The Bank of New York Mellon 10-Qquarter ended 2026-09-30
PositiveRestructuring
New business and client activity lift Securities Services; Investment Management outflows and lower-fee mix constrain growth.
Filed 2026-10-30 07:02 ET
Key figures · Q3 FY2026 · period ended 2026-09-30
- Net revenue$5.7B1YoY +11.7%QoQ −0.4%
How net revenue adds up Net interest income $1,423M + Total fee and other revenue $4,253M Net revenue $5,676M Lines as the filer presents them on its income statement.
- Net income$1.7B2YoY +17.0%QoQ −4.0%
- Total assets$494.0BQoQ −5.9%
- Total debt$41.2B3QoQ +15.7%
How total debt adds up Long-term debt $33,308M + Commercial paper $6,845M + Other borrowed funds $1,005M Total debt $41,158M Lines as the filer presents them on its balance sheet.
- Shareholders' equity$43.6BQoQ −2.4%
- Tangible book value$24.1BYoY −0.9%QoQ −4.3%
Notes (3)
- Net revenue: Net interest income plus non-interest income, as the filer presents them.
- Net income: About the summary: The summary's $1.61B is net income available to common shareholders after preferred dividends; this claim's $1.69B is attributable net income excluding noncontrolling interests, before that deduction.
- Total debt: Excludes deposits, repurchase agreements, federal funds purchased and securities loaned. Borrowings the company raised to fund itself: long-term and short-term borrowings, FHLB advances, subordinated debt and finance leases. About the summary: The summary's $6.85B is the Commercial paper line, one of the 3 lines that make up total debt (see ⓘ).
Notes on other figures in this summary (2)
Net income (nine months): Summary: $4.87B · Filing: $5.1B
Comment from AI: The summary's $4.87B is net income available to common shareholders after preferred dividends; this claim's $5.08B is attributable net income excluding noncontrolling interests, before that deduction.
Goodwill: Summary: $6.3B · Filing: $16.7B
Comment from AI: The summary's $6.3B is Investment Management goodwill; this claim's $16.73B is total goodwill, including goodwill beyond that segment.
How this filing reads
- Health+0.211.0% CET1 and rising earnings support capacity, though the ratio fell from 11.9%.
- Momentum+0.7Q3 revenue rose 12%, pre-tax income 18%, and net income 20% year over year.
- Outlook0.0Securities-services demand is strong; investment-management flows remain negative and CET1 declined to 11.0%.
Executive Summary
BNY provides custody, securities processing, payments and investment management to banks, institutional investors and wealthy clients, earning fees and interest income. It is moving toward a platforms operating model while investing in technology and pursuing efficiencies across its client-service businesses. Q3 showed strong demand for securities services and client financing, although revenue growth moderated from the nine-month pace. Investment management remained the weak spot: outflows and product mix constrained growth, while its goodwill valuation had little cushion. For investors, the opportunity is expanding profits from BNY’s large client network; the counterweight is declining capital ratios and valuation pressure outside its strongest businesses.
What's Happening in the Business
Securities Services drove the quarter’s growth. Asset Servicing revenue reached $2.13B, +12% Y/Y, supported by new business, client activity and market values. Issuer Services grew faster, reaching $690M, +27%, partly through Corporate Trust pass-through activity associated with BNY’s financial-agent role on Trump Accounts; that revenue should not be read as equivalent growth in underlying profitability.
Market and Wealth Services benefited from clients bringing more assets and using more financing and transaction services. Wealth Solutions’ U.S. platform attracted $48B of net new assets vs $3B a year earlier. Average collateral balances rose 14% to $8.26T, supporting clearance and collateral-management activity.
Investment management presented a different picture. Assets under management rose just 2% Y/Y to $2.19T, with market appreciation offsetting cumulative outflows and currency effects. Q3 brought $10B of long-term strategy inflows but $22B of short-term cash outflows. Demand for lower-fee products also constrained revenue, making asset growth alone an incomplete measure of progress.
BNY continued investing while reducing staffing. Employees declined 5% to 46,600, but software, purchased services and revenue-related costs increased. Management’s efficiency program is therefore supporting investment and margins, rather than simply cutting total spending.
