NII, Fee Income Growth Likely to Support BNY Mellon's Q3 Earnings

The Bank of New York Mellon Corporation BK is scheduled to report third-quarter 2025 results on Oct. 16, before market open. The company’s quarterly revenues and earnings are expected to have increased on a year-over-year basis.

In the last reported quarter, BK’s earnings surpassed the Zacks Consensus Estimate. Results were primarily aided by a rise in fee revenues and net interest income (NII). Growth in the assets under custody and/or administration (AUC/A) and assets under management (AUM) balances further supported the results. However, higher expenses were an undermining factor.

BNY Mellon has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average beat being 8.9%.

The Bank of New York Mellon Corporation Price and EPS Surprise

 

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

The consensus estimate for the company’s third-quarter earnings is pegged at $1.76 per share, which has been revised marginally higher over the past seven days. The figure reflects a rise of 15.8% from the year-ago quarter’s reported number.

The consensus estimate for sales is pegged at $4.95 billion, implying 6.5% year-over-year growth.

BNY Mellon’s Other Key Estimates for Q3

Fee Revenues: The Zacks Consensus Estimate for total investment services fees (constituting more than 50% of the company’s total revenues) is pegged at $2.54 billion, suggesting a rise of 8.5% from the year-ago quarter’s actual. Our estimate for the metric is $2.53 billion.

The consensus mark for financing-related fees stands at $54 million, which indicates a 1.9% year-over-year rise. Our estimate for financing-related fees is $55.4 million.

The consensus estimate for distribution and servicing fees is pegged at $36.92 million, implying a 2.8% year-over-year decline. Our estimate for the same is $37.8 million.

The third quarter witnessed a rise in foreign exchange (FX) trading volumes and volatility, given the global trade tensions and tariff-related uncertainty. This is expected to have boosted BNY Mellon’s FX revenues. The consensus estimate for foreign exchange revenues stands at $185 million, suggesting a 5.7% rise from the year-ago quarter. Our estimate for the same is $189.2 million.

The consensus estimate for total fees and other revenues is $3.79 billion, indicating a rise of 5.3% from the year-ago quarter’s actual. We project the metric to be $3.75 billion.

NII: Amid a softening labor market, the Federal Reserve lowered interest rates by 25 basis points to 4.00-4.25% in mid-September. Nonetheless, rates were high for the major part of the third quarter, so BNY Mellon’s NII is expected to have been positively impacted. Further, funding costs are expected to have stabilized on securities portfolio repricing and a deposit mix shift.

Per the Fed’s latest data, the lending scenario was robust in the to-be-reported quarter, leading to an increase in overall loan balances. Hence, stabilizing funding costs, relatively higher rates and modest loan growth are expected to have led to a rise in BNY Mellon’s NII in the quarter.

The consensus mark for NII is pegged at $1.17 billion, indicating an 11.4% year-over-year rise. We expect NII to be $1.12 billion.

Expenses: Because of higher restructuring charges and buyouts, BNY Mellon’s expenses have been elevated over the past few years. In the third quarter, overall costs are expected to have increased, driven by inflationary pressure, technology upgrades and a multi-year transformation plan.

Our estimate for non-interest expenses is $3.25 billion, suggesting a 4.9% year-over-year rise.

What the Zacks Model Unveils for BK

According to our quantitative model, the chances of BNY Mellon beating the Zacks Consensus Estimate this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for BNY Mellon is +0.86%.

Zacks Rank: The company currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Bank Stocks That Warrant a Look

Here are a couple of other bank stocks that you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this time:

The Earnings ESP for KeyCorp KEY is +3.68% and it carries a Zacks Rank #3 at present. The company is slated to report third-quarter 2025 results on Oct. 16.

Over the past seven days, the Zacks Consensus Estimate for KeyCorp’s quarterly earnings has been unchanged at $0.38.

State Street STT is scheduled to announce third-quarter 2025 results on Oct. 17. The company sports a Zacks Rank #1 and has an Earnings ESP of +0.13% at present.

Quarterly earnings estimates for State Street have been revised marginally upward to $2.62 over the past week.

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

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