Bank of New York Mellon : Q2 2023 Earnings Press Release

News Release

BNY MELLON REPORTS SECOND QUARTER 2023 EARNINGS OF

$1.0 BILLION OR $1.30 PER COMMON SHARE

Revenue up 5%

EPS up 26% (a)

ROE 12%

ROTCE 23%(b)

CET1 11.1%

Tier 1 leverage 5.7%

(a) Excluding the net impact of notable items, primarily litigation and severance, EPS increased 20%. See (b) below.

NEW YORK, July 18, 2023 - The Bank of New York Mellon Corporation ("BNY Mellon") (NYSE: BK) today reported:

							2Q23 vs.
		2Q23		1Q23		2Q22	1Q23	2Q22
Net income applicable to common shareholders (in millions)	$	1,031	$	905	$	835	14%	23%
Diluted earnings per common share (c)	$	1.30	$	1.12	$	1.03	16%	26%

(c) Includes impact of notable items of $(0.07) per share in 2Q23, $(0.01) per share in 1Q23 and $(0.12) per share in 2Q22.

Second Quarter Results

CEO Commentary

Total revenue of $4.5 billion, increased 5%

• Net interest revenue increased 33%
• Fee revenue decreased 2%

Total noninterest expense of $3.1 billion, was flat, or increased 1% excluding notable items (b)

AUC/A of $46.9 trillion, increased 9%

AUM of $1.9 trillion, decreased 2%

Securities Services

• Total revenue increased 12%
• Income before taxes increased 91%; or increased 52% excluding notable items (b)
• Pre-taxoperating margin of 29%

Market and Wealth Services

• Total revenue increased 10%
• Income before taxes increased 8%
• Pre-taxoperating margin of 46%

Investment and Wealth Management

• Total revenue decreased 10%
• Income before taxes decreased 38%
• Pre-taxoperating margin of 16%; Adjusted pre-tax operating margin of 18% (b)

Capital

• Returned $745 million to common shareholders, including $448 million of common share repurchases

Robin Vince, President and Chief Executive Officer, commented, "BNY Mellon delivered good financial performance amid a very dynamic operating environment, and we continued taking actions to position the firm for higher underlying growth and enhanced operational efficiency over time."

"The company reported earnings per share of $1.30, up 26% year-over-year, on $4.5 billion of revenue, up 5% year-over- year, and generated a return on tangible common equity of 23% in the second quarter. Our focus on revenue growth and expense discipline allowed us to drive meaningful positive operating leverage and improve our pre-tax margin to 30% while we continued making significant investments in our future," Mr. Vince added.

"In the second quarter we saw particular strength in Clearance and Collateral Management and Depositary Receipts, and our recently launched solutions, such as Pershing's innovative Wove advisory platform, give us confidence that revenues will build over time," Mr. Vince further noted.

"Following the release of the Federal Reserve's 2023 bank stress test last month, we increased our common dividend by 14% starting this quarter, and our overall approach to maintaining a high-quality, resilient balance sheet and returning capital to shareholders remains unchanged," Mr. Vince concluded.

Media Relations: Garrett Marquis [phone]

Investor Relations: Marius Merz [phone]

1. For information on this Non-GAAP measure, see "Explanation of GAAP and Non-GAAP financial measures" beginning on page 9. Note: Above comparisons are 2Q23 vs. 2Q22, unless otherwise noted.

