BNY beats estimates, stays mum on merger rumors

UPDATE: This article now includes details from BNY's earnings call and comments from CEO Robin Vince.

The Bank of New York Mellon had plenty of updates to provide about its estimate-beating second quarter, but there was one topic on which the bank's executives kept quiet.

In recent weeks, reports have circulated that BNY has held talks with its Chicago-based rival, Northern Trust, about a potential merger. The Wall Street Journal sparked the rumors last month by reporting that BNY approached Northern Trust about the potential acquisition, and that the two firms' CEOs had at least one conversation about it.

In a call with journalists on Tuesday following BNY's earnings release, CEO Robin Vince refused to add fuel to the chatter.

"We do not comment on rumors or speculation," Vince told reporters. "Our real focus is on our second-quarter results."

The CEO added that he's more interested in BNY's "organic" potential, boosted by the company's years-long reorganization under his leadership.

Later, during the bank's earnings call, an analyst broached the Northern Trust question a second time. Once again, Vince refused to respond to speculation, but he did offer a window into his thinking — and perhaps some reluctance — about large-scale mergers.

"M&A, done well, can be a powerful tool in the toolkit," Vince answered. "Having said that, I just really want to underscore this point: It's a very high bar for us, for M&A, especially a larger transaction. It would have to make a ton of sense."

He went on to specify that a "strong cultural fit," alignment with BNY's priorities and workable financials would all be prerequisites for any hypothetical acquisition. He did not say whether Northern Trust meets those standards.

As of June 30, BNY had $485.8 billion of total assets. At the end of 2025's first quarter, Northern Trust had $165 billion. Both are custody banks — BNY is the world's largest — and analysts have said that if the two firms merged, the resulting megabank would likely dominate the asset-servicing market.

Northern Trust, however, has expressed little interest in such a deal.

"I can tell you that Northern Trust is fully committed to remaining independent and continuing to deliver long-term value to our stakeholders, as we have for the past 135 years," a spokesperson for the smaller bank told American Banker in an email last month.

During BNY's earnings call, Vince and CFO Dermot McDonogh focused more on the company's second-quarter results, which surpassed expectations. Earnings per share were $1.93, well above analysts' average estimate of $1.75, according to S&P.

Revenue came out to $5.03 billion, beating the $4.83 billion consensus estimate of analysts and marking a 9% increase from the same period last year.

The bottom line showed the steepest jump of all: Net income for the quarter reached $1.44 billion, up 23% from the second quarter of 2024. It also surpassed analysts' expectations, which had pegged net income at $1.25 billion.

In addition to beating estimates, BNY also outdid its biggest rival. State Street Corp., a custody bank with $353.8 billion of assets, reported a lackluster quarter on Tuesday. The firm's earnings per share were $2.17, missing analysts' consensus estimate of $2.31, per S&P. Net income totaled $693 million — a 3% drop from the same period last year.

Behind BNY's rise in revenue were sharp increases in two areas. The first was fee revenue, which climbed 7% year over year, reaching $3.64 billion. The second was net interest income, which swelled to $1.2 billion, up 17% from last year's second quarter. BNY mainly attributed the growth in NII to "the continued reinvestment of maturing investment securities at higher yields."

The improving numbers come at a time when BNY is undergoing a broad transformation. Under the direction of Vince, a Goldman Sachs veteran who took over as CEO three years ago, the company is reorganizing into what he calls a "platforms operating model" by streamlining and unifying many departments. The new model, Vince said last quarter, is designed "to get things done quicker with a little bit less bureaucracy and nonsense getting in the way."

On Tuesday, Vince said BNY is already reaping the rewards of that reorganization.

"At this midpoint of the year, we are pleased to see the initial work of our multi-year transformation bearing fruit," Vince said. "We have a lot of opportunity in front of us, but the strategy to unlock it is working."

Read more on bank earnings:
https://www.americanbanker.com/earnings

With roots dating back to 1784, BNY is the nation's oldest bank. But in recent years, it's been an early adopter of some of the world's newest financial technologies.

In 2022, BNY launched a product offering direct custody of cryptocurrencies, starting with bitcoin. That product ran into a roadblock from the Biden-era Securities and Exchange Commission, which required custodians to list crypto assets as liabilities on their balance sheets. 

But soon after President Trump took office, the SEC dropped that rule. And in June, the U.S. Senate passed the GENIUS Act, which clarifies the federal regulation of stablecoins, a crypto product pegged to more traditional assets. The legislation continues to work its way through the House of Representatives on its way, potentially, to President Trump for signing.

Amid this friendlier political environment for crypto, BNY announced this month that it will take custody of stablecoins issued by the crypto company Ripple.

"We see digital assets as a long-term play," Vince told reporters on Tuesday. "Our clients … really want us as a trusted partner to help them make their way in the digital assets world, and we see a lot of opportunity there."