Bank of New York Beats Q4 Expectations

Bank of New York (NYSE: BK) reported stronger-than-expected Q4 results. Driven by robust growth in Assets under custody (AUC) and Assets under management (AUM), BK exceeded both earnings and revenue estimates.

However, at the time of writing, shares of the American investment banking services holding company were down almost 1% during the pre-market trading session.

Q4 Performance

The bank reported earnings of $1.01 per share, a 28% year-over-year gain, outpacing analysts’ estimates of $0.99 per share. The company reported earnings of $0.79 per share for the prior-year period.

Furthermore, revenues jumped 4% year-over-year to $4 billion and exceeded consensus estimates of $3.95 billion. The increase in revenues reflected a 4% surge in Fee revenue, driven by higher market values and client volumes, and partially offset by higher money market fee waivers. 

Notably, AUM increased 10% to $2.4 trillion while Assets under custody (AUC) grew 14% to $46.7 trillion, driven by net client inflows and higher market values, and partially offset by a stronger dollar.

The provision for credit losses was a benefit of $17 million for the quarter, while total noninterest expense increased 1% to $3.0 billion.

Notably, the company returned $5.7 billion, or 160% of its earnings to shareholders through common dividends and share repurchases during the year.

CEO Comments

Bank of New York  CEO, Todd Gibbons, commented, “The pace of innovation across the firm, including in areas such as digital assets, real-time payments, the Future of Collateral and Pershing X – to name just a few – gives me great confidence in our growth prospects.”

Looking ahead, he added, “As we look to 2022 and beyond, we expect double-digit EPS growth as we are determined to continue delivering consistent organic growth which, together with the current expectation for higher rates, should allow us to generate positive operating leverage, while at the same time continue investing in the growth and efficiency of our businesses.”

Wall Street’s Take

Overall, the stock has a Moderate Buy consensus rating based on 8 Buys, 5 Holds and 1 Sell. At the time of writing, the average BNY Mellon price target of $66.50 implies 4.6% upside potential to current levels. Shares have gained 39% over the past year.

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