Key Metrics
- Total Fee and Other Revenue: $3,600 million (+6% yoy, +1% qoq)
- Total Investment Services Fees: $2,344 million
- Investment Management and Performance Fees: $794 million
- Foreign Exchange and Other Trading: $175 million
- Financing-related Fees: $53 million
- Distribution and Servicing Fees: $38 million
- Investment and Other Revenue: $196 million
- Net Interest Revenue (FTE): $1,048 million (+3% yoy, +2% qoq)
- Provision for Loan Loss: $23 million
- Noninterest Expense: $3,100 million (Flat yoy)
- Net Interest Margin (FTE): 1.16% (Decreased by 2 basis points yoy)
- Ending AUM: $2,144 million (+18% yoy)
- Ending AUCA: $52.1 trillion (+14% yoy)
- Book Value: $51.78 per common share (+10% yoy)
- Tangible Book Value: $28.01 per common share (+13% yoy)
Forward guidance
- Net Interest Income (NII): Forecasted to be slightly below Q3's strong results, with Q4 expected around $1 billion, outperforming the initial full-year guidance by approximately 5 percentage points.
- Expenses: Core expenses (excluding notable items) for FY2024 are expected to remain roughly flat.
- Effective Tax Rate: Anticipated to be at the lower end of the 23% to 24% range for FY2024.
- Capital Return: Committed to returning 100% or more of 2024 earnings to shareholders through dividends and buybacks, having already returned 103% year-to-date.
- Wove Revenue Guidance: On track to achieve $30 million to $40 million in revenue for 2024.
- Platform Model Transition: Approximately 50% of the firm expected to be on the new operating model by the end of Q1 2025, with full implementation anticipated within 18 months.
- Archer Acquisition: Expected to close before the end of 2024, enhancing capabilities across multiple business lines.
Key takeaways
- Positives:
- Robin Vince noted, "We think that the spread of those things can provide a lot more services to our clients in more joined-up way of solutions," indicating a strong focus on cross-selling and integrated services, which can enhance client retention and revenue growth.
- The acquisition of Archer is expected to "produce a positive impact across several of our lines of business," showcasing strategic growth through technology that aligns with market trends in managed accounts.
- BNY reported a 22% year-over-year increase in EPS, reflecting strong operational execution and effective cost management, with Dermot McDonogh stating, "We want to demonstrate to you that we can prove that we can deliver 33% margins through the cycle."
- The firm achieved over $50 trillion in assets under custody, with Dermot emphasizing, "We came into the year with a backlog... and we're beginning to go into Q4 with a bigger backlog than we came into the beginning of the year," indicating robust client demand.
- Negatives:
- Despite strong performance, management acknowledged "risks and uncertainties ahead," including geopolitical tensions and regulatory changes, which could impact future growth.
- Dermot mentioned, "I expect where we are to moderate a little bit on balances in Q4," suggesting potential challenges in maintaining deposit levels amid changing interest rates.
- The firm experienced net new asset outflows of $22 billion in the Market and Wealth Services segment, indicating competitive pressures and client retention challenges.
- The transition to a platform operating model is ongoing, with only 25% of employees currently integrated, which may lead to temporary operational inefficiencies during the transition period.
Peer Summary
- Deposit Behavior: JPMorgan Chase noted, "We expect deposits to be relatively flat for the remainder of the year," indicating a potential slowdown in consumer yield-seeking behavior, which could affect overall liquidity in the sector.
- Fee Revenue Growth: State Street projected total fee revenue growth at or slightly above 4-5% for FY2024, while Ameriprise anticipates a 10% revenue growth, suggesting varying levels of optimism in fee-based income across competitors.
- NII Outlook: Morgan Stanley expects NII to be "modestly down" in Q4 due to lower rate expectations, mirroring concerns expressed by other firms about maintaining net interest income amid changing interest rates.
- Competitive Pressures: Morgan Stanley acknowledged, "advisory and equity underwriting markets remain below historical averages," highlighting ongoing competitive challenges in investment banking and wealth management.
- Operational Efficiency: State Street reported a 17% year-over-year increase in EPS, driven by "solid fee and total revenue growth," indicating a focus on operational efficiency that may influence competitive positioning in the sector.
