BNY - Is Bank of New York Mellon a Buy?
Bank of New York Mellon (NYSE: BNY) is not your typical bank in that it is not a commercial bank that relies on loans for income, or an investment bank that facilitates mergers and acquisitions, among other roles. BNY Mellon is a custody bank, which means it holds and safeguards financial assets for primarily large institutional clients, such as mutual fund companies and pensions. BNY Mellon is the largest custody bank in the country with $35 trillion in assets under custody, ahead of its main competitor State Street (NYSE: STT).
As a custody bank, BNY Mellon makes most of its money from fees charged for holding assets. It also has a smaller investment management arm. Thus, its revenue stream is fairly stable, and it has less risk than other types of banks, which showed in the volatile first quarter.
Unlike most banks, which took losses in Q1, BNY Mellon saw a 4% increase in net income year over year to $944 million and a 12% increase in earnings per share to $1.05. The company had $4.1 billion in revenue in the first quarter, a 5% increase over the first quarter of 2019. That was driven by a 10% increase in fee income due to elevated transaction volumes and heightened volatility.