Bank of New York Mellon Corp
For the period ended Mar 31, 2024. Filed May 3, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 3, 2024
Extracted filing text, with the paragraph anchors used by the comparison.
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Review of business segments
We have an internal information system that produces performance data along product and service lines for our three principal business segments: Securities Services, Market and Wealth Services and Investment and Wealth Management, and the Other segment.
Business segment accounting principles
Our business segment data has been determined on an internal management basis of accounting, rather than the generally accepted accounting principles (“GAAP”) used for consolidated financial reporting. These measurement principles are designed so that reported results of the businesses will track their economic performance.
For information on the accounting principles of our business segments, see Note 19 of the Notes to Consolidated Financial Statements. For information on the primary products and services in each line of business, the primary types of revenue by line of
BNY Mellon 11 business and how our business segments are presented and analyzed, see Note 24 of the Notes to Consolidated Financial Statements in our 2023 Annual Report.
Business segment results are subject to reclassification when organizational changes are made, or for refinements in revenue and expense allocation methodologies. Refinements are typically reflected on a prospective basis. In the first quarter of 2024, we made certain realignments of similar products and services within our lines of business consistent with the firm’s ongoing transition to a platforms operating model uniting related capabilities and enabling streamlining of internal processes to drive growth, efficiency, resiliency, and enhanced risk management. The largest change was the movement of Institutional Solutions from Pershing to Clearance and Collateral Management, both in the Market and Wealth Services business segment. We made other smaller changes that moved activity from Asset Servicing in the Securities Services business segment to Treasury Services in the Market and Wealth Services business segment, and from Wealth Management in the Investment and Wealth Management business segment and Pershing in the Market and Wealth Services business segment to Investment Management in the Investment and Wealth Management business segment. The Other segment was not impacted by the changes. Prior period business segment results have been revised to reflect these changes.
The results of our business segments may be influenced by client and other activities that vary by quarter. In the first quarter, staff expense typically increases, reflecting the vesting of long-term stock awards for retirement-eligible employees. The timing of our annual employee merit increases also impacts staff expense. In 2024, the merit increase was effective in March, thus partially impacting the first quarter and second quarter staff expense variances. For 2023, the merit increase was effective at the beginning of the second quarter. In the third quarter,
volume-related fees may decline due to reduced client activity. In the fourth quarter, we typically incur higher business development and marketing expenses. In our Investment and Wealth Management business segment, performance fees are typically higher in the fourth and first quarters, as those quarters represent the end of the measurement period for many of the performance fee-eligible relationships.
The results of our business segments may also be impacted by the translation of financial results denominated in foreign currencies to the U.S. dollar. We are primarily impacted by activities denominated in the British pound and the euro. On a consolidated basis and in our Securities Services and Market and Wealth Services business segments, we typically have more foreign currency-denominated expenses than revenues. However, our Investment and Wealth Management business segment typically has more foreign currency-denominated revenues than expenses. Overall, currency fluctuations impact the year-over-year growth rate in the Investment and Wealth Management business segment more than the Securities Services and Market and Wealth Services business segments. However, currency fluctuations, in isolation, are not expected to significantly impact net income on a consolidated basis.
Fee revenue in the Investment and Wealth Management business segment, and, to a lesser extent, the Securities Services and Market and Wealth Services business segments, is impacted by global market fluctuations. At March 31, 2024, we estimated that a 5% change in global equity markets, spread evenly throughout the year, would impact fee revenue by less than 1% and diluted earnings per common share by $0.04 to $0.07.
See Note 19 of the Notes to Consolidated Financial Statements for the consolidating schedules, which show the contribution of our business segments to our overall profitability.
