tapebrief
BK · Q4 2025
Preliminary brief— based on press release only. Full analysis including management tone and Q&A will be added when the transcript is available.

BK · Q1 2026 Earnings

BNY Mellon

Reported April 16, 2026

30-second summary

Revenue grew 13% YoY to $5.41B in Q1, blowing past the trajectory implied by the ~5% FY2026 guide and forcing a +100bps raise to ~6% just one quarter in. ROTCE printed 29.3% — already above the medium-term 28% target raised last quarter — and the firm delivered 833bps of positive operating leverage. Management's prepared remarks centered the AI narrative and the revenue raise. The medium-term 38% pre-tax margin target was directly probed in Q&A by Morgan Stanley's Manan Ghasalia, who noted Q1 already printed 37% before the full platform benefit — the exchange in the available record was cut off mid-response, but the question itself confirms the target framework remains in play as a topic of investor engagement.

Headline numbers

EPS

Q1 FY2026

$2.24

Revenue

Q1 FY2026

$5.41B

+13.0% YoY

Operating margin

Q1 FY2026

37.0%

Key financials

Q1 FY2026
MetricQ1 FY2026YoYQ4 FY2025QoQ
Revenue$5.41B+13.0%$5.18B+4.4%
EPS$2.24—$2.02+10.9%
Operating margin37.0%—36.0%+100bps

Guidance

BNY raised FY2026 revenue growth guidance to ~6% YoY (from ~5%), raised expense growth to top of 3-4% range, and disclosed new ~10% YoY NII growth target; withdrew medium-term ROTCE and pre-tax margin targets.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

New guidance

MetricPeriodGuideYoY
Net interest income growth YoYFY2026up approximately 10% year-over-year—

Changes to prior guidance

MetricPeriodPrior guideNew guideΔResult
Revenue growth YoY (excluding notable items)
FY2026
approximately 5% year-over-yearapproximately 6% year-over-year+100 basis pointsRaised
Expense growth YoY (excluding notable items)
FY2026
approximately 3-4% year-over-year growthat the top of the 3-4% rangeshifted to upper bound (4%)Raised
Operating leverage
FY2026
more than 100 basis points of positive operating leverage in 2026Withdrawn — no replacement—Withdrawn
Pre-tax margin target (medium-term)
FY2026
38%Withdrawn — no replacement—Withdrawn
Return on tangible common equity target (medium-term)
FY2026
28%Withdrawn — no replacement—Withdrawn
Tier 1 leverage ratio target
FY2026
5.5% to 6%Withdrawn — no replacement—Withdrawn

Reaffirmed unchanged this quarter: Quarterly tax rate (approximately 23% for the remaining quarters this year)

Segment performance

Q1 FY2026
SegmentQ1 FY2026YoY
Securities Services$2.678B+17.0%
Market and Wealth Services$1.892B+11.0%
Investment and Wealth Management$0.825B+6.0%

Capital & returns

Q1 FY2026
SegmentQ1 FY2026
Return on Common Equity16.1%
Return on Tangible Common Equity (Non-GAAP)29.3%
Common Equity Tier 1 (CET1) Ratio11.0%
Tier 1 Capital Ratio13.8%
Total Deposits$417.1 billion

Other KPIs

Q1 FY2026
SegmentQ1 FY2026
Assets Under Custody/Administration (AUC/A)$59.4 trillion
Assets Under Management (AUM)$2.1 trillion
Net Interest Margin (FTE)1.38%

Management tone

Q2 anchor ("no ceiling on targets") → Q3 anchor ("year three of a decade") → Q4 anchor ("turn the page, raise the bar") → Q1 FY2026 anchor ("AI is the operating model now").

The AI transformation narrative was the centerpiece of the prepared remarks this quarter. Robin Vince devoted multiple slides and a substantial share of the script to AI, framing it as "a superpower" and "a capacity multiplier" with a three-vector financial benefit: productivity for the 47,000-person workforce, embedded capabilities in client-facing platforms, and an expanded perimeter of activities that AI-enabled economics now make viable.

AI disclosure scaled materially and reframed from cost lever to capacity multiplier. Prior-quarter disclosures emphasized incremental headcount-style metrics like digital employees (117 → 130+). This quarter Vince cited a different, broader metric — "218 AI solutions in production right now... up four times year over year" — alongside a continued mention of digital employees working side by side with humans. Note these are different categories (total AI solutions vs. digital employees), not a direct apples-to-apples progression. The framing also shifted: "47,000 people being able to deliver like one that is, in fact, many times larger... this concept of 47,000 people being able to do a lot more." AI is no longer being sold purely as headcount efficiency; it's being sold as growth capacity. This is consistent with the expense guide moving to the top of the 3–4% range (more AI investment) while revenue is raised.

