Tough to gauge US custody bank Q1 performance, says Jefferies
Uncertainty around fee growth and the possibility of future rate hikes is weighing on the sentiment of major US custodian banks, Jefferies top equity analyst says.
Ken Usdin, the investment bank’s New York-based managing director of equity research, said it was a “difficult first quarter” to gauge the performance of BNY Mellon, Northern Trust and State Street.
“The first quarter has numerous moving targets i.e. NII, FX, sec. lending,” Usdin said in a note on Friday.
“We model BNY Mellon slightly below, Northern Trust beating, and State Street missing.”
Meanwhile, he remains below consensus for 2017 on all three and continues to expect downward revisions in the near-term.
The analyst has a ‘hold’ rating on Chicago-based Northern Trust. Shares in the firm have declined by 12% to $63.02 since the start of 2016.
BNY Mellon, down 13% to $35.67 over the same period, was also kept as a ‘hold’ by Usdin.
He maintained his ‘buy’ rating on shares in Boston-based State Street, 15% weaker over the past three months to $56.18.
Each firm serves a large number of institutional investors, providing custody and fund administration services, along with investment management and securities lending.
State Street plans to release its first-quarter 2016 numbers on April 27.
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