BNY (BNY) Q3 2026 earnings review
BNY beats its plan, but profit slips from last quarter
BNY grew faster than its own plan allowed for, but profit slipped from the spring quarter as costs kept climbing. Revenue rose 12% from a year ago on fees from bond trusteeship, custody and securities lending, and profit per share gained 24%. By our math, the July plan now leaves only about 3% revenue growth for the fourth quarter.
| Revenue | $5.68B +12% from a year ago |
|---|---|
| Profit per share | $2.34 +24% from a year ago, −4% from last quarter |
| Fourth-quarter revenue growth implied by the July plan | About 3% by our math, at the middle of the range |
| Full-year outlook | Not restated July plan: revenue up 10–11% |
⚖️ Verdict: 🟢 Bullish
The story got better, because the quarter showed the July plan was cautious rather than a warning: revenue and net interest income both beat what it implied, and client money at Pershing and collateral balances kept rising. The bad news: the gap between revenue growth and cost growth narrowed for a second quarter, and capital ratios fell again.
The question now is whether the fourth quarter slows as sharply as the July plan implies. Either management set a cautious plan and will lift it, as it did in July, or lower deposits and a weaker market make a slow quarter real. The January results will tell.
🐂 Bull Case
Revenue Ran Ahead of BNY's Own Full-Year Plan
In July, finance chief Dermot McDonogh set a plan for revenue to grow 10% to 11% this year, excluding one-offs. Because the first half had already grown about 13%, that plan implied a slower second half. By our math it pointed to roughly $5.5 billion of revenue per quarter for the rest of the year.
The bank delivered $5.7 billion in the third quarter, about 3% above that pace. Net interest income, the profit from deposits, loans and securities after the interest it pays, also ran ahead. It came in at $1.42 billion against roughly $1.37 billion implied by the July plan, helped by "the reinvestment of investment securities at higher yields and balance sheet growth".
That says the plan was cautious; it does not say the slowdown has gone away. If the plan does not move, by our math the fourth quarter would grow only about 3% from a year ago and net interest income would fall slightly. The release neither restates nor changes the plan, so the fourth quarter is where this gets settled.
What to watch: whether BNY lifts its full-year revenue outlook before the January results. A raise would confirm that the July plan was set with caution rather than with knowledge of a weak fourth quarter.
Corporate Trust Fees Drive Securities Services Growth
Securities Services is BNY's largest unit: it holds and administers client assets, and its Issuer Services line services bond issues and depositary receipt programmes. Segment revenue rose 15% from a year ago to $2.8 billion, the fastest of the three businesses.
The company attributes the Issuer Services gain to "higher Corporate Trust revenue", while Asset Servicing grew on "higher client activity, net new business and market values". Securities lending, where BNY lends out client holdings for a fee, grew faster still.
- Issuer Services fees: $449 million, up 43% from a year ago
- Asset Servicing fees: $1.26 billion, up 12%
- Securities lending revenue: $92 million, up 48%
- Debt serviced by Issuer Services: $15.4 trillion, up 6%
This matters because the gain came largely from activity and new business rather than from market levels, which fell during the quarter. But a 43% jump in one fee line is unlikely to repeat, and Issuer Services fees already slipped 3% from the second quarter.
What to watch: Issuer Services fees in the fourth quarter against this quarter's $449 million. A figure close to it would show the corporate trust gains are recurring business rather than a burst of activity.
Clients Bring More Money to Pershing and BNY's Funds
Pershing is BNY's brokerage platform that clears trades and holds accounts for financial advisers. Net new assets there, the money clients added minus what they withdrew, reached $48 billion, the most in the five quarters shown.
The fund business improved too. Long-term active funds took in $6 billion, the first positive quarter in the series shown. Liability-driven investments, a product line that had lost money for a year, added $3 billion.
This matters because active funds carry higher fees than the index and cash products that had been taking the flows, so the mix the company blames for slow fee growth may stop getting worse. Clearing accounts at Pershing grew 5% from a year ago, which gives the brokerage a wider base for next year.
What to watch: long-term active fund flows next quarter. A second positive reading would show a turn rather than a single mandate.
🐻 Bear Case
Operating Leverage Narrows for a Second Quarter
"With broad-based growth across our platforms, we increased revenue by 12% year-over-year, delivering significant operating leverage and earnings per share growth of 24%," chief executive Robin Vince said. Operating leverage means revenue growing faster than costs, and this quarter the gap was the narrowest in the five quarters shown.
- Revenue growth minus cost growth: 3.9 percentage points, after 6.1 last quarter and 8.3 the quarter before
- Professional, legal and purchased services: up 17% from a year ago, now 8.4% of revenue against 8.0%
- Securities Services pre-tax margin: 35.8%, down from 39.3% last quarter, as the segment's costs rose 5% in three months
Against the second quarter the gap turned negative: revenue was flat while costs rose 1%, so pre-tax profit fell 4%. BNY says "More than 3/4 of YoY increase reflects revenue-related expenses", which means costs follow sales. But sales did not grow from the second quarter and the costs still did, so that explanation covers only part of the move.
What to watch: firmwide costs in the fourth quarter against this quarter's $3.5 billion. By our math the July plan already has costs growing faster than revenue in that quarter, so any figure above this quarter's would widen that gap.
Capital Ratios Slip as Bond Losses Grow
BNY's capital ratios, the regulators' measure of equity against assets and risk, fell again this quarter. The company blames capital returned to shareholders and "a decline in accumulated other comprehensive income", the accounting line where unrealized losses on its bond portfolio sit.