BNY Mellon 2Q23 Earnings Release

CONSOLIDATED FINANCIAL HIGHLIGHTS

(in millions, except per share amounts and unless otherwise noted; not								2Q23 vs.
meaningful - N/M)		2Q23		1Q23		2Q22	1Q23	2Q22
Fee revenue	$	3,257	$	3,156	$	3,339	3%	(2)%
Investment and other revenue		97		79		91	N/M	N/M
Total fee and other revenue		3,354		3,235		3,430	4		(2)
Net interest revenue		1,100		1,128		824	(2)		33
Total revenue		4,454		4,363		4,254	2		5
Provision for credit losses		5		27		47	N/M	N/M
Noninterest expense		3,111		3,100		3,112	-		-
Income before taxes		1,338		1,236		1,095	8		22
Provision for income taxes		270		260		231	4		17
Net income	$	1,068	$	976	$	864	9%	24%
Net income applicable to common shareholders of The Bank of New	$	1,031	$	905	$	835	14%	23%
York Mellon Corporation
Operating leverage (a)							173	bps	473 bps
Diluted earnings per common share (b)	$	1.30	$	1.12	$	1.03	16%	26%
Average common shares and equivalents outstanding - diluted (in thousands)		790,725		807,718		813,590
Pre-tax operating margin		30%		28%		26%
Metrics:	$	63,459					-%	(8)%
Average loans	$	63,261	$	69,036
Average deposits		277,209		274,000		311,017	1		(11)
AUC/A at period end (in trillions) (current period is preliminary)		46.9		46.6		43.0	1		9
AUM (in trillions) (current period is preliminary)		1.91		1.91		1.94	-		(2)

1. Operating leverage is the rate of increase (decrease) in total revenue less the rate of increase (decrease) in total noninterest expense.
2. Includes impact of notable items of $(0.07) per share in 2Q23, $(0.01) per share in 1Q23 and $(0.12) per share in 2Q22.

bps - basis points.

KEY DRIVERS (comparisons are 2Q23 vs. 2Q22, unless otherwise stated)

Total revenue increased 5%, primarily reflecting:

• • Fee revenue decreased 2%, primarily reflecting lower foreign exchange revenue, the impact of the Alcentra divestiture and the mix of cumulative AUM net inflows, partially offset by the abatement of money market fee waivers.
  • Net interest revenue increased 33%, primarily reflecting higher interest rates, partially offset by changes in balance sheet size and mix.
• Provision for credit losses was $5 million, primarily reflecting changes in the macroeconomic forecast driving increased reserves related to commercial real estate, which were partially offset by a reduction in reserves related to financial institutions.
• Noninterest expense was flat, or increased 1% excluding notable items (c), related to litigation and severance. The increase reflects higher investments and revenue-related expenses, as well as the impact of inflation, partially offset by the favorable impact of efficiency savings and the impact of the Alcentra divestiture.
• Effective tax rate of 20.2%.

Assets under custody and/or administration ("AUC/A") and Assets under management ("AUM")

• AUC/A increased 9%, primarily reflecting higher market values, client inflows and net new business.
• AUM decreased 2%, primarily reflecting lower market values driven by the year-over-year decrease in UK fixed income markets and the divestiture of Alcentra, partially offset by net inflows and the favorable impact of a weaker U.S. dollar.

Capital and liquidity

• $297 million of dividends to common shareholders (d).
• $448 million of common share repurchases.
• Return on common equity ("ROE") - 12%; Return on tangible common equity ("ROTCE") - 23% (c).
• Common Equity Tier 1 ("CET1") ratio - 11.1%.
• Tier 1 leverage ratio - 5.7%.
• Average liquidity coverage ratio ("LCR") - 120%; Average net stable funding ratio ("NSFR") - 136%.
• Total Loss Absorbing Capacity ("TLAC") ratios exceed minimum requirements.

1. See "Explanation of GAAP and Non-GAAP financial measures" beginning on page 9 for additional information.
2. Including dividend-equivalents on share-based awards.

Note: Throughout this document, sequential growth rates are unannualized.

