uploads///BNY Mellon Segments

Analyzing Bank of New York Mellon’s Segmental Performance

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Jan. 26 2016, Updated 4:06 p.m. ET

BNY Mellon’s segments

Bank of New York Mellon (BK) operates under two primary business segments in the United States (SPY):

  • The Investment Services segment provides custody and related services, broker-dealer services, collateral services, and clearing services, among others.
  • The Investment Management segment provides institutional and retail clients with wealth and estate planning and private banking solutions.

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Earnings for the Investment Services segment

During the fourth quarter, revenues from the Investment Services business increased by 3% to $2.6 billion. The Investment Services segment’s fees were flat at $1.7 billion on a YoY (year-over-year) basis. Asset-servicing fees increased to $1.0 billion during the quarter, reflecting organic growth in global collateral services, broker-dealer services, and securities lending revenue. Net interest revenues increased to $632 million compared to last year due to higher internal crediting rates for the deposits. Non-interest expenses declined slightly to $1.8 billion reflecting lower litigation and consulting expenses.

Earnings for the Investment Management segment

In 4Q15, Bank of New York Mellon’s Investment Management segment generated revenues of $1.0 billion—2% higher than in 4Q14. The decline is a reflection of the negative impact of a stronger dollar, net outflows, and low equity market values. Assets under management were $1.6 trillion, 4% lower on a YoY basis. Long-term outflows were $11 billion due to equity, index, and fixed income investments, while short-term outflows were $2 billion.

The Investment Management segment’s fees came in at $799 million, 3% lower on a YoY basis. This reflected the impact of lower equity market values and net outflows.

BNY Mellon has agreed to acquire the assets of Menlo Park, California-based Atherton Lane Advisers. This would add $2.7 billion in assets under management and approximately 700 high-net-worth clients.

Bank of New York Mellon constitutes 8.5% of the Financial Select Sector SPDR Fund (XLF). Peers like Northern Trust Corporation (NTRS) and State Street Corporation (STT) have weights of 0.53% and 0.73%, respectively, in XLF.

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