12 BNY Mellon
Securities Services business segment
| (dollars in millions, unless otherwise noted) · 1Q24 vs. | ||||||||
|---|---|---|---|---|---|---|---|---|
| 1Q24 · 4Q23 · 3Q23 · 2Q23 · 1Q23 · 4Q23 · 1Q23 | ||||||||
| Revenue: | ||||||||
| Investment services fees: | ||||||||
| Asset Servicing | $1,013 | $975 | $976 | $980 | $941 | 4% | 8% | |
| Issuer Services | 261 | 285 | 281 | 319 | 236 | (8) | 11 | |
| Total investment services fees | 1,274 | 1,260 | 1,257 | 1,299 | 1,177 | 1 | 8 | |
| Foreign exchange revenue | 124 | 118 | 107 | 124 | 139 | 5 | (11) | |
| Other fees (a) | 59 | 54 | 52 | 54 | 55 | 9 | 7 | |
| Total fee revenue | 1,457 | 1,432 | 1,416 | 1,477 | 1,371 | 2 | 6 | |
| Investment and other revenue | 99 | 112 | 65 | 84 | 72 | N/M | N/M | |
| Total fee and other revenue | 1,556 | 1,544 | 1,481 | 1,561 | 1,443 | 1 | 8 | |
| Net interest income | 583 | 635 | 600 | 668 | 666 | (8) | (12) | |
| Total revenue | 2,139 | 2,179 | 2,081 | 2,229 | 2,109 | (2) | 1 | |
| Provision for credit losses | 11 | 64 | 19 | 16 | — | N/M | N/M | |
| Noninterest expense (excluding amortization of intangible assets) | 1,530 | 1,645 | 1,590 | 1,560 | 1,532 | (7) | — | |
| Amortization of intangible assets | 7 | 8 | 8 | 7 | 8 | (13) | (13) | |
| Total noninterest expense | 1,537 | 1,653 | 1,598 | 1,567 | 1,540 | (7) | — | |
| Income before income taxes | $591 | $462 | $464 | $646 | $569 | 28% | 4% | |
| Pre-tax operating margin | 28% | 21% | 22% | 29% | 27% | |||
| Securities lending revenue (b) | $46 | $48 | $46 | $47 | $48 | (4)% | (4)% | |
| Total revenue by line of business: | ||||||||
| Asset Servicing | $1,668 | $1,675 | $1,585 | $1,695 | $1,657 | —% | 1% | |
| Issuer Services | 471 | 504 | 496 | 534 | 452 | (7) | 4 | |
| Total revenue by line of business | $2,139 | $2,179 | $2,081 | $2,229 | $2,109 | (2)% | 1% | |
| Selected average balances: | ||||||||
| Average loans | $11,204 | $11,366 | $11,236 | $11,283 | $10,939 | (1)% | 2% | |
| Average deposits | $174,687 | $171,086 | $162,509 | $172,863 | $167,209 | 2% | 4% | |
| Selected metrics: | ||||||||
| AUC/A at period end (in trillions) (c) | $35.4 | $34.2 | $32.3 | $33.2 | $32.6 | 4% | 9% | |
| Market value of securities on loan at period end (in billions) (d) | $486 | $450 | $406 | $415 | $441 | 8% | 10% | |
| Issuer Services: | ||||||||
| Total debt serviced at period end (in trillions) (e) | $14.0 | $14.0 | $13.8 | $13.8 | $13.6 | —% | 3% | |
| Number of sponsored Depositary Receipts programs at period end | 527 | 543 | 559 | 564 | 577 | (3)% | (9)% | |
(a) Other fees primarily include financing-related fees.
(b) Included in investment services fees reported in the Asset Servicing line of business.
(c) Consists of AUC/A primarily from the Asset Servicing line of business and, to a lesser extent, the Issuer Services line of business. Includes the AUC/A of CIBC Mellon of $1.7 trillion at March 31, 2024 and Dec. 31, 2023, $1.5 trillion at Sept. 30, 2023, $1.6 trillion at June 30, 2023 and $1.5 trillion at March 31, 2023.
(d) Represents the total amount of securities on loan in our agency securities lending program. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $64 billion at March 31, 2024, $63 billion at Dec. 31, 2023 and Sept. 30, 2023, $66 billion at June 30, 2023 and $69 billion at March 31, 2023
(e) Reported amounts have been revised from previously reported amounts.
The Securities Services business segment consists of two distinct lines of business, Asset Servicing and Issuer Services, which provide business solutions across the transaction life cycle to our global asset owner and asset manager clients. We are one of the leading global investment services providers with
$35.4 trillion of AUC/A at March 31, 2024. For information on the drivers of the Securities Services fee revenue, see Note 10 of the Notes to Consolidated Financial Statements in our 2023 Annual Report.
