10 Best Diversified Bank Stocks to Buy Now

5. The Bank of New York Mellon Corporation (NYSE:BK)

Number of Hedge Fund Holders In Q2 2024: 50

The Bank of New York Mellon Corporation (NYSE:BK), the bank founded by Alexander Hamilton in 1984, is a GSIB. This places it at the heart of the ongoing tussle between the Federal Reserve and big banks over the Fed’s decision to implement tighter capital requirements that could eat into banking retained earnings for at least two years. However, investors have brushed this off, as The Bank of New York Mellon Corporation (NYSE:BK)’s shares are up by 51.7% over the past year and by 31.45% year to date. Key to this performance has been the bank’s remarkable ability to keep its costs under control even as inflation still hasn’t dropped fully. In H1 2024, The Bank of New York Mellon Corporation (NYSE:BK)’s noninterest expenses were $6.23 billion which were essentially flat over the year ago figure of $6.11 billion. Additionally, a sizeable $4.6 billion of its $7 billion in H1 noninterest income was through investment services fees. This provides The Bank of New York Mellon Corporation (NYSE:BK) exposure to rate cut tailwinds to the stock and investment markets, with the bank benefiting as stock, M&A, and other associated activities pick up.

The Bank of New York Mellon Corporation (NYSE:BK)’s management shed more light on its investment services revenue during the Q2 2024 earnings call:

“Total investment services fees were up 3% year-over-year. In Asset Servicing, investment services fees grew by 4%, primarily reflecting higher market values and net new business. We continue to see strong momentum in ETF servicing with AUC/A of over $2 trillion, up more than 50% year-on-year, and the number of funds serviced up over 20% year-on-year.

This growth reflects both higher market values as well as client inflows, which included a large ETF mandate in Ireland from a leading global asset manager. In alternatives, fund launches for the quarter continued their recent activity in private markets. Investment services fees for alternatives were up mid-single-digits, reflecting growth from both new and existing clients. And in Issuer Services, investment services fees were up 1%, reflecting net new business across both Corporate Trust and Depositary Receipts, partially offset by the normalization of elevated fees associated with corporate actions in Depositary Receipts in the second quarter of last year. We’re particularly pleased to see the investments and new leaders in our Corporate Trust platform beginning to bear fruit.”