The Bank of New York Mellon Corporation’s BK shares touched a new 52-week high of $88.25 in Friday’s trading session. Over the past month, BK stock has gained 5.5%, outperforming the industry, the Zacks Finance Sector and the S&P 500 index. Also, the company’s shares have fared better than its close peers, BankUnited Inc. BKU and Northern Trust Corp. NTRS.

One-Month Price Performance

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Does BK stock have more upside left despite hitting a 52-week high? Let us try to decipher that.

Factors to Influence BNY Mellon Stock Performance

Relatively Higher Rates to Aid Revenues: Though the Federal Reserve has reduced interest rates by 100 basis points since September 2024, the rates are expected to remain higher for longer in light of sticky inflation and geopolitical uncertainties. This will support BK’s net interest income (“NII”) and net interest margin (“NIM”), driven by higher yields while elevated deposit costs will weigh on it to some extent.

BNY Mellon’s NII indicated a compound annual growth rate (CAGR) of 6.2% over the five years ended 2024. Similarly, NIM improved to 1.32% in 2024 from 1.26% in 2023, 0.97% in 2022, 0.68% in 2021 and 0.84% in 2020. Also, total revenues and loans witnessed a CAGR of 2.5% and 5.4%, respectively, over the same period.

Quarterly Revenue Trend

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Further, BNY Mellon’s product offerings and strategic collaborations are expected to drive revenue growth. Also, a favorable stance of the Trump administration toward businesses and expansionary policies is likely to support fee revenues.

Sales Estimates

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Additionally, the BNY platform’s operating model is likely to drive the top line through leveraging technology and boosting fee revenues. This will enable the company to achieve higher operating leverage over time.

Strategic Buyouts & Expansion Efforts: BNY Mellon has been trying to expand its presence in international markets through several growth initiatives including launching new services, digitizing operations and making strategic buyouts.

In November 2024, the company acquired Archer, while in September, it announced plans to launch Alts Bridge. In 2021, the company, through its subsidiary, acquired Optimal Asset Management. Given the huge growth potential of overseas securities markets and a rise in complex new securities, the long-term growth prospects of the industry are encouraging. In 2024, non-U.S. revenues constituted 35% of total revenues. 

These initiatives are expected to further strengthen BNY Mellon’s footprint globally and boost its international revenues.

Solid Balance Sheet Position: As of Dec. 31, 2024, BK’s total cash and cash equivalents (consisting of cash and due from banks and interest-earning deposits) were $103.3 billion. Total debt was $54 billion.

Additionally, the company maintains investment-grade long-term senior debt ratings of A1, A and AA- from Moody’s, the S&P Ratings and Fitch Ratings, respectively. This renders the company favorable access to the debt market. Thus, given its decent earnings strength and a solid liquidity position, BNY Mellon will likely be able to address debt obligations in the near term, even if the economic situation worsens.

Moreover, as of Dec. 31, 2024, BK’s common equity tier 1 ratio and the total capital ratio of 11.2% and 14.8%, respectively, were well above the regulatory requirements.

BNY Mellon’s focus on maintaining strong capital and balance sheet positions supports its capital distribution activities. This is demonstrated by the bank’s capital distributions of about $4.4 billion through dividends ($1.3 billion) and share repurchases ($3.1 billion) in 2024.
 
After the clearance of the 2024 stress test, the company hiked its quarterly cash dividend by 12% to 47 cents per share. Further, the company has been consistently raising its quarterly cash dividends. The bank hiked dividends four times during the last five years, with a dividend payout ratio of 31%.

Dividend Yield

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Similarly, BKU increased its dividend four times over the past five years, while NTRS raised its dividend only once over the same time frame.

Also, BK has a share repurchase plan. In April 2024, the company announced a new share repurchase program worth $6 billion. As of Dec. 31, 2024, roughly $5.33 billion worth of shares remained available for repurchase under the authorization. Management expects to return more or less than 100% earnings this year.

Rising Operating Expenses: While BNY Mellon’s cost-saving initiatives helped it lower expenses over the past several years, the same has been increasing of late. The company’s total non-interest expenses recorded a CAGR of 3.1% over the last five years ended 2024.

Expense Growth Trend

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The company’s multi-year transformation program is expected to result in higher expenses in the quarters ahead. Moreover, given the inflationary pressure and the company’s efforts to upgrade operations with updated technology and automation, overall costs are expected to remain elevated.

Bullish Analyst Sentiments for BK

Over the past week, the Zacks Consensus Estimate for earnings of $6.93 and $7.77 per share for 2025 and 2026, respectively, moved marginally upward.

Estimate Revision Trend

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The projected figures imply growth of 14.9% and 12.1% for 2025 and 2026, respectively.

Find the latest earnings estimates and surprises on Zacks Earnings Calendar.

Final Thoughts on BNY Mellon Stock

Relatively high interest rates, strategic buyouts and a solid balance sheet are likely to support BNY Mellon’s financials. Moreover, the Trump administration’s expansionary moves will further complement the bank’s growth initiatives to boost its top line. However, rising expenses remain a concern. Nonetheless, the company’s new operating model will likely drive operating leverage. Thus, BK stock remains a lucrative bet for investors now.

BK currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The Bank of New York Mellon Corporation (BK) : Free Stock Analysis Report

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