The Asset Servicing business provides a comprehensive suite of solutions. We are one of the largest global custody and front-to-back outsourcing
BNY Mellon 13 partners. We offer services for the safekeeping of assets in capital markets globally, as well as fund accounting services, exchange-traded funds servicing, transfer agency, trust and depository, front-to-back capabilities as well as data and analytics solutions for our clients. We deliver foreign exchange, securities lending and financing solutions, on both an agency and principal basis. Our agency securities lending program is one of the largest lenders of U.S. and non-U.S. securities, servicing a lendable asset pool of approximately $5 trillion in 34 separate markets. Our market-leading liquidity services portal enables cash investments for institutional clients and includes fund research and analytics.
Our Digital Asset Custody platform offers custody and administration services for Bitcoin and Ether for select U.S. institutional clients. Our Digital Assets Funds Services provides accounting and administration, transfer agency and ETF services to digital asset funds. We expect to continue developing our digital asset capabilities and to work closely with clients to address their evolving digital asset needs. As of and for the quarter ended March 31, 2024, our Digital Asset Custody platform and related initiative had a de minimis impact on our assets, liabilities, revenues and expenses.
The Issuer Services business includes Corporate Trust and Depositary Receipts. Our Corporate Trust business delivers a full range of issuer and related investor services, including trustee, paying agency, fiduciary, escrow and other financial services. We are a leading provider to the debt capital markets, providing customized and market-driven solutions to investors, bondholders and lenders. Our Depositary Receipts business drives global investing by providing servicing and value-added solutions that enable, facilitate and enhance cross-border trading, clearing, settlement and ownership. We are one of the largest providers of depositary receipts services in the world, partnering with leading companies from more than 50 countries.
AUC/A of $35.4 trillion increased 9% compared with March 31, 2023, primarily reflecting higher market values.
Total revenue of $2.1 billion increased 1% compared with the first quarter of 2023 and decreased 2% compared with the fourth quarter of 2023. The drivers of total revenue by line of business are indicated below.
Asset Servicing revenue of $1.7 billion increased 1% compared with the first quarter of 2023 and was flat compared with the fourth quarter of 2023. The increase compared with the first quarter of 2023 primarily reflects higher market values, net new business and higher client activity, partially offset by lower net interest income and foreign exchange revenue. Compared with the fourth quarter of 2023, higher market values, client activity and foreign exchange revenue were offset by lower net interest income and a strategic equity investment gain in the fourth quarter of 2023.
Issuer Services revenue of $471 million increased 4% compared with the first quarter of 2023 and decreased 7% compared with the fourth quarter of 2023. The increase compared with the first quarter of 2023 primarily reflects higher Depositary Receipts revenue, partially offset by lower net interest income. The decrease compared with the fourth quarter of 2023 primarily reflects lower Depositary Receipts revenue and net interest income.
Market and regulatory trends are driving investable assets toward lower fee asset management products at reduced margins for our clients. These dynamics are also negatively impacting our investment services fees. However, at the same time, these trends are providing additional outsourcing opportunities as clients and other market participants seek to comply with regulations and reduce their operating costs.
Noninterest expense of $1.5 billion was flat compared with the first quarter of 2023 and decreased 7% compared with the fourth quarter of 2023. Compared with the first quarter of 2023, higher investments and employee merit increases were offset by efficiency savings. The decrease compared with fourth quarter of 2023 primarily reflects efficiency savings, lower severance expense and lower revenue-related expenses.
