
(in dollars)
Basic
$ 1.01
$ 1.04
$ 0.79
$ 4.17
$ 3.84
Diluted
$ 1.01
$ 1.04
$ 0.79
$ 4.14
$ 3.83
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.
Fee revenue reconciliation
4Q21 vs .
2021 vs.
(dollars in millions)
4Q21
4Q20
4Q20
2021
2020
2020
Fee revenue
$ 3,231
$ 3,114
4%
$ 12,977
$ 12,515
4%
Less: Money market fee waivers
(278)
(149)
(1,027)
(368)
Fee revenue, excluding money market fee waivers – Non-GAAP
$ 3,509
$ 3,263
8%
$ 14,004
$ 12,883
9%
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.
Reconciliations of Non-GAAP measures, excluding notable items
4Q21 vs.
(in millions, except per share amounts)
4Q21
4Q20
4Q20
Total revenue – GAAP
$ 4,015
$ 3,843
4%
Impact of notable items (a)
—
(61)
Total revenue – Non-GAAP
$ 4,015
$ 3,904
3%
Noninterest expense – GAAP
$ 2,967
$ 2,925
1%
Impact of notable items (a)
37
165
Noninterest expense – Non-GAAP
$ 2,930
$ 2,760
6%
Diluted earnings per common share – GAAP
$ 1.01
$ 0.79
28%
Impact of notable items (a)
(0.04)
(0.18)
Diluted earnings per common share – Non-GAAP
$ 1.04
(b)
$ 0.96
(b)
8%
(a)
Notable items in 4Q21 include severance expense and litigation reserves. Notable items in 4Q20 include litigation reserves, severance expense, losses on business sales (reflected in investment and other revenue) and real estate charges.
(b)
Does not foot due to rounding.
Reconciliations of Non-GAAP measures, excluding notable items - Securities
4Q21 vs.
(in millions)
4Q21
3Q21
4Q20
3Q21
4Q20
Noninterest expense – GAAP
$ 1,490
$ 1,543
$ 1,504
(3)%
(1)%
Impact of notable items (a)
21
70
84
Noninterest expense – Non-GAAP
$ 1,469
$ 1,473
$ 1,420
—%
3%
Income before taxes – GAAP
$ 350
$ 313
$ 215
12%
63%
Impact of notable items (a)
(21)
(70)
(84)
Income before taxes – Non-GAAP
$ 371
$ 383
$ 299
(3)%
24%
(a)
Notable items in 4Q21, 3Q21 and 4Q20 include litigation reserves and severance expense.
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 $2.4 trillion 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.
https://www.prnewswire.com/news-releases/bny-mellon-reports-fourth-quarter-2021-earnings-of-822-million-or-1-01-per-common-share-301462600.html
SOURCE BNY Mellon
