Yahoo Finance Higher Rates, Loan Growth to Aid BNY Mellon's (BK) Q1 Earnings
The Bank of New York Mellon Corporation BK is scheduled to report first-quarter 2023 results on Apr 18, before market open. Its revenues and earnings in the to-be-reported quarter are expected to have witnessed increases on a year-over-year basis.
In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results were aided by a rise in net interest revenues. However, asset balances witnessed a decline and higher expenses hurt results to some extent.
BNY Mellon has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three and met in one of the trailing four quarters, with a surprise of 4.8%, on average.
The Zacks Consensus Estimate for the company’s first-quarter earnings is pegged at $1.09, which has been unchanged over the past seven days. The consensus estimate indicates a rise of 26.7% from the year-ago quarter’s reported number. Our estimate for first-quarter earnings is 91 cents.
The consensus estimate for sales is pegged at $4.35 billion, implying a 10.7% rise from the prior-year quarter’s reported figure. Our estimate for the same is $4.16 billion.
Key Factors & Estimates for Q1
Fee Revenues: Supported by overall asset inflows in the first quarter, BNY Mellon is expected to have recorded an improvement in the total assets under management (AUM) balance. Thus, the related fee is likely to have increased.
The Zacks Consensus Estimate for total investment services fee (comprising more than 50% of the company’s total revenues) is pegged at $2.12 billion, which indicates a rise of 6.4% from the prior-year quarter’s reported number. Our estimate for the same is $2.05 billion, indicating a year-over-year rise of 3%.
The consensus mark for financing-related fees is pegged at $42.48 million, which suggests a 5.6% year-over-year decline. Our estimate for financing-related fees is $42 million, indicating a decline of 6.8%.
The consensus estimate for distribution and servicing fees is pegged at $33.97 million, indicating 13.2% growth from the previous-year quarter’s reported figure. Our estimate for the same is $34.2 million, suggesting year-over-year growth of 14.2%.
The consensus estimate for foreign exchange revenues is pegged at $199 million, suggesting a decline of 3.9% from the prior-year quarter’s reported figure. Our estimate is $204.2 million, indicating a 1.4% decline. The consensus mark for investment and other income of $8.42 million suggests a year-over-year decline of 88%.
Thus, the consensus estimate for total fees and other revenues is pegged at $3.24 billion, suggesting a marginal rise from the prior-year quarter’s reported number. Our estimate for the same is $3.07 billion, indicating a year-over-year decline of 4.8%.
Net Interest Revenues (NIR): While loan growth has been strong in the to-be-reported quarter, the overall lending scenario wasn’t very impressive. Following the bank runs in the first week of March, overall loan demand is likely to have decelerated as recessionary fears gained ground.
Nevertheless, continuing with its hawkish monetary policy stance, the Federal Reserve raised interest rates by another 50 basis points in the quarter. The policy rate has thus reached a 15-year high of 4.75-5%. While the inversion of the yield curve in the March-end quarter is expected to have been an offsetting factor, BK’s interest income is expected to have improved, supported by the rise in rates and decent loan growth.
The consensus mark for NIR for the first quarter is pegged at $1.06 billion, indicating 51.7% year-over-year growth. Our estimate for NIR is $1.09 billion, suggesting a year-over-year rise of 56.2%.
Expenses: Because of higher litigation and restructuring charges, BNY Mellon’s expenses have been elevated over the past few years. Nevertheless, overall costs are expected to have been manageable in the quarter under review, given the elimination of unnecessary management layers.
Our estimate for first-quarter non-interest expenses is $3.22 billion, suggesting a year-over-year rise of 7.2%.
What the Zacks Model Unveils
According to our quantitative model, the chances of BNY Mellon beating the Zacks Consensus Estimate this time are high. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — which is required to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for BNY Mellon is +2.24%.
Zacks Rank: The company currently carries a Zacks Rank #3.
Other Stocks That Warrant a Look
A couple of other finance stocks that you may want to consider, as these too have the right combination of elements to post an earnings beat in their upcoming releases, per our model, are BlackRock, Inc. BLK and BankUnited BKU.
The Earnings ESP for BlackRock is +1.05% and it carries a Zacks Rank #3 at present. The company is slated to report first-quarter 2023 results on Apr 14.
BankUnited is expected to release first-quarter 2023 earnings on Apr 25. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +4.84%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The Bank of New York Mellon Corporation (BK) : Free Stock Analysis Report
BlackRock, Inc. (BLK) : Free Stock Analysis Report
BankUnited, Inc. (BKU) : Free Stock Analysis Report