Digital assets reframed from "first step" product to platform validation via a brand-name client. Last quarter's narrative was the on-chain mirrored deposit "first step." This quarter Robin Vince disclosed "PayPal has selected BNY to provide institutional-grade digital asset custody" — directly answering a multi-quarter watch item that asked for named client wins. Crucially, Vince also articulated a new defensive framing on AI vendor lock-in: "we've got the scale to actually be able to use AI and deploy it properly... you don't have the scale... you run risk of lock-in because of the way that you live in someone else's ecosystem." The $4B tech spend is now being positioned as a competitive moat against commoditization, not just an investment.

Organic growth language hardened from "grinding higher" to acceleration. McDonough characterized organic growth as continuing to grind higher — pointing out it was 3% in 2025, 1% in 2023, and flat in 2022. But the actual Q1 print was 13% YoY — far above grind. The disclosure that over 50% of clients that awarded asset servicing new business in Q1 also awarded business to at least one other line of business is the structural underpinning that allowed the FY guide raise. The shift: cross-sell is no longer aspirational; it's a measurable engine.

Recurring themes management leaned on this quarter:

AI ubiquity and immediate financial impactOrganic growth acceleration from commercial model and multi-line winsOperating leverage with simultaneous strategic investmentDigital asset infrastructure as core business evolutionDurable, diversified revenue streams independent of market conditionsScale and connectivity as competitive moat against AI commoditization risk

Risks management surfaced:

Deposit margin compression continuing despite strong volumesCyber defense complexity and threat acceleration from AI toolsToken pricing power and lock-in risk with AI providersGeopolitical conflicts and evolving policy uncertaintyMarket environment volatility and path of growth/inflation/rates difficult to predict

Answers to last quarter's watch list

Q1 FY2026 revenue growth tracking toward the ~5% FY guide — Q1 printed +13% YoY, far ahead of the implied trajectory, and management raised the FY guide to ~6%. The Q4 guide was conservative; consensus will need to recalibrate further given Q1 alone implies the new ~6% guide also has cushion.
Resolved positively
Investment and Wealth Management inflecting out of YoY decline — Segment printed $825M, +6% YoY, ending three consecutive quarters of decline. This is an 800bps swing from Q4's -2%.
Resolved positively
Expense growth at low end of 3–4% to preserve >100bps operating leverage — Management moved the guide to the top of the 3–4% range, while Q1 delivered 833bps of operating leverage — far above the >100bps framework. The expense guide is tighter but the operating leverage commitment is being over-delivered in practice.
Resolved positively
Concrete named wins on tokenized deposits, stablecoin custody, CLO tokenization — PayPal named as an institutional-grade digital asset custody client. This is the first named major client win since the "first step" framing. Other categories (stablecoin reserve custody, CLO tokenization) remained framework-led.
Resolved positively
ROTCE trajectory toward the 28% medium-term target — Q1 ROTCE (Non-GAAP) printed 29.3%, already 130bps above the target.
Resolved positively
Q1 effective tax rate confirming the stock-vesting tax benefit before normalizing to ~23% — Management reaffirmed the ~23% quarterly rate for the remaining quarters of FY2026, implying the Q1 benefit was realized as expected.
Resolved positively
Whether management resumes segment-level forward guidance — Management stayed with the firmwide top-line guide, added an explicit NII guide (~10% YoY), but did not return to segment-level forward guides. The single-firmwide format holds.
Resolved positively

What to watch into next quarter

Whether Q2 FY2026 revenue prints above the ~6% YoY implied trajectory (which against $5.03B Q2 FY2025 base implies ~$5.33B) — if Q1's 13% is a one-time print, expect mean reversion; if it sustains, FY guide gets raised again

Whether the 38% pre-tax margin target gets formally addressed on the next call given Ghasalia's question and Q1's 37% print already pressing the target before full platform-model benefit

CET1 trajectory after dropping 90bps QoQ to 11.0% on a spot-inflated balance sheet; whether this normalizes as the one-time deposit/overnight-loan effect reverses, or whether it signals a structural shift in capital intensity

Investment and Wealth Management sustaining positive YoY growth after the +6% Q1 inflection — one quarter is data, two is a trend

Whether the "218 AI solutions in production" figure grows materially in Q2 and whether management attaches a specific dollar revenue or efficiency contribution

Net interest income tracking against the new explicit ~10% FY guide — Q1 NIM held flat at 1.38% despite the spot-inflated deposit base, and management expects Q2 deposit balances to moderate slightly from Q1; Q2 NIM direction matters for the ~10% NII guide

Whether any new named digital asset / tokenization wins follow the PayPal disclosure, especially in stablecoin reserve custody and CLO tokenization

Sources

  1. BNY Mellon Q1 2026 Financial Supplement — SEC filing, https://www.sec.gov/Archives/edgar/data/1390777/000139077726000042/ex992_financialsupplementx.htm
  2. BNY Mellon Q1 2026 earnings call prepared remarks and Q&A — Robin Vince (CEO) and Dermot McDonough (CFO)
  3. Tapebrief BNY Mellon Q4 FY2025 brief (internal, for cross-quarter trend context)
  4. Tapebrief BNY Mellon Q3 FY2025 brief (internal, for cross-quarter trend context)
  5. Tapebrief BNY Mellon Q2 FY2025 brief (internal, for cross-quarter trend context)

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