14 BNY Mellon
Market and Wealth Services business segment
| (dollars in millions, unless otherwise noted) · 1Q24 vs. | ||||||||
|---|---|---|---|---|---|---|---|---|
| 1Q24 · 4Q23 · 3Q23 · 2Q23 · 1Q23 · 4Q23 · 1Q23 | ||||||||
| Revenue: | ||||||||
| Investment services fees: | ||||||||
| Pershing | $482 | $472 | $478 | $466 | $469 | 2% | 3% | |
| Treasury Services | 184 | 179 | 180 | 183 | 175 | 3 | 5 | |
| Clearance and Collateral Management | 329 | 322 | 305 | 295 | 290 | 2 | 13 | |
| Total investment services fees | 995 | 973 | 963 | 944 | 934 | 2 | 7 | |
| Foreign exchange revenue | 24 | 21 | 21 | 21 | 18 | 14 | 33 | |
| Other fees (a) | 58 | 50 | 49 | 52 | 51 | 16 | 14 | |
| Total fee revenue | 1,077 | 1,044 | 1,033 | 1,017 | 1,003 | 3 | 7 | |
| Investment and other revenue | 17 | 16 | 16 | 16 | 15 | N/M | N/M | |
| Total fee and other revenue | 1,094 | 1,060 | 1,049 | 1,033 | 1,018 | 3 | 7 | |
| Net interest income | 423 | 436 | 401 | 420 | 453 | (3) | (7) | |
| Total revenue | 1,517 | 1,496 | 1,450 | 1,453 | 1,471 | 1 | 3 | |
| Provision for credit losses | 5 | 28 | 6 | 7 | — | N/M | N/M | |
| Noninterest expense (excluding amortization of intangible assets) | 833 | 836 | 790 | 792 | 781 | — | 7 | |
| Amortization of intangible assets | 1 | 1 | 2 | 2 | 1 | — | — | |
| Total noninterest expense | 834 | 837 | 792 | 794 | 782 | — | 7 | |
| Income before income taxes | $678 | $631 | $652 | $652 | $689 | 7% | (2)% | |
| Pre-tax operating margin | 45% | 42% | 45% | 45% | 47% | |||
| Total revenue by line of business: | ||||||||
| Pershing | $670 | $669 | $657 | $641 | $649 | —% | 3% | |
| Treasury Services | 416 | 408 | 397 | 413 | 419 | 2 | (1) | |
| Clearance and Collateral Management | 431 | 419 | 396 | 399 | 403 | 3 | 7 | |
| Total revenue by line of business | $1,517 | $1,496 | $1,450 | $1,453 | $1,471 | 1% | 3% | |
| Selected average balances: | ||||||||
| Average loans | $39,271 | $39,200 | $37,496 | $36,432 | $36,854 | —% | 7% | |
| Average deposits | $89,539 | $87,695 | $84,000 | $85,407 | $86,040 | 2% | 4% | |
| Selected metrics: | ||||||||
| AUC/A at period end (in trillions) (b) | $13.1 | $13.3 | $13.1 | $13.4 | $13.7 | (2)% | (4)% | |
| Pershing: | ||||||||
| AUC/A at period end (in trillions) | $2.6 | $2.5 | $2.4 | $2.4 | $2.4 | 4% | 8% | |
| Net new assets (U.S. platform) (in billions) (c) | $(2) | $(4) | $23 | $(34) | $37 | N/M | N/M | |
| Daily average revenue trades (“DARTs”) (U.S. platform) (in thousands) | 290 | 229 | 223 | 223 | 261 | 27% | 11% | |
| Average active clearing accounts (in thousands) | 7,991 | 8,012 | 7,979 | 7,946 | 7,849 | —% | 2% | |
| Treasury Services: | ||||||||
| Average daily U.S. dollar payment volumes | 237,124 | 243,005 | 233,620 | 233,931 | 236,322 | (2)% | —% | |
| Clearance and Collateral Management: | ||||||||
| Average tri-party collateral management balances (in billions) | $5,157 | $5,248 | $5,706 | $6,044 | $5,626 | (2)% | (8)% | |
(a) Other fees primarily include financing-related fees.
(b) Consists of AUC/A from the Clearance and Collateral Management and Pershing lines of business.
(c) Net new assets represents net flows of assets (e.g., net cash deposits and net securities transfers, including dividends and interest) in customer accounts in Pershing LLC, a U.S. broker-dealer.
The Market and Wealth Services business segment consists of three distinct lines of business, Pershing, Treasury Services and Clearance and Collateral Management, which provide business services and technology solutions to entities including financial
institutions, corporations, foundations and endowments, public funds and government agencies. For information on the drivers of the Market and Wealth Services fee revenue, see Note 10 of the Notes to Consolidated Financial Statements in our 2023 Annual Report.
BNY Mellon 15
Pershing provides execution, clearing, custody, business and technology solutions, delivering operational support to broker-dealers, wealth managers and registered investment advisors (“RIAs”) globally.
Our Treasury Services business is a leading provider of global payments, liquidity management and trade finance services for financial institutions, corporations and the public sector.
