BNY (BNY): Q3 profit per share up 24% as fees and interest income grow, while its capital cushion slips
BNY, the New York bank that holds and processes other institutions' assets, reported third-quarter profit of $2.34 per share, up 24% from $1.88 a year earlier. Sales rose 12% to $5.68bn and costs rose only 8%. Its main capital cushion, the CET1 ratio, fell to 10.9% from 11.7% as it kept returning cash to shareholders.
What happened
On 15 October 2026 BNY (the Bank of New York Mellon Corporation) published results for the three months to 30 September. Under US accounting rules (GAAP), net income available to common shareholders was $1,608 million, or $2.34 per diluted share (per share, counting shares that could exist after options and similar awards). Excluding "notable items", one-off entries the company separates out, profit per share was $2.37. This quarter's notable items were $23 million of severance costs and a $1 million release of a legal reserve. Chief executive Robin Vince said BNY "delivered strong results in the third quarter" and that revenue rose 12% from a year earlier. That is management's view; the figures below are from the filed release.
BNY is mainly a custody bank. Instead of lending to households, it holds and services financial assets for big investors such as pension funds, asset managers and other banks. At 30 September it was responsible for $63.4 trillion of assets under custody or administration (AUC/A, assets it safeguards and processes for clients, up 10% from a year earlier) and $2.2 trillion of assets under management (AUM, assets it invests on clients' behalf, up 2%). Both figures are marked preliminary in the release. It also returned about $1.4 billion to shareholders in the quarter: $937 million of share buybacks and $436 million of dividends.
The numbers, explained
Start with sales, which banks call revenue. Total revenue was $5,676 million against $5,081 million a year earlier, a rise of $595 million, or 11.7% ($595M divided by $5,081M). Against the second quarter ($5,698 million) it was down $22 million, about 0.4%, so growth is a year-on-year story rather than a sequential one. Revenue has two main parts. Fee revenue, charges for services such as custody, clearing and currency trading, was $4,078 million, up 12.1% from $3,637 million. Net interest income, the interest earned on loans and investments minus the interest paid to depositors, was $1,423 million, up 15.1% from $1,236 million but down 1.6% from $1,446 million in the second quarter. The remaining $175 million is investment and other revenue (4,078 + 1,423 + 175 = 5,676).
Now costs and profit. Noninterest expense, mainly staff and technology, was $3,489 million against $3,236 million, up 7.8%. Because revenue grew 11.7% and expenses 7.8%, the gap is 3.9 percentage points, which the company calls operating leverage of 389 basis points (a basis point is one hundredth of a percentage point). Set aside $1 million for credit losses and pre-tax income was $2,186 million ($5,676M minus $3,489M minus $1M), up 18.0% from $1,852 million. Pre-tax margin, the share of each sale left before tax, was 38.5% (2,186 divided by 5,676), against 36.4%. Put simply, BNY kept about 38.5 cents of each dollar of sales before tax. Return on tangible common equity (ROTCE, profit as a share of shareholders' equity excluding goodwill and similar intangibles, a non-GAAP measure) was 29.0%, against 25.6%.
Two numbers point the other way. Profit per share was down 4.5% from the second quarter's $2.45 (a fall of $0.11, $0.11 divided by $2.45), as pre-tax income slipped 3.6% from $2,267 million to $2,186 million. The CET1 ratio, a bank's highest-quality capital as a share of its risk-weighted assets and a key measure of its ability to absorb losses, was 10.9%, against 11.0% in the second quarter and 11.7% a year earlier, a fall of 0.8 percentage points. A lower ratio is not a warning in itself, and the release does not break down the fall; in our reading, returning $1.4 billion to shareholders in the quarter is part of the picture. Independent coverage by Zacks (via Yahoo Finance) put analysts' expected adjusted profit at $2.26 per share and sales at $5.56 billion; those are estimates, and the reported $2.37 and $5.68 billion were above them.
Why it matters
BNY earns most of its money from being the plumbing of the financial system. When an asset manager buys shares, a bank settles the trade, holds the shares safely, pays out dividends and reports the holdings. BNY charges small fees on enormous volumes. That makes its fees steady when markets are calm and larger when markets are busy or asset prices are high. The release shows the quarter's strength was broad: Securities Services, which includes custody and issuer services, brought in $2,820 million of revenue (up 15%), about half the total. Market and Wealth Services brought in $1,984 million (up 12%), and Investment and Wealth Management $857 million (up 4%).
For customers, the numbers suggest demand for trusted record-keeping and cash and collateral services is growing, with Issuer Services, which supports companies that issue shares and bonds, up 27% to $690 million. For rivals such as State Street and large banks' custody arms, they show how competitive that business is. The investment management arm is the weaker part: its revenue grew 1%, and assets under management fell 2% from the second quarter. On outlook, the company says it expects full-year revenue growth near the middle of a range of 12% to 13%, and expense growth near the middle of 7% to 8%, both excluding notable items. Those are management's forecasts, not facts. The finance chief described fourth-quarter revenue as "roughly flattish", and said expenses would step up.
What to watch next
BNY's fourth-quarter and full-year results will show how the year lands against its own forecasts: revenue growth near the middle of 12% to 13%, and net interest income up about 15% for the full year. We did not find a confirmed date for that release, so check the investor relations page at bny.com/investorrelations. The release also gives capital figures to follow: the CET1 ratio (10.9%) and the Tier 1 leverage ratio (5.7%, against 6.1% a year earlier, per Zacks). Finally, the company says it will not treat fourth-quarter expenses as the base for next year's costs, so the next full-year expense outlook is a dated item to read when it is published.
- Key terms in plain words
- AUC/A: the value of assets a custody bank holds or processes for clients. It earns fees on them, but they are not the bank's own money.
- Net interest income: interest earned on loans and investments less interest paid on deposits.
- CET1 ratio: the bank's highest-quality capital as a share of its risk-weighted assets.
- Operating leverage: how much faster revenue grows than costs.
Sources
More on BNY (BNY) · Financials takes
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