Original title: in-depth study of the banking industry: bank of New York Mellon: a unique source of custodian banks:Tianfeng Securitieslimited company
Bank of New York Mellon, with a custody size of $37.1 trillion (at the end of 1919), is the largest custodian in the world. Bank of New York Mellon was established by the merger of Bank of New York and Mellon Financial Corporation in 2007. after many business mergers and acquisitions and business sales, Bank of New York spun off the traditional commercial banking business, focusing on asset custody, asset management and other businesses.
Divest the traditional banking business and become a unique custodian bank
The hosting industry is highly concentrated, and New York Mellon is in the vanguard. The hosting industry wins by scale, reduces marginal costs through scale expansion, and the concentration of the overseas hosting industry continues to rise. at the end of 15 years, the global hosting market was 125 trillion US dollars, while New York Mellon accounted for about 23 percent of the global share. 1H20 US TOP4 hosting reached 118.7 trillion US dollars, with a high degree of industry concentration.
Under the epidemic, the performance is stable, and the spread dependence is small. Affected by the epidemic, the net profit of 1H20's four major banks in the United States fell by 50% to 110%, while the net profit of New York Mellon decreased by only 1.68%, and its performance was relatively stable. This is due to the fact that New York Mellon mainly relies on intermediary business, with little traditional credit business and less credit risk, so it can make less provision, so it has less impact in this epidemic. In terms of interest margin, the net interest margin of 1H20 New York Mellon is 1.18 per cent, while that of other traditional big banks is more than 2 per cent. New York Mellon accounts for about 80 per cent of non-interest income, and the light-asset Bank of New York Mellon is relatively less dependent on spreads.
The two major sectors of investment services and investment management develop in coordination: (1) the investment services sector takes asset custody as the core and provides comprehensive financial services. In 19 years, the investment services sector contributed about 73% of the operating income. (2) the investment management section takes asset management as the core and has several asset management subsidiaries. In 19 years, the scale of global asset management reached 89 trillion US dollars. New York Mellon, with $1.9 trillion under management, is the seventh largest asset manager in the world. Trusteeship and capital management fly together. For financial institutions that basically have no retail channels, escrow platforms and online sales platforms are the main sales channels.
The riddle of low valuation: net assets with a high proportion of goodwill
Goodwill accounts for a large proportion of net assets. Generally speaking, light-asset banks have higher valuations, but New York Mellon's current valuation of around 0.8 times PB is not high in the industry. This is due to the fact that the net assets of New York Mellon have generated more goodwill from mergers and acquisitions for many years, and the goodwill is higher in its net assets. Goodwill accounts for 41.9% of net assets. Excluding goodwill, it is calculated that at the end of 1919, New York Mellon was valued at 1.84 times PB, and the market gave it a higher valuation.
Goodwill accounts for a small proportion of net assets of China's listed banks. Compared with Chinese banks, American banks generally have a history of mergers and acquisitions, and the proportion of goodwill in their net assets is generally higher. The proportion of goodwill of China's five major banks is about 0.1%, and their net assets are solid.
Investment suggestion: the capital occupation of trusteeship business is low, or the important choice of bank transformation is that there is more room for the development of trusteeship market in our country. As an intermediary business with low capital occupation and strong anti-risk ability, trusteeship business has been paid more and more attention by listed banks. The net worth of Chinese listed banks is relatively solid, which is lower than the valuation given by the US market. In the post-epidemic era, the domestic economy has recovered steadily, supporting the reasonable repair of the valuation of bank stocks. The valuation switch in the fourth quarter is worth paying attention to.
Risk tips: out of control of the epidemic led to economic stall; significant deterioration in asset quality; substantial narrowing of interest rate spreads, etc.