Bank of New York Mellon Corp Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Maybe Robin, for you. So the call in terms of the transformation efforts, digital assets, AI just sounds like significant runway on all things organic, but address for us how you're thinking about capital deployment relative to where the stocks trading at today and I'm sure this is not news to you in terms of news around BNY pursuing a merger with the competitor, your interview in Barron. So give us a sense of when we think about capital deployment as shareholders, how should we think what the priority is outside of funding the business, be it buybacks versus M&A. Thanks.

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : That's very clear. Thank you. And I guess maybe just following up on that you referenced the 27% ROTCE this quarter. I get it's a seasonally strong quarter, but as we think about again relative to new investors trying to put money to work in the stock is structurally based on all the work you've done so far over the last few REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 15, 2025 / 1:30PM, BK.N - Q2 2025 Bank of New York Mellon Corp Earnings Call years and where things are going, is it safe for investors -- shareholders -- to assume that this is becoming a high 20s ROTCE institution which should then support a very different multiple than we've been used to for the last several years. Thanks.

Question: Kenneth Usdin - Autonomous Research - Analyst : I wanted to ask about just the evolution of as the year goes on of just overall top of the house performance because obviously you're taking up your NII guide, but NII is only 25% of revenues. And while the cost guide is up, I think it maybe misses the point that on the fee side, your guide is only just for year over year and here we are plus 6% in the second quarter and plus 7% for the year to date. So I'm just wondering on the fee side, are fees better than your original expectations too? And is that informing as much as the NII upside the slight drip up on the overall cost guide as the total is coming in better?

Question: Kenneth Usdin - Autonomous Research - Analyst : Understood. That's great color and I do like that upper right chart on page 3. Just one thing on the environment then, can you've talked previously about just the stickiness of deposits and obviously that's informing the better-than-expected NII outlook. Does anything change in the environment at that point because I think Robin will bring back in your point about like tools in the kit and arsenal to just continue to add deposits, but maybe you could just help us understand the environmental side a little bit. Thank you.

Question: Betsy Graseck - Morgan Stanley - Analyst : I wanted to dig in a little bit on the AI commentary that you had, Robin, and starting off, the operating leverage is just so strong, almost double what consensus had baked in for you and really terrific results here. I wanted to understand your comments on AI as it relates to the forward look because you indicated that nearly all your employees are using the Eliza, AI platform and You're starting to, you're beginning to see the benefit of this. I mean, is it the benefit from AI at a level that we can see in these operating leverage results, and maybe you could help us understand is this more revenues or expenses? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 15, 2025 / 1:30PM, BK.N - Q2 2025 Bank of New York Mellon Corp Earnings Call

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : Hi, no good deed goes unpunished. I know you talked about organic growth (multiple speakers)--

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : (laughter) Look, I'm the first to say you've optimized much better than I had expected these last two years, and -- but -- and you have these very high returns, but the organic growth and you do it correctly ex-markets, ex-currency, ex-deals, whether it's 2% or 3% is still not great in the scheme of the overall world. And I know you want that growth to be better, and I know you said you had record sales, but it's the growth is still the growth. It hasn't changed that much at an organic level. And I know you guys have thought about this, but to the degree you sacrifice the high -- very high returns to reinvest for better growth than what the company had for the past 5, 10, 20 years, right? And so where do you stand in that trade-off of maybe having lower returns or maybe not raising your return targets and reinvesting more for growth, and where should that organic growth be in your perfect world, the way you define it?

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : And I guess just one more follow-up on the talk about acquisitions and I heard you, it can be a powerful tool (technical difficulty) if it makes sense, you're not going to do anything (technical difficulty) stupid, I hear you. As you (technical difficulty) the art of what's possible, since you are talking about being a different type of not your parents, BNY, because you are more diverse in terms of your offerings. What's the realm of possibilities for acquisition? Clearly, traditional trust businesses or sub-businesses are always possible going back to the merger, the big merger, but what other areas would you consider maybe buying?

Question: Alexander Blostein - Goldman Sachs Group Inc - Analyst : So I had a couple of questions for you guys around the new business opportunities. I know you mentioned a couple things around the digital assets and just tokenize environment which obviously continues to be quite dynamic. I was hoping you could build on that a little more. Obviously, there's a lot of debates in the financial services industry today, perhaps more so on this topic than in the past in terms of what's a risk versus what's an opportunity. So when you think about where BNY sits in that realm, where do you see both risk to the existing businesses and some of the new revenue opportunities that could come out of this?

Question: Alexander Blostein - Goldman Sachs Group Inc - Analyst : Yeah, that's totally fair. Dermot, one for you on just the balance sheet dynamic and deposits. I know you mentioned you guys don't lead with deposits that all makes sense but when we look at the trajectory for the deposit based for the last couple of quarters, obviously much more stable

Question: Alexander Blostein - Goldman Sachs Group Inc - Analyst : Alrighty, thank you so much.

Question: Brian Bedell - Deutsche Bank AG - Analyst : Maybe two separate questions on the platforms operating model. So first one, maybe for you, Dermot, focusing on the cost reduction element, as we have another 50% to migrate over the next call it 12 months, and I know obviously expense guidance went up a little bit, which makes complete sense given the stronger revenue growth environment and also the dynamic budgeting aspect that you've talked about. But on the cost reduction side from that conversion on the platform's operating model and how should we think about framing that as a positive contributor to the expense story for the rest of this year in '26.

Question: Brian Bedell - Deutsche Bank AG - Analyst : Yeah, okay, that's great. And then maybe just also following question on the platform's operating model. As you think about M&A, maybe just your thoughts around how much the operating model -- the platform's operating model informs your decision about what type of M&A to do? Is it a mean -- is it a major or a primary factor in bringing on businesses that you think can fit into that model and therefore you can scale them inorganically and then I guess is it even possible to do large scale M&A and integrate that into this platform or do you see too many disparities with other large providers that would make that difficult.

Question: David Smith - Truist Securities - Analyst : So you're pretty clear that you know you see further upside on returns and margin from here even with the strong results you've had in this quarter in the first half. Are there areas right now that you feel like you're over-earning or would you say that you know you're looking to hold or improve profitability across the firm from these levels right now?

Question: David Smith - Truist Securities - Analyst : So just to push you a little bit on that, if you're not putting any ceilings or capping yourself on gro -- on expenses in order to achieve positive operating leverage, why not invest a little bit more than just 3% expense growth, given the strong backdrop you're seeing and strong performance you've shown so far in the first half.

Question: Rajiv Bhatia - Morningstar Inc - Analyst : I just want to follow up on your remarks that you're not seeing negative pricing. Should I interpret that as pricing being flat year over year? And is that on a consolidated basis? So are you seeing the pricing environment differ by LOB?

Question: Rajiv Bhatia - Morningstar Inc - Analyst : And does it differ by like LOB? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 15, 2025 / 1:30PM, BK.N - Q2 2025 Bank of New York Mellon Corp Earnings Call