Our Clearance and Collateral Management business clears and settles equity and fixed income transactions globally and serves as custodian for tri-party repo collateral worldwide. We are the primary provider of U.S. government securities clearance and a provider of non-U.S. government securities clearance. Our collateral services include collateral management, administration and segregation. We offer innovative solutions and industry expertise, which help financial institutions and institutional investors with their financing, risk and balance sheet challenges. We are a leading provider of tri-party collateral management services with an average of $5.2 trillion serviced globally, including approximately $4.0 trillion of the U.S. tri-party repo market at March 31, 2024.
AUC/A of $13.1 trillion decreased 4% compared with March 31, 2023, primarily reflecting lower collateral management balances, partially offset by higher market values.
Total revenue of $1.5 billion increased 3% compared with the first quarter of 2023 and 1% compared with the fourth quarter of 2023. The drivers of total revenue by line of business are indicated below.
Pershing revenue of $670 million increased 3% compared with the first quarter of 2023 and was flat compared with the fourth quarter of 2023. The increase compared with the first quarter of 2023 primarily reflects higher market values and client activity, partially offset by lost business in the prior year. Compared with the fourth quarter of 2023, higher client activity and market values were offset by lower net interest income and lost business in the prior year.
Treasury Services revenue of $416 million decreased 1% compared with the first quarter of 2023 and increased 2% compared with the fourth quarter of 2023. The decrease compared with the first quarter of 2023 primarily reflects lower net interest income, partially offset by net new business. The increase compared with the fourth quarter of 2023 primarily reflects higher client activity.
Clearance and Collateral Management revenue of $431 million increased 7% compared with the first quarter of 2023 and 3% compared with the fourth quarter of 2023. The increase compared with the first quarter of 2023 primarily reflects higher collateral management fees and clearance volumes, partially offset by lower net interest income. The increase compared with the fourth quarter of 2023 primarily reflects higher collateral management fees and clearance volumes.
Noninterest expense of $834 million increased 7% compared with the first quarter of 2023 and was flat compared with the fourth quarter of 2023. The increase compared with the first quarter of 2023 primarily reflects higher investments and revenue-related expense and employee merit increases, partially offset by efficiency savings.
16 BNY Mellon
Investment and Wealth Management business segment
| 1Q24 vs. | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (dollars in millions) · 1Q24 · 4Q23 · 3Q23 · 2Q23 · 1Q23 · 4Q23 · 1Q23 | |||||||||
| Revenue: | |||||||||
| Investment management fees | $768 | $725 | $748 | $753 | $755 | 6% | 2% | ||
| Performance fees | 10 | 19 | 30 | 10 | 22 | N/M | N/M | ||
| Investment management and performance fees (a) | 778 | 744 | 778 | 763 | 777 | 5 | — | ||
| Distribution and servicing fees | 70 | 66 | 62 | 58 | 55 | 6 | 27 | ||
| Other fees (b) | (60) | (55) | (50) | (56) | (53) | N/M | N/M | ||
| Total fee revenue | 788 | 755 | 790 | 765 | 779 | 4 | 1 | ||
| Investment and other revenue (c) | 17 | (121) | 1 | 12 | 6 | N/M | N/M | ||
| Total fee and other revenue (c) | 805 | 634 | 791 | 777 | 785 | 27 | 3 | ||
| Net interest income | 41 | 45 | 39 | 39 | 45 | (9) | (9) | ||
| Total revenue | 846 | 679 | 830 | 816 | 830 | 25 | 2 | ||
| Provision for credit losses | (1) | (2) | (9) | 7 | — | N/M | N/M | ||
| Noninterest expense (excluding amortization of intangible assets) | 736 | 680 | 670 | 674 | 732 | 8 | 1 | ||
| Amortization of intangible assets | 4 | 5 | 5 | 5 | 5 | (20) | (20) | ||
| Total noninterest expense | 740 | 685 | 675 | 679 | 737 | 8 | — | ||
| Income (loss) before income taxes | $107 | $(4) | $164 | $130 | $93 | N/M | (d) | 15% | |
| Pre-tax operating margin | 13% | (1)% | 20% | 16% | 11% | ||||
| Adjusted pre-tax operating margin – Non-GAAP (e) | 14% | (1)%(d) | 22% | 18% | 13% | ||||
| Total revenue by line of business: | |||||||||
| Investment Management | $576 | $415 | $565 | $553 | $564 | 39% | 2% | ||
| Wealth Management | 270 | 264 | 265 | 263 | 266 | 2 | 2 | ||
| Total revenue by line of business | $846 | $679 | $830 | $816 | $830 | 25% | 2% | ||
| Average balances: | |||||||||
| Average loans | $13,553 | $13,405 | $13,519 | $13,995 | $13,960 | 1% | (3)% | ||
| Average deposits | $11,364 | $12,039 | $13,578 | $15,410 | $16,144 | (6)% | (30)% | ||
(a) On a constant currency basis, investment management and performance fees decreased 1% (Non-GAAP) compared with the first quarter of 2023. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 41 for the reconciliation of this Non-GAAP measure.
