The Bank of New York Mellon Corporation (BK): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


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BNY Mellon's third-quarter 2014 earnings outpaced the Zacks Consensus Estimate. Higher investment management & performance fees lifted the results, while lower net interest revenues as well as elevated expenses acted as dampeners. Moreover, sustained growth in assets remained a major strength. The restructuring initiatives and acquisitions undertaken by the company will likely result in improved revenue generation going forward. Moreover, a sturdy capital position and enhanced capital deployment activities will continue to boost investors' confidence. Though litigation costs and restructuring expenses will keep the top line under strain, the company's cost control initiatives are expected to eventually ease off the pressure. However, a persistently low interest rate environment and slow economic recovery continue to slightly weigh on the company's profitability.


Headquartered in New York and formed as a holding company for The Bank of New York Mellon, The Bank of New York Mellon Corporation (popularly known as BNY Mellon) is a financial services company that has been in business since 1784. The company was incorporated on Jul 1, 2007, following the merger of The Bank of New York Company Inc. and Mellon Financial Corporation. As of Sep 30, 2014, BNY Mellon and its subsidiaries had around 50,900 employees.

The company operates in 35 countries and provides various products and services to individuals and institutions in more than 100 markets worldwide. The company's global client base consists of financial institutions, corporations, government agencies, endowments and foundations as well as high-net-worth individuals.

BNY Mellon presents operations through the following businesses:

The Investment Management segment provides investment management services to institutional and retail investors and investment management, wealth and estate planning and private banking solutions to high-net-worth individuals and families, as well as foundations and endowments.

The Investment Services segment provides global custody and related services, broker-dealer services, alternative investment services, corporate trust, depositary receipt and shareowner services, as well as clearing services and global payment/working capital solutions to global financial institutions.

The Other segment primarily consists of credit-related services, the leasing portfolio, corporate treasury activities, business exits, M&I expenses, as well as other corporate revenues and expense items.

In 2009, BNY Mellon acquired Insight Investment Management Limited for 235 million ($377 million of cash and stock).

In 2010, BNY Mellon sold Mellon United National Bank, its national bank subsidiary located in Florida. In the same year the company acquired Delaware-based PNC Financial's Global Investment Servicing (GIS) business, Germany's BHF Asset Servicing GmbH and Toronto-based I3 Advisors.

In 2011, BNY Mellon acquired Chicago-based Talon Asset Management's wealth management business and Australia-based Penson Financial Services Australia Pty Ltd.

In 2012, BNY Mellon completed the sale of the Shareowner Services business to Computershare for $550 million and concluded the 100% stake buyout of WestLB Mellon Asset Management JV.

In May 2014, BNY Mellon acquired a 65% ownership stake in HedgeMark International, LLC. The remaining 35% stake has been held by the company since 2011.

In Jul 2014, BNY Mellon completed the sale of its equity investment in Wing Hang Bank Ltd. This resulted in an after-tax gain of nearly $315 million in the third quarter of 2014.

In Sep 2014, BNY Mellon completed the sale of its One Wall Street headquarter building to a group led by Macklowe Properties, a New York-based real estate developer. The deal, valued at $585 million, resulted in an after-tax gain of $204 million in the third quarter of 2014.

BNY Mellon's businesses benefit from global growth in financial assets, the globalization of the investment process and the growth and concentration of wealth segments. As of Sep 30, 2014, BNY Mellon had total assets of $386.3 billion, net loans of $57.3 billion, total deposits of $264.9 billion and total equity of $39.4 billion.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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