- Common equity tier 1 ratio: 10.9%, from 11.0% last quarter and 11.7% a year ago
- Tier 1 leverage ratio: 5.7%, from 5.9% and 6.1%
- Unrealized loss on investment securities: widened by $2.5 billion in the quarter, to $6.1 billion
This matters because the leverage ratio is the one BNY says it targets, so it governs how much cash goes back to shareholders. Buybacks fell 15% from the second quarter, and the total payout ratio of 85% is the lowest in the five quarters shown, even after the dividend rose.
What to watch: the tier 1 leverage ratio at year-end. Another step down would leave less room for buybacks in 2027 unless the bond losses reverse.
Investment Management Revenue Grows Just 1%
Investment Management, BNY's fund business, remains the slow unit. Its revenue rose 1% from a year ago to $562 million. That is a fraction of the growth the rest of the bank managed, and the line fell from the second quarter.
Management fees grew 3%, which the company attributes to "higher market values, partially offset by the mix of AUM flows": the products gaining money earn lower fees than the ones losing it. The segment's pre-tax margin did improve to 23.9%, from 22.3% a year ago. Costs rose only 2%, so the unit's medium-term margin target is now within reach.
What to watch: Investment Management revenue growth against the 3% fee growth this quarter. If the unit cannot grow revenue faster than markets rise, the better flows are not reaching the top line.
Risks This Quarter Didn't Answer
Four standing concerns got no new numbers in the release, the financial supplement or the slides, which carry no management commentary beyond the chief executive's short statement.
- Tokenization and on-chain settlement as a threat to custody fees: no disclosure; any revenue figure for digital-asset services would move the case.
- The financial payoff from AI: still no savings or revenue figure.
- Market dependence: fee revenue grew 12% while managed assets fell 2% from June, a helpful reading, but one quarter does not settle it.
- Litigation: the Brazilian and Russian cases and the Pershing inquiry get no mention; the quarterly filing's legal note will update them.
👓 Other Themes
Falling Markets Trimmed $27 Billion From Managed Assets
Markets moved against BNY in the quarter. The company reports a net market impact of minus $27 billion on managed assets, after a gain of $94 billion in the second quarter, and cites "the unfavorable impact of the stronger U.S. dollar" on both managed and custodied assets. Custodied assets still edged up from June, so fee income held.
💲 Other KPIs
Up 10% from a year ago and 1% from June. The growth rate has slowed from 12% last quarter because markets fell and the dollar rose. These are the securities BNY holds and administers for clients, and most of its fee revenue scales with them.
Up 14% from a year ago and 1% from the second quarter. These are the securities BNY manages as collateral for its clients' financing trades, and fees in Clearance and Collateral Management move with them. Growth has slowed from 18% in the first quarter, so the fee line that grew 17% this quarter tends to follow.
Up 4% from a year ago but down 1% from the second quarter. The bank blames "lower deposit balances" for the 2% sequential drop in net interest income, so deposits are the swing factor for the fourth quarter. Deposit growth has slowed from 13% in the first quarter.
Down 3.6% from a year ago, as buybacks retire shares faster than employee awards add them. The shrinking count turned 20% growth in profit for common shareholders into 24% growth per share. The decline slowed, because the bank repurchased about a quarter fewer shares than in the spring.
🔮 Guidance
Unchanged in the release, which does not restate the July plan. The plan has revenue for the year growing 10% to 11%, excluding one-offs. By our math, after nine months of 13% growth, it leaves about 3% growth for the fourth quarter at the middle of the range. That compares with 7% growth in the same quarter last year, so either the plan moves or the fourth quarter slows sharply.
Unchanged in the release. Net interest income has grown 18% over nine months, so by our math the July plan leaves about $1.32 billion for the fourth quarter at the middle of the range. That is 7% below this quarter and slightly below the fourth quarter of last year. Higher reinvestment yields and loan growth, the drivers the company cites, both continued this quarter.
Unchanged in the release. Costs excluding one-offs have risen 7% over nine months. By our math the plan leaves about $3.47 billion for the fourth quarter, level with this quarter. Because the revenue plan implies much slower growth in the same quarter, the plan as it stands would have costs growing faster than revenue in the fourth quarter, by our math.
Unchanged. The rate came in at 22.8% this quarter, in line with the plan. A one-point move in the rate shifts quarterly profit by about $22 million, by our math, so the tax line is a small factor next to revenue and costs.
❓ Key Questions
Did the full-year plan change with these results?
The release repeats nothing from July. By our math that plan now implies revenue growth of about 3% in the fourth quarter and a small fall in net interest income. Investors need to know whether management raised it on the call or stands behind that slowdown.
How much of the Issuer Services fee jump will recur?
Corporate Trust drove a 43% rise in the line from a year ago, yet fees fell 3% from the second quarter. Without a run-rate, readers cannot tell how much of the gain is durable business and how much was a burst of activity.
What share of fee growth came from new business?
The company credits net new business, client activity and market values without weighting them. Markets fell in the quarter, which suggests the new-business part was large, but only a figure would show how much of the 12% growth survives a flat market.
Why did Securities Services costs rise 5% in one quarter?
Revenue in the segment was flat from the second quarter while costs rose 5%, cutting its pre-tax margin by 3.5 points. The release cites revenue-related expenses and investments; the split decides whether the margin recovers.
Can BNY quantify revenue from digital-asset services?
Tokenized settlement is the longest-term threat to custody fees, and management has not yet put a number on revenue from stablecoin reserve custody or tokenized funds. A figure would show whether BNY earns from the shift or loses to it.