Bank of New York Mellon (NYSE:BNY) is looking to expand relationships with existing clients and attract new ones as it builds on a companywide operating overhaul, Chief Financial Officer Dermot McDonogh said at a BMO Capital Markets event.
Speaking with Brennan Hawken, BMO’s head of diversified financials research, McDonogh pushed back on the suggestion that BNY’s stock is expensive after a multiyear run-up. He said comparisons with the company’s historical valuation may not reflect its ambitions for the future.
“We are about building a scalable, diversified set of businesses that could withstand a wide variety of scenarios,” McDonogh said, adding that the company believes its best years are ahead.
Investment management margin and sales growth
Hawken asked when BNY’s Investment and Wealth Management segment might achieve its target of a full-year pretax margin above 25%. McDonogh did not provide a timetable, but pointed to the segment’s 24% margin in the third quarter and signs of improving performance.
McDonogh said active equity funds at Newton were performing above benchmarks and beginning to see inflows. He also cited strength in cash management business Dreyfus and said Insight had been awarded a £1 billion mandate in the United Kingdom.
He said the investment management business had taken longer to integrate with the rest of BNY because it had been more siloed and technologically distant. The company sees opportunities to manage expenses, grow revenue and sell investment management services to clients elsewhere in the firm, he said.
Across BNY, McDonogh said the company had recorded 15 consecutive quarters of year-over-year sales growth through the third quarter. Approximately 10% of wins came from new clients last year, a proportion he said was roughly consistent this year.
The median client uses only one BNY product, McDonogh said, while only one company does business with all roughly eight of BNY’s specific businesses. He described that as an opportunity to deepen existing relationships and fill gaps by product and geography.
Operating model and pricing
McDonogh said all BNY employees are now part of its platform operating model, which he described as a way to reduce silos, eliminate duplication and share capabilities across businesses. For example, lending operations that had used separate technology and processes are now managed under one platform owner, he said.
He also pointed to investment in asset servicing technology and client service. Hawken said pricing pressure, long a concern in the business, had become less prominent. McDonogh attributed the change in part to longer-term client partnerships, saying pricing becomes less central when discussions focus on helping clients execute their strategies.
In the third quarter, 50% of asset servicing mandates won also included an award to another part of BNY, McDonogh said.
Digital assets and wealth services
On digital assets, McDonogh said BNY expects traditional and digital infrastructure to coexist and is investing to give clients a choice in how they move and store assets. He said the company serves both digitally native firms using traditional banking services and traditional clients exploring digital assets.
Asked whether digitally native clients are less profitable, McDonogh said there was “no degradation.” He did not provide a revenue figure for the digital asset business.
In Wealth Solutions, which includes the former Pershing business, McDonogh said BNY previously guided for mid-single-digit growth in net new assets, excluding the effects of client deconsolidation largely associated with mergers and acquisitions. He said net new assets were up about 9% year over year in the third quarter.
Asked about current-quarter trends and the outlook for 2026, McDonogh did not provide an updated forecast. He instead emphasized BNY’s long-term strategy and the need for a durable business model.
About Bank of New York Mellon (NYSE:BNY)
BNY, formerly known as BNY Mellon, is a global financial services company headquartered in New York City. Formed in 2007 through the merger of the Bank of New York and Mellon Financial Corporation, BNY traces its roots back to 1784, making it one of the oldest banking institutions in the United States. It was also the first company listed on the New York Stock Exchange.
BNY operates at the center of the world’s capital markets, partnering with clients to help them operate more efficiently and accelerate growth.
