BNY Mellon Stock Up on Q2 Earnings Beat, Expenses Rise Y/Y

The Bank of New York Mellon Corporation’s BK second-quarter 2025 adjusted earnings of $1.94 per share surpassed the Zacks Consensus Estimate of $1.74. Also, the bottom line reflected a jump of 28% from the prior-year quarter.

BK shares gained 2.3% in the pre-market trading session on better-than-expected results. A full day’s trading session will depict a clearer picture.

Results were primarily aided by a rise in fee revenues and net interest income (NII). Also, the company recorded a provision benefit in the quarter, which was a tailwind. Growth in the assets under custody and/or administration (AUC/A) and assets under management (AUM) balances further supported results. However, higher expenses were an undermining factor.

The results excluded certain non-recurring items. Considering those, net income applicable to common shareholders (GAAP basis) was $1.39 billion, up 22% from the year-ago quarter. We had projected a net income applicable to common shareholders of $1.15 billion.

BK’s Revenues Improve, Expenses Rise

Total revenues increased 9% year over year to $5.03 billion. This is the first time the company’s quarterly revenues exceeded $5 billion. The top line surpassed the Zacks Consensus Estimate of $4.86 billion.

NII was $1.20 billion, up 17% year over year. The rise reflected the continued reinvestment of maturing investment securities at higher yields and balance sheet growth, partially offset by changes in deposit mix. Our estimate for the metric was $1.10 billion.

Net interest margin (NIM) expanded 12 basis points (bps) year over year to 1.27%. Our estimate for NIM was 1.28%.

Total fees and other revenues increased 7% year over year to $3.83 billion. The rise was driven by an increase in investment services fees and foreign exchange revenues. Our estimate for the same was $3.69 billion.

Total non-interest expenses (GAAP basis) were $3.21 billion, up 4% from the prior-year quarter. The rise was driven by an increase in almost all the cost components except for net occupancy costs, distribution and servicing costs, and costs related to the amortization of intangible assets. We had projected non-interest expenses of $3.23 billion.

BNY Mellon’s Asset Balances Increase

As of June 30, 2025, AUM was $2.11 trillion, up 3% year over year. The rise reflected higher market values and the favorable impact of the weaker U.S. dollar, partially offset by cumulative net outflows. Our estimate for AUM was $2.08 trillion.

AUC/A of $55.8 trillion increased 13% year over year, primarily reflecting client inflows, higher market values and the favorable impact of the weaker U.S. dollar.

BK’s Credit Quality Improves

The allowance for loan losses, as a percentage of total loans, was 0.38%, down 2 bps from the prior-year quarter. As of June 30, 2025, non-performing assets were $161 million, down from $227 million in the year-ago quarter.

In the reported quarter, the company recorded a provision benefit of $17 million, primarily driven by property-specific reserve releases related to its commercial real estate exposure. In the prior-year quarter, provisions were nil. We had expected provisions to be $14.9 million.

BNY Mellon’s Capital Position Improves

As of June 30, 2025, the common equity Tier 1 ratio was 11.5%, up from 11.4% as of June 30, 2024. The Tier 1 leverage ratio was 6.1%, up from 5.8% as of June 30, 2024.

BK’s Share Repurchase Update

In the reported quarter, BNY Mellon repurchased shares worth $895 million.

Our Take on BNY Mellon

Relatively higher interest rates, BK’s global expansion efforts and a strong balance sheet position are likely to keep supporting its top-line growth. Also, a robust AUM balance is another positive. However, concentration risk due to the company’s higher dependence on fee-based revenues and elevated expenses is worrisome.

The Bank of New York Mellon Corporation Price, Consensus and EPS Surprise

 

The Bank of New York Mellon Corporation price-consensus-eps-surprise-chart | The Bank of New York Mellon Corporation Quote

Currently, BNY Mellon carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Release Dates of Other Major Banks

Truist Financial Corporation TFC is slated to report quarterly results on July 18. The Zacks Consensus Estimate for Truist’s second-quarter earnings has been revised downward over the past seven days. (Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.)

BankUnited, Inc. BKU is scheduled to report quarterly results on July 23. The Zacks Consensus Estimate for BankUnited’s second-quarter earnings has been unchanged over the past seven days.

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This article originally published on Zacks Investment Research (zacks.com).

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