Diverging Bank Earnings: Why BNY Outperformed JPMorgan in Q4 2025

The Q4 2025 earnings season for major U.S. banks revealed stark contrasts in performance, with Bank of New York Mellon (BNY) outpacing JPMorgan Chase (JPM) despite both operating in a challenging regulatory and macroeconomic environment. While JPMorgan's results reflected resilience, BNY's earnings exceeded expectations across key metrics, driven by robust net interest income growth, asset management strength, and disciplined cost management. This analysis unpacks the divergent trajectories of the two institutions, focusing on their financial performance, valuation metrics, and the factors that underpinned BNY's outperformance.

Financial Performance: BNY's Earnings Surge vs. JPMorgan's Modest Growth

BNY Mellon delivered a standout Q4 2025 performance, with adjusted earnings per share (EPS) of $2.08, surpassing analyst estimates of $1.98 and marking a 28% year-over-year increase. Total revenue reached $5.18 billion, up 7% from the prior year and slightly above the $5.15 billion consensus estimate. This growth was fueled by a 13% rise in net interest income to $1.35 billion and a 5% increase in fee revenue, reflecting BNY's ability to capitalize on higher interest rates and its expanding asset management business.

In contrast, JPMorgan reported Q4 2025 net income of $13.0 billion, or $4.63 per share, which fell short of the prior year's $14.0 billion. While revenue grew 7% year-over-year to $46.8 billion-matching analyst expectations-its net interest income (NII) of $25.1 billion, though up 7% from 2024, faced headwinds from deposit margin compression. JPMorgan's Commercial & Investment Bank (CIB) segment saw a 10% revenue increase, while its Asset & Wealth Management (AWM) division reported a 13% rise in revenue to $6.5 billion according to Q4 2025 results. However, these gains were offset by a decline in full-year EPS compared to 2024.

BNY's outperformance can be attributed to its focus on low-cost custody and asset management, which generated $59.3 trillion in assets under custody/administration (AUC/A)-a 14% year-over-year increase-and $2.2 trillion in assets under management (AUM), up 7%. These metrics highlight BNY's ability to scale its fee-based businesses, which are less sensitive to interest rate volatility than JPMorgan's broader lending and trading operations.

Valuation Metrics: BNY's Efficiency vs. JPMorgan's Premium Pricing

BNY's earnings were accompanied by a more favorable valuation profile compared to JPMorgan. While JPMorgan's price-to-earnings (P/E) ratio stood at 16.07, near its 5-year high, and its price-to-sales (P/S) and price-to-book (P/B) ratios also approached historical peaks, BNY's valuation appeared more attractive relative to its growth. For instance, BNY's adjusted EPS growth of 24% for the full year 2025 outpaced JPMorgan's flat or declining EPS, suggesting stronger operational efficiency.

JPMorgan's profitability metrics, including a trailing twelve-month net profit margin of 34.70% and a Return on Equity (ROE) of 17%, underscore its dominance in capital generation. However, these figures were tempered by regulatory uncertainties, particularly the proposed cap on credit card interest rates, which could erode net interest margins. BNY, meanwhile, demonstrated a leaner cost structure, with expenses rising only 3%-4% in 2026 guidance despite a 5% revenue growth outlook. This cost discipline, combined with its asset management scale, positioned BNY as a more agile player in a regulatory climate that favors fee-driven models.

Factors Behind the Divergence: Strategic Priorities and Risk Profiles

The divergence in Q4 2025 results stems from structural differences in the two banks' business models. BNY's emphasis on custody, clearing, and asset servicing-segments with high margins and stable cash flows-allowed it to benefit from a surge in market activity and rising interest rates. Its AUM growth, driven by inflows into fixed-income and alternative assets, further insulated it from volatility affecting JPMorgan's trading and lending divisions.

JPMorgan, by contrast, faces a more complex earnings landscape. Its exposure to credit card interest rates, consumer lending, and market risk amplifies its vulnerability to regulatory shifts and economic slowdowns. While its NII growth of 7% in Q4 2025 was impressive, deposit margin compression-a result of higher funding costs-limited upside potential. Additionally, JPMorgan's elevated valuation multiples reflect investor optimism about its long-term profitability, but this optimism may be unwarranted if regulatory pressures intensify or interest rates stabilize.

Conclusion: BNY's Strategic Edge in a Fragmented Sector

BNY Mellon's Q4 2025 outperformance over JPMorgan highlights the advantages of a business model centered on fee-based growth, asset management scale, and operational efficiency. While JPMorgan remains a leader in capital generation and market share, its exposure to regulatory and macroeconomic risks creates a more uncertain outlook. For investors, BNY's disciplined cost structure and robust asset growth suggest a more resilient path forward in a sector increasingly defined by regulatory scrutiny and interest rate volatility.

As the financial sector navigates 2026, the contrast between these two institutions underscores the importance of strategic differentiation in a fragmented banking landscape.