Page - 2

BNY Mellon 2Q23 Earnings Release

SECURITIES SERVICES BUSINESS SEGMENT HIGHLIGHTS

(dollars in millions, unless otherwise noted; not meaningful - N/M)		2Q23		1Q23		2Q22		2Q23 vs.
				1Q23	2Q22
Investment services fees:	$	991					5%	-%
Asset Servicing	$	948	$	995
Issuer Services		319		236		309	35	3
Total investment services fees		1,310		1,184		1,304	11	-
Foreign exchange revenue		124		139		155	(11)	(20)
Other fees (a)		54		55		54	(2)	-
Total fee revenue		1,488		1,378		1,513	8	(2)
Investment and other revenue		84		72		36		N/M	N/M
Total fee and other revenue		1,572		1,450		1,549	8	1
Net interest revenue		668		666		457		-	46
Total revenue		2,240		2,116		2,006	6	12
Provision for credit losses		16		-		13		N/M	N/M
Noninterest expense		1,582		1,556		1,656	2	(4)
Income before taxes	$	642	$	560	$	337	15%	91%
Total revenue by line of business:	$	1,706					3%	11%
Asset Servicing	$	1,664	$	1,534
Issuer Services		534		452		472	18	13
Total revenue by line of business	$	2,240	$	2,116	$	2,006	6%	12%
Pre-tax operating margin		29%		26%		17%	(b)
Securities lending revenue (c)	$	47	$	48	$	45	(2)%	4%
Metrics:	$	11,283					3%	(1)%
Average loans	$	10,939	$	11,386
Average deposits	$	172,863	$	167,209	$	191,191	3%	(10)%
AUC/A at period end (in trillions) (current period is preliminary) (d)	$	33.2	$	32.6	$	31.0	2%	7%
Market value of securities on loan at period end (in billions) (e)	$	415	$	441	$	441	(6)%	(6)%

1. Other fees primarily include financing-related fees.
2. Excluding higher litigation reserves, adjusted pre-tax operating margin was 21% (Non-GAAP). See "Explanation of GAAP and Non-GAAP financial measures" beginning on page 9 for information on this Non-GAAP measure.
3. Included in investment services fees reported in the Asset Servicing line of business.
4. Consists of AUC/A primarily from the Asset Servicing line of business and, to a lesser extent, the Issuer Services line of business. Includes the AUC/A of CIBC Mellon Global Securities Services Company ("CIBC Mellon"), a joint venture with the Canadian Imperial Bank of Commerce, of $1.6 trillion at June 30, 2023 and $1.5 trillion at March 31, 2023 and June 30, 2022.
5. Represents the total amount of securities on loan in our agency securities lending program. Excludes securities for which BNY Mellon acts as agent on behalf of CIBC Mellon clients, which totaled $66 billion at June 30, 2023, $69 billion at March 31, 2023 and $70 billion at June 30, 2022.

KEY DRIVERS

• The drivers of the total revenue variances by line of business are indicated below.
• • Asset Servicing - The year-over-year increase primarily reflects higher net interest revenue, partially offset by lower foreign exchange revenue. The sequential increase primarily reflects higher client activity, partially offset by lower foreign exchange revenue.
  • Issuer Services - The year-over-year increase primarily reflects higher net interest revenue and Depositary Receipts revenue. The sequential increase primarily reflects higher Depositary Receipts revenue, partially offset by lower net interest revenue.
• Noninterest expense decreased year-over-year, primarily reflecting lower litigation reserves and the favorable impact of efficiency savings, partially offset by higher investments and the impact of inflation.

Page - 3

BNY Mellon 2Q23 Earnings Release

MARKET AND WEALTH SERVICES BUSINESS SEGMENT HIGHLIGHTS

(dollars in millions, unless otherwise noted; not meaningful - N/M)		2Q23		1Q23		2Q22	2Q23 vs.
			1Q23	2Q22
Investment services fees:	$	496					(1)%	4%
Pershing	$	499	$	479
Treasury Services		172		168		176	2	(2)
Clearance and Collateral Management		265		260		240	2	10
Total investment services fees		933		927		895	1	4
Foreign exchange revenue		21		18		22	17	(5)
Other fees (a)		55		54		46	2	20
Total fee revenue		1,009		999		963	1	5
Investment and other revenue		16		15		11	N/M	N/M
Total fee and other revenue		1,025		1,014		974	1	5
Net interest revenue		420		453		340	(7)	24
Total revenue		1,445		1,467		1,314	(1)	10
Provision for credit losses		7		-		4	N/M	N/M
Noninterest expense		781		769		702	2	11
Income before taxes	$	657	$	698	$	608	(6)%	8%
Total revenue by line of business:	$	686					(1)%	8%
Pershing	$	693	$	636
Treasury Services		402		412		373	(2)	8
Clearance and Collateral Management		357		362		305	(1)	17
Total revenue by line of business	$	1,445	$	1,467	$	1,314	(1)%	10%
Pre-tax operating margin		46%		48%		46%
Metrics:	$	36,432					(1)%	(14)%
Average loans	$	36,854	$	42,391
Average deposits	$	85,407	$	86,040	$	94,716	(1)%	(10)%
AUC/A at period end (in trillions) (current period is preliminary) (b)	$	13.4	$	13.7	$	11.8	(2)%	14%

1. Other fees primarily include financing-related fees.
2. Consists of AUC/A from the Clearance and Collateral Management and Pershing lines of business.

