BNY Mellon Stock Has Limited Upside

BNY Mellon Stock Has Limited Upside

Share to Linkedin The bank is heavily dependent on asset servicing fees (29% in 2020) and investment management fees (22% in 2020), which are charged as a percentage of Assets under Custody & Administration (AuC/A) and Assets under Management (AuM) respectively. In Q1, the AuC/A grew 1. 5% on a sequential basis to $41. 7 trillion, while the AuM saw a marginal increase to $2. 2 trillion. The growth in assets base is a positive indicator for the company, which will likely benefit its revenue prospects. However, both the investment management fee as a % of AUM and Asset Servicing Fee as a % AuC/A have registered a decline in 2020 and are expected to see a further decrease in FY2021. This is likely to reduce the positive impact of asset growth to some extent. Further, the net interest income benefited from growth in interest-earning assets, however, it was more than offset by a drop in net interest margin. We expect the same trend to continue in the current year. Overall, the above factors will likely restrict BNY Mellon's revenues to $15. 7 billion in FY2021 – slightly lower than the 2020 figure. That said, the net income margin is