Bank of New York Mellon Corp

This is our first report on a global custodian and asset management behemoth, Bank of New York Mellon Corp. This After a surge in deposit balances following recent market fluctuations, BNY Mellon finished the quarter slightly higher than its starting point. The company’s broader liquidity platform, managing over $1.3 trillion of cash and short-term investments, witnessed growth in most channels. The company manages over $1 trillion in client cash across various short-term investment options, further demonstrating its significant role in the broader liquidity ecosystem. BNY Mellon delivered solid Q1 financial performance, reporting a 30% year-on-year increase in EPS and 11% revenue growth. The company controlled expenses and generated a healthy return on tangible common equity of 20%. Its Tier 1 leverage ratio and liquidity coverage ratio remained robust. BNY Mellon has committed to cutting its core expense growth by roughly half compared to 2022 and continues to report healthy growth in net interest revenue. Despite flat year-over-year fees, several business highlights like strong pipeline in Asset Servicing, increased ETF activity, and the launch of Outsourced Trading business are set to alter this trajectory and drive underlying fee growth. The company continues to build on its foundation of client trust, resilience, and culture to deliver successful outcomes amid market uncertainties. We initiate coverage on the stock of Bank of New York Mellon Corp with a ‘Hold’ rating.