The Bank of New York Mellon Corporation Q4 FY2025 earnings call

Strategic Update: 2025 was a successful year with record net income ($5.3B), revenue ($20.1B), and 26% return on tangible common equity. Total revenue grew 8% YOY, with 507 basis points of positive operating leverage. Commercial Model: Operating as One BNY, achieved record sales with wins like WisdomTree, Jupiter, and Japan's Government Pension Investment Fund. Platform Operating Model: ~70% of people in platform model, driving productivity. AI Adoption: Enterprise AI platform Eliza, collaborations with Google and OpenAI, enabling digital employees. Innovation: Launched Dreyfus Stablecoin Reserves Fund, tokenized AAA CLO strategy, and tokenized deposits.

Security Services: Total revenue was $2.5 billion, up 7% year-over-year. Total investment services fees were up 11%. ETF AUC/A ended the year at $3.8 trillion, up 34% year-over-year. Alternatives AUC/A were up 10% year-over-year. Pretax income was $838 million, a 30% increase year-over-year with a pretax margin of 34%. Markets and Wealth Services: Total revenue was $1.8 billion, up 8% year-over-year. Investment services fees were up 4%. Pershing had net new assets of $51 billion in the fourth quarter. Clearance and Collateral Management investment services fees increased by 15%. Pretax income was $882 million, up 9% year-over-year with a pretax margin of 49%. Investment and Wealth Management: Total revenue was $854 million, down 2% year-over-year. Investment Management fees were up 1% driven by higher market values and the weaker dollar, but there were net outflows in Q4. Pretax income was $148 million, down 14% year-over-year with a pretax margin of 17%.

2026 total revenue excluding notable items expected to grow ~5% YOY. Expenses to grow 3-4% excluding notable items. Medium-term targets revised: pretax margin to 38%, ROTCE to 28%. Tier 1 leverage ratio target 5.5%-6%.

Market environment variability affecting revenue and margin targets. Sensitivity to interest rate changes and potential deposit margin compression. Uncertainties in AI adoption and integration impacting medium-term targets.

Q: Ebrahim Poonawala on guidance and revenue growth assumptions A: Dermot McDonogh on top line growth guide, NII and fees composition Q: Michael Mayo on AI digital employees and savings A: Robin Vince on AI hub, Eliza platform, and digital employees Q: Unknown Analyst on pretax margin improvement A: Dermot McDonogh on segment performance and growth opportunities Q: Steven Chubak on tokenized deposits and clearance/collateral management A: Robin Vince on digital asset opportunities and clearance business outlook Q: Alexander Blostein on fee revenue outlook and buyback A: Robin Vince and Dermot McDonogh on portfolio effect, megatrends, and capital return plans Q: Glenn Schorr on consolidation in Pershing's space A: Dermot McDonogh on role in market and pipeline health Q: David Smith on medium-term targets and client relationships A: Dermot McDonogh on client relationship growth and future targets Q: Gerard Cassidy on inorganic growth and market opportunities A: Robin Vince on M&A optionality and global market opportunities Q: Emily Ericksen on expenses and NII drivers A: Dermot McDonogh on expense guide and NIM outlook