The Bank of New York Mellon Corporation’s BNY second-quarter 2026 adjusted earnings of $2.46 per share handily surpassed the Zacks Consensus Estimate of $2.20. Also, the bottom line increased 26.8% from the year-ago quarter.
Results primarily benefited from 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 assets under custody and/or administration (AUC/A) and assets under management (AUM) balances further supported the results. However, higher expenses hurt the results to some extent.
Results excluded certain non-recurring items. Considering those, net income applicable to common shareholders (GAAP basis) was $1.7 billion, up 21.9% from the year-ago quarter.
BNY's Fee Revenues and NII Increase
Total revenues increased 13.3% year over year to $5.70 billion. The top line surpassed the Zacks Consensus Estimate of $5.38 billion.
Total fee revenues were $4.04 billion, up 10.8% year over year. Investment services fees increased 12.6% to $2.91 billion, supported by net new business, higher market values and increased client activity.
Investment management and performance fees rose 5% to $796 million. Foreign exchange revenues increased 7.5% to $229 million. Investment and other revenues totaled $216 million, up from $184 million in the prior-year quarter, reflecting improved seed capital results.
NII jumped 20.2% year over year to $1.45 billion. The increase reflected the reinvestment of investment securities at higher yields and balance-sheet growth, partly offset by deposit margin compression.
The net interest margin expanded 18 basis points (bps) year over year to 1.45%.
Average loans grew 20.1% from the prior-year quarter to $85.59 billion. Average deposits increased 4.6% to $314.04 billion.
Bank of New York Mellon's Expenses Rise
Total non-interest expenses were $3.44 billion, up 7.3% year over year. Higher revenue-related costs, investments and employee salary increases drove the rise, partly offset by efficiency savings.
Despite higher costs, revenue growth outpaced expense growth. This generated 606 basis points of year-over-year operating leverage.
The pre-tax operating margin expanded to 39.8% from 36.6% a year earlier.
BNY's Asset Balances Expand
AUC/A were $62.6 trillion as of June 30, 2026, up 12.2% year over year. The increase reflected higher market values and net client inflows, partly offset by the unfavorable impact of a stronger U.S. dollar.
AUM increased 5.7% to $2.23 trillion. Higher market values supported the balance, though cumulative net outflows and currency movements were headwinds.
BNY’s Credit Quality Improves
The allowance for loan losses, as a percentage of total loans, was 0.25%, down 13 bps from the prior-year quarter. As of June 30, 2026, non-performing assets were $33 million, down 79.5% from the year-ago quarter.
BNY recorded a provision benefit of $8 million compared with a benefit of $17 million in the year-ago quarter. The current-quarter benefit primarily reflected improvements in commercial real estate exposure, partly offset by changes in macroeconomic and other factors.
BNY’s Capital Ratios Fall
As of June 30, 2026, the common equity Tier 1 ratio was 11%, down from 11.5% as of June 30, 2025. The Tier 1 leverage ratio was 5.9%, down from 6.6% as of June 30, 2025.
BNY’s Capital Distribution Update
In the reported quarter, BNY repurchased shares worth $1.1 billion.
BNY declared a quarterly dividend of 63 cents per share, representing a 19% hike from the prior payout. The dividend will be paid out on Aug. 7 to shareholders on record as of July 27.
Our Take on BNY
BNY’s global expansion efforts and a strong balance sheet position are likely to keep supporting its top-line growth. A robust AUM balance is another positive. However, steadily rising expenses and concentration risk due to the company’s higher dependence on fee-based revenues remain headwinds.
BNY Price, Consensus and EPS Surprise
BNY price-consensus-eps-surprise-chart | BNY Quote
Currently, BNY carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Dates of BNY’s Peers
State Street STT is slated to report second-quarter 2026 numbers tomorrow.
Over the past week, the Zacks Consensus Estimate for State Street’s quarterly earnings has been revised 2.5% higher to $3.30. This indicates 30.4% growth from the prior-year quarter.
Northern Trust NTRS is scheduled to announce second-quarter 2026 numbers on July 22.
Over the past week, the Zacks Consensus Estimate for Northern Trust’s quarterly earnings has been revised marginally upward to $2.68. This reflects a 25.8% increase from the prior-year quarter.
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This article originally published on Zacks Investment Research (zacks.com).