The Bank of New York Mellon 10-Kyear ended 2025-12-31

Executive Summary

BNY provides custody, clearing, payments and investment management to institutions, corporations and wealthy clients, earning fees and interest on client-funded assets. It is concentrating on a platforms operating model, technology-enabled client services and broader artificial-intelligence adoption to support growth and efficiency. FY2025 showed stronger demand across securities servicing, payments and collateral management, while revenue grew faster than expenses and profitability improved for a third consecutive year. The opportunity is to turn its financial-market infrastructure into deeper client relationships; the counterweight is an investment-management business losing client assets, alongside dependence on market activity and deposit economics.

What's Happening in the Business

Growth strengthened in BNY’s two largest businesses. Securities Services benefited from client inflows, new business and higher asset values; assets under custody and/or administration across BNY reached $59.3T, up 14%. Market and Wealth Services gained from higher payments revenue, collateral balances and clearing activity. Clients’ regulatory and cost pressures create outsourcing opportunities, although technology providers and less-regulated competitors add pricing pressure.

Investment and Wealth Management moved in the opposite direction. Assets under management rose 7% to $2.18T because markets and currencies more than offset withdrawals, not because clients added money overall. Long-term strategies lost $93B net, versus $52B in FY2024; $56B of short-term cash inflows only partly compensated. This matters because cash and indexed products generally earn lower fees than active equity and multi-asset strategies.

BNY continued investing while reducing its workforce. Full-time employees fell 7% to 48,100, but software and equipment expense increased 9.4% to $2.15B. Efficiency savings helped absorb investment spending and salary increases. Expanded AI training supports management’s “AI everywhere for everyone” ambition; the filing does not establish how much savings AI itself delivered.

Key Financial Highlights

FY2025 amounts are GAAP unless indicated; changes are Y/Y.

Segment results use BNY’s internal management accounting basis.

• Investment services fees: $10.2B, +8.4%, supplied most fee growth through client activity, new business and higher markets. Asset Servicing revenue reached $7.52B, +9.4%, making it the largest business-line contributor.
• Market and Wealth Services: Payments and Trade revenue was $2.00B, +15%; Clearance and Collateral Management was $2.07B, +13%; Pershing was $2.93B, +9.0%. Average collateral balances rose 14%, while Pershing’s U.S. platform attracted $55B of net new assets versus $(6)B.
• Investment Management: Revenue fell 5.7% to $2.20B as asset-flow mix weakened fee generation; Wealth Management was broadly flat. The rebate-presentation change applied to all periods and reduced both revenue and expense, without changing economics.
• Credit and notable items: A $32M credit-loss benefit replaced a $70M expense as commercial real estate exposures and forecasts improved. Results also included $214M of severance expense versus $240M, and a $52M disposal gain versus none.
• Capital returns: Repurchases totaled $3.54B and common dividends $1.45B. Year-end shares fell 4.1% net of issuance; the common equity tier 1 capital ratio nevertheless rose to 11.9% from 11.2%, above its 8.5% requirement, supported by earnings and improved securities valuations.

Risk Assessment

• Operational resilience: BNY’s high-volume custody, payments and settlement network depends on vendors and market infrastructure, so processing failures or cyberattacks can create client losses and regulatory exposure.
• Investment-management impairment: Persistent outflows threaten earnings and goodwill; the reporting unit carries $6.3B of goodwill with fair value only ≈10% above carrying value.
• Deposit and rate exposure: Uninsured U.S.-office deposits total $186B, making client confidence important to funding stability, while changing deposit mix and yield curves can erode interest income.
• Collateral and credit: Securities-lending indemnifications increased 22% to $666B, secured by $706B of collateral; borrower defaults combined with falling collateral values could still cause losses.
• Litigation and sanctions: Reasonably possible losses extend up to $700M beyond related accruals, with Brazilian Postalis proceedings and Russia-related judgments among unresolved exposures.

What to Watch

• Pershing client gains: Its return to positive net new assets should translate into sustained revenue growth; renewed withdrawals would weaken the evidence of deeper client relationships.
• Collateral demand: Growing collateral balances supported clearance revenue; continued client growth would validate the infrastructure opportunity, while weaker balances and volumes would expose market dependence.
• Investment-management retention: Long-term outflows are worsening despite rising managed assets; stabilizing flows and fees would signal recovery, while further withdrawals would increase impairment pressure.
• Platform efficiency: Revenue is growing faster than expenses while staffing falls and technology spending rises; sustained margin improvement without service failures would support management’s operating-model transition.