BNY Mellon

Methodology

BNY Mellon's custody banking and asset servicing businesses generate relatively stable fee revenue from institutional clients, with less credit risk than traditional banks. The company's earnings are sensitive to market levels (affecting assets under custody) and interest rates (affecting deposit revenue). This calculation works reasonably for BNY Mellon given the recurring nature of custody fees, though market volatility and rate changes can create near-term earnings fluctuations.

Methodology

BNY Mellon's PEG ratio typically ranges from 1.0-1.8, reflecting moderate valuations for a custody bank with steady but unspectacular growth from market appreciation and new client wins. The company's capital-light servicing model provides stability, but limited organic growth opportunities constrain multiples. Compare to other custody banks like State Street and asset managers to assess whether BNY Mellon's market position justifies its valuation.

Methodology

BNY Mellon's dividend yield (typically 2.5-3.5%) combined with share buybacks makes PEGY important for evaluating total capital returns from this mature financial services company. The bank's strong capital generation from fee-based businesses supports substantial shareholder returns. PEGY better captures the investment proposition for BNY Mellon, where consistent capital returns enhance the appeal of a steady but slow-growing custody banking franchise.