Bank of New York Mellon Exceeds Q3 Expectations

The Bank of New York Mellon Corporation (BK) reported better-than-expected third-quarter results aided by robust growth in its Assets under custody (AUC) of 17% and 13% growth in Assets under management (AUM). Growth was driven by higher market values and net new client inflows. Shares closed at $57.65 on October 19.

The bank reported earnings of $1.04 per share, up 6% year-over-year, and beat analyst estimates of $1.00 per share. (See Insiders’ Hot Stocks on TipRanks)

Additionally, total revenue came in at $4.03 billion, up 5% compared to the year-ago period, and also surpassed Street estimates of $3.88 billion. The bank’s Q3 fees and other revenue, which are major contributors to total revenue, stood at $3.39 billion, and net interest income came in at $641 million.

During Q3, the bank awarded shareholders $300 million in common dividends and $2 billion of share repurchases. Moreover, the bank announced a partnership with Verizon (VZ), enabling it to send request for payment messages directly to consumers’ bank accounts. BNY Mellon also launched Pershing X, in association with Pershing, to help financial services firms solve the challenges of managing multiple disconnected technology tools and data sets for their advisors.

Todd Gibbons, CEO of BNY Mellon said, “Our financial performance this quarter reflects healthy and broad-based organic growth across our businesses as well as a supportive global markets backdrop… We ended the quarter with a Tier 1 leverage ratio of 5.7 percent, which together with our continued capital generation, provides us meaningful capacity to continue investing in our businesses and returning excess capital to our shareholders.”

The BNY Mellon Board also declared a common stock dividend of $0.34 per share payable on November 12 to shareholders of record on November 1.

Recently, Deutsche Bank analyst Brian Bedell lifted the price target on the stock to $71 (23.2% upside potential) from $69 while maintaining a Buy rating.

Overall, the stock has a Moderate Buy consensus rating based on 4 Buys and 2 Holds. The average Bank of New York Mellon price target of $59.17 implies 2.6% upside potential to current levels. Shares have gained 55.4% over the past year.