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Which Segment Drove BNY Mellon’s 4Q16 Earnings?

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Business segments

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

  • Investment Services – This segment provides custody and related services, broker-dealer services, collateral services, and clearing services, among others.
  • Investment Management – This segment provides investment management services to institutional and retail clients, including wealth and estate planning and private banking solutions.
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Earnings for the Investment Services business

In 4Q16, Bank of New York Mellon’s (BK) revenues from its Investment Services business rose 5% to $2.7 billion. The Investment Services segment’s fees were 4% higher year-over-year at $1.7 billion.

Asset servicing fees rose 3% to ~$1.0 billion during the quarter, backed by higher money market fees. However, this movement was offset by a stronger US dollar and the downsizing of BK’s UK business.

Net interest revenues increased to $713 million due to higher short-term rates. Non-interest expenses fell to $1.8 billion, reflecting lower legal expenses.

Earnings for the Investment Management business

Bank of New York Mellon’s Investment Management (JPM) (BAC) segment generated revenues of $960 million during 4Q16, which is 4% lower than in 4Q15. Assets under management (C) increased 1% year-over-year to ~$1.7 trillion. Long-term inflows totaled $11 billion in 4Q16 while short-term outflows totaled $1 billion.

Investment management fees of $801 million were flat year-over-year and reflected higher money market fees and market value. However, these fees were offset by the unfavorable impact of a stronger US dollar.

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