(b) Other fees primarily include investment services fees.
(c) Investment and other revenue and total fee and other revenue are net of income (loss) attributable to noncontrolling interests related to consolidated investment management funds.
(d) Excluding notable items, income before taxes decreased 27% (Non-GAAP) compared with the fourth quarter of 2023. Excluding notable items and net of distribution and servicing expense, the adjusted pre-tax operating margin was 21% (Non-GAAP) in the fourth quarter of 2023. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 41 for the reconciliation of these Non-GAAP measures.
(e) Net of distribution and servicing expense. See “Supplemental information – Explanation of GAAP and Non-GAAP financial measures” beginning on page 41 for the reconciliation of this Non-GAAP measure.
BNY Mellon 17
| AUM trends | 1Q24 vs. | ||||||
|---|---|---|---|---|---|---|---|
| (dollars in billions) | 1Q24 | 4Q23 | 3Q23 | 2Q23 | 1Q23 | 4Q23 | 1Q23 |
| AUM by product type: (a) | |||||||
| Equity | $168 | $145 | $133 | $145 | $142 | 16% | 18% |
| Fixed income | 219 | 205 | 190 | 203 | 207 | 7 | 6 |
| Index | 474 | 459 | 425 | 440 | 408 | 3 | 16 |
| Liability-driven investments | 573 | 605 | 534 | 579 | 604 | (5) | (5) |
| Multi-asset and alternative investments | 174 | 170 | 156 | 162 | 161 | 2 | 8 |
| Cash | 407 | 390 | 383 | 377 | 386 | 4 | 5 |
| Total AUM | $2,015 | $1,974 | $1,821 | $1,906 | $1,908 | 2% | 6% |
| Changes in AUM: (a) | |||||||
| Beginning balance of AUM | $1,974 | $1,821 | $1,906 | $1,908 | $1,836 | ||
| Net inflows (outflows): | |||||||
| Long-term strategies: | |||||||
| Equity | (4) | (2) | (3) | (3) | (4) | ||
| Fixed income | 12 | 3 | (7) | (4) | 4 | ||
| Liability-driven investments | 13 | 4 | 1 | (3) | 10 | ||
| Multi-asset and alternative investments | (5) | (1) | (4) | (1) | (3) | ||
| Total long-term active strategies inflows (outflows) | 16 | 4 | (13) | (11) | 7 | ||
| Index | (15) | (10) | (2) | 2 | (2) | ||
| Total long-term strategies inflows (outflows) | 1 | (6) | (15) | (9) | 5 | ||
| Short-term strategies: | |||||||
| Cash | 16 | 7 | 7 | (9) | — | ||
| Total net inflows (outflows) | 17 | 1 | (8) | (18) | 5 | ||
| Net market impact | 16 | 122 | (50) | (3) | 52 | ||
| Net currency impact | (10) | 30 | (27) | 19 | 15 | ||
| Other | 18(b) | — | — | — | — | ||
| Ending balance of AUM | $2,015 | $1,974 | $1,821 | $1,906 | $1,908 | 2% | 6% |
| Wealth Management client assets (c) | $309(d) | $312 | $292 | $286 | $279 | (1)% | 11% |
(a) Excludes assets managed outside of the Investment and Wealth Management business segment.
(b) Includes AUM and AUC/A in the Wealth Management line of business.
(c) Reflects the realignment of similar products and services within our lines of business.
(d) The realignment of similar products and services within our lines of business reduced client assets attributed to the Wealth Management business.
Our Investment and Wealth Management business segment consists of two distinct lines of business: Investment Management and Wealth Management. Our investment firms deliver a highly diversified portfolio of investment strategies independently, and through our global distribution network, to institutional and retail clients globally. BNY Mellon Wealth Management provides investment management, custody, wealth and estate planning, private banking services, investment servicing and information management. See pages 18 and 19 of our 2023 Annual Report for additional information on our Investment and Wealth Management business segment.
