Revenue growth drives BNY estimates beat

Yahoo Finance's Brian Sozzi, Brian Cheung, and Julie Hyman break down how BNY Mellon is faring n Tuesday’s market.

Video Transcript

BRIAN SOZZI: Live in the earnings season avalanche. It's in full swing, and it's picking up steam. Brian, I know you are locked and loaded on Bank of New York Mellon. If I have to point out any red flag in their report, operating margins flat year over year. Company warning about, really, higher cost of doing business. Heard a similar tone from some other banks last week.

BRIAN CHEUNG: Yeah, I mean, well, you guys thought you were done with me on bank earnings, but yeah, Bank of New York Mellon kind of a little bit behind the pack here in reporting. But they did have some pretty interesting results here that are leading to a pretty harsh market reaction in pre-market trading. Actually, looks like it's down about 3 and 1/2% as we wait for the final minutes before we start the opening bell here on Tuesday.

But $4 billion in revenue on the top line. That was up 5% year over year for a bottom line buck and $0.04 of diluted earnings per share. Their fee revenue was up 6%, so that's good. They had higher client volumes. But as you alluded to, Brian, their expenses not so great. They're actually-- their non-interest expenses were higher. And their big business, which is Pershing-- this is kind of their clearing and their custody businesses-- it was actually down quarter over quarter, although it was up on a year over year basis.

So BNY Mellon, which isn't one of these more kind of heavy investment banking, like a Morgan Stanley business, nor are they a kind of bread and butter loaning business like a Wells Fargo, it's kind of mixed results here, which I think is a reason why the Street is not reacting too positively to it.