Key Financial Highlights
All changes are Y/Y unless stated otherwise; results are GAAP.
| Metric | Q3 2026 | 9M 2026 | Investor interpretation |
|---|---|---|---|
| Revenue | $5.68B; +12% | $16.8B; +13% | Investment services led growth; the quarter modestly lagged the YTD pace. |
| Net interest income | $1.42B; +15% | $4.24B; +18% | Securities reinvestment and earning-asset growth outweighed deposit-margin compression. |
| Noninterest expense | $3.49B; +7.8% | $10.3B; +6.5% | Investment and activity-linked spending absorbed part of the efficiency savings. |
| Pre-tax income | $2.19B; +18% | $6.47B; +24% | Revenue outpaced costs, widening margins, though quarterly profit growth slowed. |
| Net income applicable to BNY common shareholders | $1.61B; +20% | $4.87B; +25% | Lower quarterly preferred dividends helped common earnings beyond pre-tax growth. |
| Diluted EPS | $2.34; +24% | $7.02; +30% | Repurchases reduced diluted shares, amplifying common-earnings growth. |
Segment results use management-basis accounting.
| Segment | Q3 revenue | Q3 pre-tax income | 9M revenue | 9M pre-tax income |
|---|---|---|---|---|
| Securities Services | $2.82B; +15% | $1.01B; +24% | $8.33B; +16% | $3.16B; +32% |
| Market and Wealth Services | $1.98B; +12% | $1.02B; +17% | $5.85B; +12% | $3.01B; +19% |
| Investment and Wealth Management | $857M; +4.0% | $205M; +11% | $2.55B; +5.9% | $477M; +21% |
- Investment services fees: $2.97B, +15%, supplied $388M of the quarter’s $595M revenue increase; new business and client activity mattered alongside market appreciation.
- Investment Management revenue: $562M, broadly flat, as flow mix offset higher market values; Wealth Management contributed $295M, +11%, helped by interest income.
- Investment spending: 9M premises, equipment and capitalized software purchases reached $1.79B, +60%, showing that workforce reductions did not mean reduced investment capacity.
- Capital returns: 9M treasury-stock purchases were $3.02B vs $2.49B; cash dividends paid were $1.39B vs $1.27B. Shares outstanding fell 2.2% from year-end, net of issuance.
- Capital pressure: standardized common equity Tier 1 fell to 11.0% from 11.9% at year-end; distributions, balance-sheet growth and securities valuation losses outweighed retained earnings. Q3’s $943M after-tax unrealized available-for-sale securities loss reduced capital without passing through net income.
Risk Assessment
- Goodwill impairment: Investment Management’s $6.3B of goodwill rests on estimated fair value only ≈3% above carrying value; a 25bp discount-rate increase would reduce estimated value ≈5%, potentially triggering a material noncash charge.
- Funding and capital: Commercial paper increased to $6.85B from $2.00B at year-end, while client-linked deposits can retreat with activity, potentially tightening funding and shareholder-return capacity.
- Counterparty exposure: Securities-lending indemnifications totaled $706B against $749B of collateral, leaving exposure to borrower failures combined with rapid collateral-price declines.
- Platform execution: Processing failures, cyberattacks or unsuccessful technology adoption could disrupt the custody and transaction services on which BNY’s client relationships depend.
- Legal exposure: Estimable reasonably possible losses reach $630M above accruals, with additional unquantifiable matters, including contested Brazilian and Russian proceedings.
A 10-Q does not have to restate the risk factors in the annual report. Full list: the company's 10-Ks on SEC.
What to Watch
- Securities-services growth: Asset Servicing’s quarterly growth trails its 9M pace; sustained new business and client inflows would support durability, while weaker activity would expose reliance on market values.
- Investment-management recovery: Long-term inflows are positive but total flows remain negative; improving fee revenue and valuation headroom would validate recovery, while persistent outflows or impairment would undermine it.
- Capital-return capacity: The standardized capital ratio is lower despite stronger earnings; stabilization alongside distributions would support the model, while further erosion could force slower repurchases.
Longer version: the summary of each of the report's 35 sections, written by an AI model from the same filing.
Changes since the previous 10-Q
- Risk escalated Investment Management goodwill
Investment Management's $6.3B goodwill had approximately 6% valuation headroom. → Headroom halved to approximately 3%; a 25bp discount-rate increase could erase it. - Watch item mixed Investment-management retention
Q2 long-term withdrawals totaled $21B; continued withdrawals threatened fees and goodwill valuations. → Long-term strategies drew $10B; $22B short-term outflows kept total flows negative. - Watch item unchanged Capital-return capacity
Standardized CET1 stabilized at 11.0%; sustained stability would support continued capital returns. → Standardized CET1 remained 11.0%, unchanged from June despite distributions and securities valuation losses.
Figures are computed from the filing's XBRL data; the summary and scores are written by an AI model reading the filing.
Model 006 · prompt v163 · 2026-10-30 14:34:05Z