Analyst Note| Rajiv Bhatia, CFA |
Wide-moat-rated Bank of New York Mellon reported decent first-quarter financial results with revenue and EPS (excluding notable items) of $3.93 billion and $0.94, respectively, which compares with the FactSet consensus of $3.94 billion and $0.85. Rising interest rates are certainly helping as net interest revenue growth is now expected to be 13% in 2022, compared with a previous 10% increase. BNY Mellon also saw a $44 million favorable impact to net fee waivers versus the prior quarter, and further rate hikes will mean more favorability. That said, lower market levels, mixed retention trends, actions related to Russia, and a strong U.S. dollar are also weighing on BNY Mellon’s financial results. In light of these mixed trends, we will maintain our fair value estimate of $55 on BNY Mellon’s shares.