AUM of $2.0 trillion as of March 31, 2024, increased 6% compared with March 31, 2023, primarily reflecting higher market values.
Net long-term strategy inflows were $1 billion in the first quarter of 2024, driven by liability-driven and fixed income investments, partially offset by the outflows of index, multi-asset and alternative and equity investments. Short-term strategy inflows were $16 billion in the first quarter of 2024. Market and regulatory trends have resulted in increased demand for lower fee asset management products and for performance-based fees.
Total revenue of $846 million increased 2% compared with the first quarter of 2023 and 25% compared with the fourth quarter of 2023. The
18 BNY Mellon drivers of total revenue by line of business are indicated below.
Investment Management revenue of $576 million increased 2% compared with the first quarter of 2023 and 39% compared with the fourth quarter of 2023. The increase compared with the first quarter of 2023 primarily reflects higher market values, partially offset by the mix of AUM flows and lower performance fees. The increase compared with the fourth quarter of 2023 primarily reflects the reduction in the fair value of a contingent consideration receivable recorded in the fourth quarter of 2023 and higher market values, partially offset by the timing of performance fees.
Wealth Management revenue of $270 million increased 2% compared with the first quarter of 2023 and 2% compared with the fourth quarter of 2023. The increase compared with the first quarter of 2023
primarily reflects higher market values, partially offset by changes in product mix and lower net interest income. The increase compared with the fourth quarter of 2023 primarily reflects higher market values, partially offset by lower net interest income.
Revenue generated in the Investment and Wealth Management business segment included 30% from non-U.S. sources in the first quarter of 2024, compared with 31% in the first quarter of 2023 and 36% in the fourth quarter of 2023.
Noninterest expense of $740 million was flat compared with the first quarter of 2023 reflecting higher investments and employee merit increases, offset by efficiency savings. Noninterest expense increased 8% compared with the fourth quarter of 2023 primarily reflecting higher revenue-related expenses.
Other segment
| (in millions) | 1Q24 | 4Q23 | 3Q23 | 2Q23 | 1Q23 |
|---|---|---|---|---|---|
| Fee revenue | $(17) | $(17) | $6 | $(2) | $3 |
| Investment and other revenue (a) | 47 | 38 | 74 | 34 | 38 |
| Total fee and other revenue (a) | 30 | 21 | 80 | 32 | 41 |
| Net interest (expense) | (7) | (15) | (24) | (27) | (36) |
| Total revenue (a) | 23 | 6 | 56 | 5 | 5 |
| Provision for credit losses | 12 | (6) | (13) | (25) | 27 |
| Noninterest expense | 65 | 820 | 24 | 71 | 41 |
| (Loss) income before income taxes (a) | $(54) | $(808) | $45 | $(41) | $(63) |
| Average loans and leases | $1,816 | $1,706 | $1,711 | $1,749 | $1,508 |
(a) Prior periods were restated to reflect the retrospective application of adopting new accounting guidance related to our investments in renewable energy projects using the proportional amortization method (ASU 2023-02). See Note 2 of the Notes to Consolidated Financial Statements for additional information.
See page 20 of our 2023 Annual Report for additional information on the Other segment.
Total revenue includes corporate treasury and other investment activity, including hedging activity, which has an offsetting impact between fee and other revenue and net interest expense.
Total revenue increased $18 million compared with the first quarter of 2023 and $17 million compared with the fourth quarter of 2023. The increase compared with the first quarter of 2023 primarily reflects a strategic equity investment loss recorded in
the first quarter of 2023. The increase compared with the fourth quarter of 2023 primarily reflects net securities losses recorded in the fourth quarter of 2023, partially offset by strategic equity investment gains also recorded in the fourth quarter of 2023.
The provision for credit losses was $12 million in the first quarter of 2024, primarily reflecting increased reserves related to cash balances with exposure to Russia.
Noninterest expense increased $24 million compared with the first quarter of 2023 and decreased $755 million compared with the fourth quarter of 2023. The decrease compared with the fourth quarter of
BNY Mellon 19
2023 primarily reflects the FDIC special assessment recorded in the fourth quarter of 2023 and lower severance expense and litigation reserves.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.