KEY DRIVERS

• The drivers of the total revenue variances by line of business are indicated below.
• • Pershing - The year-over-year increase primarily reflects the abatement of money market fee waivers, higher net interest revenue and higher fees on sweep balances, partially offset by lower client activity. The sequential decrease primarily reflects lower net interest revenue.
  • Treasury Services - The year-over-year increase primarily reflects higher net interest revenue. The sequential decrease primarily reflects lower net interest revenue.
  • Clearance and Collateral Management - The year-over-year increase primarily reflects higher net interest revenue, U.S. government clearance volumes and U.S. collateral management balances. The sequential decrease primarily reflects lower net interest revenue.
• Noninterest expense increased year-over-year, primarily reflecting higher investments and higher revenue-related expense, as well as the impact of inflation, partially offset by the favorable impact of efficiency savings.

Page - 4

BNY Mellon 2Q23 Earnings Release

INVESTMENT AND WEALTH MANAGEMENT BUSINESS SEGMENT HIGHLIGHTS

(dollars in millions, unless otherwise noted; not meaningful - N/M)		2Q23		1Q23		2Q22	2Q23 vs.
			1Q23	2Q22
Investment management fees	$	750	$	752	$	825	-%	(9)%
Performance fees		10		22		5	N/M	100
Investment management and performance fees		760		774		830	(2)	(8)
Distribution and servicing fees		58		55		51	5	14
Other fees (a)		(56)		(53)		(31)	N/M	N/M
Total fee revenue		762		776		850	(2)	(10)
Investment and other revenue (b)		12		6		(13)	N/M	N/M
Total fee and other revenue (b)		774		782		837	(1)	(8)
Net interest revenue		39		45		62	(13)	(37)
Total revenue		813		827		899	(2)	(10)
Provision for credit losses		7		-		-	N/M	N/M
Noninterest expense		677		734		691	(8)	(2)
Income before taxes	$	129	$	93	$	208	39%	(38)%
Total revenue by line of business:	$	546					(2)%	(9)%
Investment Management	$	557	$	603
Wealth Management		267		270		296	(1)	(10)
Total revenue by line of business	$	813	$	827	$	899	(2)%	(10)%
Pre-tax operating margin		16%		11%		23%
Adjusted pre-tax operating margin - Non-GAAP(c)		18%		13%		26%
Metrics:	$	13,995					-%	(1)%
Average loans	$	13,960	$	14,087
Average deposits	$	15,410	$	16,144	$	20,802	(5)%	(26)%
AUM (in billions) (current period is preliminary) (d)	$	1,906	$	1,908	$	1,937	-%	(2)%
Wealth Management client assets (in billions) (current period is preliminary) (e)	$	286	$	279	$	264	3%	8%

1. Other fees primarily include investment services fees.
2. Investment and other revenue and total fee and other revenue are net of income (loss) attributable to noncontrolling interests related to consolidated investment management funds.
3. Net of distribution and servicing expense. See "Explanation of GAAP and Non-GAAP financial measures" beginning on page 9 for information on this Non-GAAP measure.
4. Excludes assets managed outside of the Investment and Wealth Management business segment.
5. Includes AUM and AUC/A in the Wealth Management line of business.

KEY DRIVERS

• The drivers of the total revenue variances by line of business are indicated below.
• • Investment Management - The year-over-year decrease primarily reflects the impact of the Alcentra divestiture and the mix of cumulative net inflows, partially offset by improved seed capital results and the abatement of money market fee waivers. The sequential decrease primarily reflects the timing of performance fees.
  • Wealth Management - The year-over-year decrease primarily reflects lower net interest revenue and changes in product mix.
• Noninterest expense decreased year-over-year, primarily reflecting the impact of the Alcentra divestiture, partially offset by higher revenue-related expenses. The sequential decrease primarily reflects lower staff expense.

Page - 5