Bank of New York Mellon (NYSE:BNY) reported sharply higher second-quarter earnings and raised its full-year outlook, citing broad-based revenue growth, stronger client activity and momentum from its revamped commercial and operating models.
On the company’s earnings call, Chief Executive Officer Robin Vince said BNY delivered “another strong performance” in the quarter, with earnings per share of $2.45, up 27% from a year earlier. Total revenue rose 13% year-over-year to a record $5.7 billion, while the company generated about 600 basis points of positive operating leverage. Pre-tax margin expanded to 40%, and return on tangible common equity reached 31%.
“BNY is built for this type of environment,” Vince said, pointing to the company’s diversified businesses across capital markets and strong client engagement.
Revenue Growth Broad-Based Across Businesses
Chief Financial Officer Dermot McDonogh said total revenue of $5.7 billion included an 11% increase in fee revenue. Investment services fees rose 13%, reflecting net new business, higher client activity and higher market values. Investment management and performance fees increased 5%, primarily due to higher market values, partially offset by the mix of assets under management flows.
Firm-wide assets under custody and/or administration rose 12% year-over-year to $62.6 trillion, driven mainly by higher market values and net client inflows, partly offset by the unfavorable effect of a stronger U.S. dollar. Assets under management totaled $2.2 trillion, up 6% from a year earlier, with higher market values partly offset by the stronger dollar and cumulative net outflows.
Net interest income climbed 20% year-over-year to $1.4 billion, driven by reinvestment of investment securities at higher yields and balance sheet growth, partly offset by deposit margin compression. Expenses rose 7% to $3.4 billion, with McDonogh saying about three-quarters of the increase reflected revenue-related expenses. The remainder reflected higher investments and employee salary increases, partly offset by efficiency savings.
BNY recorded an $8 million benefit from provision for credit losses, which McDonogh attributed to improvements in commercial real estate exposure. He said the company now has zero non-performing assets in that area.
Segments Show Gains in Securities, Wealth and Investment Management
Securities Services reported revenue of $2.8 billion, up 15% from a year earlier. Investment services fees in the segment also increased 15%. In asset servicing, fees rose 12%, reflecting higher client activity and market values. ETF assets under custody and/or administration reached $4.4 trillion, up 35% year-over-year, while alternatives assets under custody and/or administration increased 17%.
McDonogh said issuer services investment services fees rose 23%, primarily driven by higher corporate trust fees. He cited a public sector mandate referenced by Vince, as well as broad-based growth. BNY maintained its No. 2 position in active collateralized loan obligation markets while increasing market share by 200 basis points year-over-year, and maintained its No. 1 position in conventional debt servicing while growing market share by 400 basis points.
Market and Wealth Services revenue rose 12% to $2 billion. In Wealth Solutions, investment services fees increased 5%, and net new assets were $25 billion in the quarter, representing an annualized growth rate of 4%. Clearance and collateral management fees rose 18%, supported by broad-based growth in collateral balances and clearance volumes. Average collateral balances were $8.2 trillion, up 16% year-over-year.
Investment and Wealth Management reported revenue of $863 million, up 8%. Investment management fees rose 6%, primarily due to higher market values, partly offset by the mix of AUM flows. The segment reported $3 billion of net inflows, led by cash and fixed income strategies, partly offset by outflows in LDI index and equity strategies.
Company Raises 2026 Outlook
BNY increased its outlook for 2026, with McDonogh citing the company’s performance in the first half and momentum entering the second half. The company now expects total revenue, excluding notable items, to rise 10% to 11% year-over-year, depending on market conditions. That includes expected full-year net interest income growth of 12% to 13%.
Expenses excluding notable items are now expected to increase 6% to 7%, primarily reflecting higher revenue-related expenses. Taken together, McDonogh said BNY expects to deliver about 400 basis points of positive operating leverage in 2026. The company continues to expect a quarterly tax rate of approximately 23% for the remaining two quarters of the year.
During the analyst question-and-answer session, McDonogh said the second quarter is typically BNY’s strongest quarter and that the third quarter is seasonally the slowest. He said the company is entering the quarter with strong internal momentum, client dialogue, engagement and backlog, but added that the guidance includes a “conservative bias” because of market and rate uncertainty.
Capital Return and Balance Sheet Remain in Focus
BNY returned approximately $1.5 billion of capital to common shareholders in the second quarter, bringing first-half capital return to $2.8 billion. The year-to-date total payout ratio was 87%. The company also increased its quarterly common stock dividend by 19% to $0.63 per share, effective this quarter.
McDonogh said BNY’s Tier 1 leverage ratio was 5.9%, down 7 basis points sequentially, while its CET1 ratio was 11%, essentially unchanged from the prior quarter. The company’s consolidated liquidity coverage ratio was 111%, and its net stable funding ratio was 130%.
Asked about capital philosophy, McDonogh said the company no longer guides to a specific buyback level and described capital return as “an output, not an input.” He said BNY remains willing to use its balance sheet to support clients, pointing to 6% loan growth in the quarter, primarily in securities finance.
Management Highlights AI, Digital Assets and Commercial Momentum
Vince said BNY’s transformation has centered on culture, a new platform operating model and a new commercial model designed to make it easier for clients to do more with the company. He said the second quarter marked BNY’s 14th consecutive quarter of year-over-year sales growth, and that the company has had two consecutive record sales quarters so far this year. Average deal size was up more than 20% year-over-year, and about 10% of deals were with clients entirely new to BNY.
Vince also emphasized innovation in artificial intelligence and digital assets. He described AI as a long-term opportunity that can help BNY run the company better, improve products and client experiences, and potentially expand the company’s capabilities. McDonogh said BNY’s overall engineering budget is approximately $4 billion and that AI spending remains “quite de minimis” within that context, while noting that about 40% of software written by BNY engineers is now written using AI.
On digital assets, Vince said the broader shift is toward an “always-on operating model” for financial market infrastructure. He cited BNY’s expanded relationship with Circle, which brings together institutional digital asset custody with mint and burn capabilities for USDC. Vince said BNY sees itself as a bridge between traditional and digital financial systems as the market evolves.
“We’re leaning into the new thing and participating in that fully,” Vince said.
About Bank of New York Mellon (NYSE:BNY)
BNY, formerly known as BNY Mellon, is a global financial services company headquartered in New York City. Formed in 2007 through the merger of the Bank of New York and Mellon Financial Corporation, BNY traces its roots back to 1784, making it one of the oldest banking institutions in the United States. It was also the first company listed on the New York Stock Exchange.
BNY operates at the center of the world’s capital markets, partnering with clients to help them operate more efficiently and accelerate growth.
