2023-07-17 12:31:10 ET
Citibank analyst Keith Horowitz put Bank of New York Mellon ( NYSE: BK ) stock on Catalyst Watch Positive as he expects the trust bank to outperform when it posts Q2 earnings on Tuesday morning.
On Friday, BNY Mellon ( BK ) shares dropped 6.7% after peer State Street's ( STT ) Q2 cut its guidance for net interest guidance for the rest of the year and Q2 revenue fell short of consensus as NII fell from the previous quarter.
The Citi analyst, though, pointed out that BNY Mellon's ( BK ) deposit mix is less weighted to asset servicing than State Street's — 45% vs. STT's 95%. As a result, BNY Mellon's deposit costs should be less sensitive to rising short-term interest rates than State Street's.
Horowitz expects BNY Mellon ( BK ) to maintain its net interest guidance on Tuesday. "Our work on deposit mix leads us to believe this read-through was overdone given BK's differentiated deposit mix is lower beta than STT," he wrote in a note to clients. Additionally, he expects that BK's demand deposit account mix guidance was more conservative than STT's.
BNY Mellon ( BK ) stock gained 1.6% in midday Friday trading.
The trust bank is expected to earn $1.22 per share in Q2, on an adjusted basis, according to the average analyst estimate , up from $1.13 earned in Q1 2023. Citi's Horowitz is a little more bullish, with a Q2 EPS estimate of $1.25 for BK.
Note that BNY Mellon ( BK ) quarterly EPS has exceeded the consensus estimate in each of the past 12 quarters.
More on BNY Mellon:
- Is BNY Mellon a Good Buy Ahead of Its Q2 Results?
- BNY Mellon plans 14% dividend increase as stress capital buffer stays at floor
- BNY Mellon's Pershing X teams up with Salesforce, other tech for wealth platform
- Bank of New York Mellon posts in-line Q1 earnings, lower market values drag fee income
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Bank of New York Mellon on Catalyst Watch Positive at Citi ahead of Q2 earnings