The Bank of New York Mellon Corporation (NYSE:BK) Q1 2019 Earnings Conference Call - Final Transcript

Apr 17, 2019 • 08:00 am ET


The Bank of New York Mellon Corporation (NYSE:BK) Q1 2019 Earnings Conference Call - Final Transcript


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Good morning and welcome to the First Quarter Earnings Conference Call hosted by BNY Mellon. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session.

Please note that this conference call webcast will be recorded and will consist of copyrighted material. You may not record or rebroadcast these materials, without BNY Mellon's consent.

I will now turn the call over to BNY Mellon. You may begin.

Magda Palczynska

Good morning. This is Magda Palczynska, Head of Investor Relations. Today, BNY Mellon released its results for the first quarter of 2019. The earnings press release and the financial highlights presentation to accompany this teleconference are both available on our website at

Charlie Scharf, BNY Mellon's Chairman and CEO, will lead this morning's conference call. Then Mike Santomassimo, our CFO, will take you through our earnings presentation. Following Mike's prepared remarks, there will be a Q&A session.

Before we begin, please note that our remarks today may include forward-looking statements. Actual results may differ materially from both indicated or implied by our forward-looking statements, as a result of various factors including those identified in the cautionary statement in the earnings press release. The financial highlights presentation and in our documents filed with the SEC, all available on our website. Forward-looking statements made on this call speak only as of today, April 17, 2019, and will not be updated.

With that, I will hand over to Charlie.

Charles W. Scharf

Thanks, Magda. Good morning, everyone and thanks for joining us. Before turning it over to Mike to take you through the first quarter financials in more detail, let me share some high-level thoughts about our performance. Reported earnings per share were $0.94, down from $1.10 a year ago. Revenue was down 7%. Both fees and net interest income declined, expenses were down 1% and after-tax earnings decreased 20%. Return on tangible common equity was 21%.

A few thoughts on our results. Our performance this quarter was mixed. Several of our fee-based metrics in Investment Services were consistent with recent results, while we experienced weakness in investment management and net interest income. The year-over-year declines in revenue and earnings per share were primarily driven by the changing mix and cost of our deposits and the impact of the prior year asset management outflows.

We also saw lower foreign exchange volumes and volatility, volume reductions and spread compression in securities lending and lower clearance volumes in Pershing. In addition, the impact of divestitures and asset gains and particularly strong markets and deposit balances in last year's first quarter also made the year-over-year comparison more difficult.

Last quarter, we said that if our rate assumptions played out, we would expect net interest revenue to be flat to a little up versus the fourth quarter. As you'll see, it was down 5%. Subsequent to our last earnings call, rates across the entire yield curve declined versus our assumptions, deposit balances declined and we saw changes to the mix between interest and noninterest-bearing deposits. We see