Bank of New York Mellon (NYSE:BK) executives used the company’s fourth-quarter earnings call to highlight what CEO Robin Vince described as another “successful year,” including record revenue and net income in 2025, continued operating leverage, and progress on initiatives spanning commercial execution, the firm’s platforms operating model, artificial intelligence, and digital assets.
2025 results: record revenue, net income, and capital return
Vince said BNY delivered record 2025 net income of $5.3 billion on record revenue of $20.1 billion, with return on tangible common equity (ROTCE) of 26%. Total revenue rose 8% year over year, while expenses increased 3%, contributing to positive operating leverage and an improved reported pre-tax margin of 35%. The company reported earnings per share of $7.40 for the year and returned $5 billion to shareholders through common dividends and share repurchases.
Fourth quarter: revenue up 7%, EPS up 31%
For the fourth quarter, McDonogh reported total revenue of $5.2 billion, up 7% year over year. Fee revenue increased 5%, including 8% growth in investment services fees, which he attributed primarily to net new business, higher market values, and higher client activity. Investment management and performance fees were flat.
Net interest income increased 13% year over year to $1.3 billion, aided by reinvestment of maturing securities at higher yields and balance sheet growth, with deposit margin compression noted as an offset. Investment and other revenue was $135 million, including $43 million of other investment losses and $15 million of net securities losses.
Expenses were $3.4 billion, flat on a reported basis and up 4% excluding notable items, reflecting higher investments and revenue-related expenses, employee merit increases, and the impact of a weaker U.S. dollar, partly offset by efficiency savings. Provision for credit losses was a $26 million benefit, primarily tied to improvements in commercial real estate exposure and changes in the macroeconomic forecast. BNY posted a reported pre-tax margin of 36% and ROTCE of 27%. Earnings per share were $2.02, up 31% year over year (or $2.08 excluding notable items).
Business segment performance and key operating metrics
McDonogh outlined performance across BNY’s three segments and highlighted client activity and balance sheet trends.
- Security Services: Revenue of $2.5 billion rose 7% year over year. Total investment services fees increased 11%, with asset servicing fees up 11% due to higher activity and market values. Issuer services fees rose 12%, driven by higher depository receipts activity. Foreign exchange revenue declined 3% on lower spreads amid reduced volatility, partially offset by higher volumes. Segment pre-tax income was $838 million, up 30%, and the pre-tax margin was 34%. McDonogh noted full-year 2025 segment pre-tax margin of 33%, surpassing a prior medium-term target of at least 30%.
- Markets and Wealth Services: Revenue of $1.8 billion increased 8% year over year. In Pershing, fees fell 2%, which McDonogh said reflected prior-year activity tied to a deconversion of lost business, partially offset by higher market values; net new assets were $51 billion in the quarter. Clearance and collateral management fees grew 15% as collateral balances and clearance volumes increased; average collateral balances were $7.5 trillion, up 15% year over year. Payments and trade fees rose 3% on net new business. Segment pre-tax income was $882 million, up 9%, with a 49% pre-tax margin.
- Investment and Wealth Management: Revenue of $854 million declined 2% year over year. Investment management fees rose 1% as higher market values and a weaker dollar were partly offset by AUM flow mix and rebate adjustments discussed in prior quarters. Segment pre-tax income was $148 million, down 14%, with a 17% pre-tax margin. Assets under management were $2.2 trillion, up 7% year over year; the quarter included $3 billion of net outflows, comprised of $23 billion of net outflows from long-term strategies and $20 billion of net inflows into cash.
Firmwide assets under custody and/or administration (AUCA) were $59.3 trillion, up 14% year over year. On the balance sheet, average deposits increased 4% sequentially, while average interest-earning assets rose 3%. The Tier 1 leverage ratio was 6%, down 9 basis points sequentially, and the CET1 ratio ended the quarter at 11.9%, up 17 basis points sequentially. BNY returned $1.4 billion to shareholders in the quarter, which management described as a 100% payout ratio for the period.
Strategy: commercial model, platforms operating model, AI, and digital assets
Vince emphasized progress in the firm’s commercial model and said the number of clients buying three or more services increased by more than 60% over two years, while organic fee growth reached 3% in 2025. He cited several fourth-quarter client wins, including WisdomTree selecting BNY as a banking-as-a-service provider for WisdomTree Prime, Jupiter selecting BNY for front-to-back capabilities including custody, and Japan’s Government Pension Investment Fund selecting BNY for integrated data and analytics for private markets.
On operating execution, Vince said BNY transitioned approximately half of its people into the platforms operating model during 2025, bringing the total to more than 70% of employees working in that model. Management also highlighted AI initiatives, including its enterprise AI platform “Eliza” and a collaboration with Google Cloud to integrate Gemini Enterprise capabilities, building on existing collaborations with OpenAI and others. Vince said BNY deployed more than 130 “digital employees” in 2025, describing them as multi-agentic AI capabilities that support tasks such as validating payment details and remediating code vulnerabilities.
In digital assets, Vince pointed to product launches including the Dreyfus Stablecoin Reserves Fund, a tokenized AAA CLO strategy with Securitize (with BNY as sub-advisor and custodian), and a step toward tokenizing deposits by enabling an on-chain mirrored representation of client deposit balances on BNY’s digital assets platform. Asked about early feedback and monetization for tokenized deposits, Vince framed the effort as part of an “always-on” evolution in financial markets, saying tokenized deposits could improve the usability of deposits and support clients’ activities by making cash more “programmable.”
2026 outlook and higher medium-term targets
McDonogh said BNY expects total revenue (excluding notable items) to grow approximately 5% year over year in 2026, “market dependent,” with expenses (excluding notable items) planned to rise approximately 3% to 4%. He said the firm is targeting more than 100 basis points of positive operating leverage for 2026. He also noted first-quarter seasonality for staff expenses due to long-term incentive compensation for retirement-eligible employees, and said the company expects a quarterly tax rate of approximately 23% during 2026, except in the first quarter due to an expected tax benefit from annual vesting of stock awards.
For the medium term, management raised financial targets, increasing the pre-tax margin goal by 500 basis points to 38% and the ROTCE target by 500 basis points to 28%. McDonogh said the Tier 1 leverage ratio management target remains 5.5% to 6%, and the firm intends to operate conservatively toward the upper end of that range. On capital return, he said the company’s approach is unchanged and characterized buyback levels as an output of the model, indicating an expected payout range of roughly 95% to 105%.
During Q&A, management also discussed net interest income expectations, with McDonogh describing fourth-quarter NII as supported by strong December balances tied to asset servicing activity, while indicating 2026 balances are expected to be “roughly flat” with seasonal patterns. He said the reinvestment of rolling securities at a “100-150 basis point pickup” is expected to support NII, while deposit margin compression remains a factor. He also said the company expects net interest margin to “grind higher” over 2026.
About Bank of New York Mellon (NYSE:BK)
Bank of New York Mellon Corporation (BNY Mellon) is a global financial services company headquartered in New York City that provides a wide range of asset servicing, custody, and related financial infrastructure solutions to institutional clients. Its core businesses include custody and asset servicing, clearing and collateral management, treasury services, securities lending, corporate trust services, and depositary receipt administration. The company also offers investment management and advisory services through its asset management arm and provides technology-enabled solutions for trade processing, foreign exchange, and liquidity management.
BNY Mellon serves a broad client base that includes asset managers, pension funds, corporations, banks, broker-dealers and sovereign entities.
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