BNY up 45%, State Street up 47%, Northern Trust up 43% in 12 months — which custody stock still has room to run?
Data as of: Q4 2025 (latest reported quarter)
The three dominant custody banks — BNY Mellon (BK), State Street (STT), and Northern Trust (NTRS) — have each delivered spectacular 12-month returns in the 43-47% range. But after a rally this uniform, investors need to look beneath the surface to find where the next leg of outperformance will come from.
The Scoreboard
Stock Performance
| Metric | BK | STT | NTRS |
|---|---|---|---|
| 1-Year Return | +45.0% | +46.9% | +43.4% |
| YTD Return | +0.1% | -2.4% | +1.2% |
| Price | $117.12 | $126.00 | $140.90 |
| Market Cap | $81.7B | $35.2B | $26.2B |
All three stocks have essentially stalled in 2026, with YTD returns ranging from -2.4% (STT) to +1.2% (NTRS). The explosive 2025 rally has paused — the question is whether it resumes or reverses.
Valuation
| Metric | BK | STT | NTRS |
|---|---|---|---|
| P/E (TTM) | 15.7x | 13.2x | 16.0x |
| P/E (Fwd) | 14.1x | 10.8x | 14.0x |
| P/B | 1.84x | 1.26x | 2.06x |
| P/S | 2.08x | 1.70x | 1.86x |
| PEG | 1.11 | 1.58 | 1.62 |
State Street stands out as the cheapest on virtually every metric — a 10.8x forward P/E versus 14x for both BK and NTRS. Its 1.26x price-to-book represents a meaningful discount to NTRS at 2.06x. But BK's PEG ratio of 1.11 suggests it offers the best growth-adjusted value of the three.
Earnings Power (Q4 2025)
| Metric | BK | STT | NTRS |
|---|---|---|---|
| Revenue | $8.87B | $3.67B | $3.61B |
| Net Income | $1.46B | $747M | $466M |
| EPS (Diluted) | $2.02 | $2.42 | $2.42 |
| Net Interest Income | $1.35B | $802M | $642M |
| Operating Income | $1.85B | $918M | $626M |
BK dwarfs its peers in absolute scale, generating nearly 2x the net income of STT and over 3x that of NTRS. But on a per-share basis, STT and NTRS both posted $2.42 in Q4 EPS versus BK's $2.02 — reflecting BK's much larger share count from its broader business footprint.
Full-Year Growth (FY2024 vs FY2023)
| Metric | BK | STT | NTRS |
|---|---|---|---|
| Revenue | $39.6B (+17.0%) | $22.0B (+19.6%) | $15.9B (+31.0%) |
| Net Income | $4.53B (+37.2%) | $2.69B (+38.2%) | $2.03B (+83.4%) |
| EPS | $5.80 (+49.1%) | $8.21 (+47.1%) | $9.77 (+92.3%) |
| Operating Income | $5.85B (+36.5%) | $3.40B (+46.6%) | $2.66B (+81.5%) |
Northern Trust posted the most dramatic profit recovery — EPS nearly doubled from $5.08 to $9.77 as operating income surged 81.5%. This largely reflects a normalization from NTRS's depressed 2023 earnings, when higher deposit costs compressed margins more severely than at peers. State Street's operating income growth of 46.6% also outpaced BK's 36.5%, indicating stronger operational leverage.
Profitability & Shareholder Returns
| Metric | BK | STT | NTRS |
|---|---|---|---|
| Net Margin (TTM) | 14.1% | 14.2% | 12.1% |
| ROE (TTM) | 12.5% | 10.6% | 13.4% |
| Dividend Yield | 1.76% | N/A | 2.77% |
| Payout Ratio | 27.6% | N/A | 44.4% |
| Consecutive Div Years | 42 | N/A | 41 |
| EPS CAGR (3Y) | 36.9% | 9.5% | 12.6% |
BK's 3-year EPS CAGR of 36.9% is far ahead of peers, reflecting both organic growth and disciplined capital return. NTRS offers the highest ROE at 13.4% and the richest dividend yield at 2.77%, making it the income investor's pick. STT delivers comparable margins but dividend data is unavailable in the snapshot.
Who Still Has Room to Run?
Best Value: State Street (STT)
At 10.8x forward earnings — a 23% discount to BK and NTRS — State Street is the clear value play. Its FY2024 operating income grew 46.6%, yet the stock trades at the lowest P/B (1.26x) in the group. If STT can sustain its earnings trajectory, multiple expansion alone could drive 15-20% upside to match peers' valuations. The risk: STT's higher PEG ratio (1.58) suggests the market sees slower growth ahead.
Best Quality: BNY Mellon (BK)
BK combines the best PEG ratio (1.11), the strongest 3-year EPS CAGR (36.9%), and dominant scale with $472B in total assets. Its 42-year dividend streak and low 27.6% payout ratio leave ample room for dividend growth and buybacks. BK is the "sleep well at night" pick — but at 14.1x forward earnings, much of the quality premium is already priced in.
Best Recovery Play: Northern Trust (NTRS)
NTRS's 92% EPS jump in FY2024 was impressive, but it was partly a bounce-back from depressed 2023 levels. At 14.0x forward earnings and 2.06x book — the highest P/B of the three — NTRS is priced for continued improvement. The 2.77% dividend yield provides a floor, and the wealth management franchise commands a premium. However, with the lowest net margin (12.1%) and the smallest absolute earnings base, NTRS faces the highest bar for sustained outperformance.
The Verdict
State Street (STT) has the most room to run. A 10.8x forward P/E with nearly 47% operating income growth in FY2024 is a mispricing if earnings hold. The valuation gap versus BK and NTRS is too wide for three companies competing in the same custody and ETF servicing markets. Convergence toward a 12-13x forward multiple would imply 10-20% upside from current levels.
BK remains the highest-quality holding. NTRS is the income play. But for pure upside from here, the math favors State Street.
What to Watch
- ETF asset flows: All three benefit from passive investing growth. Track AUC/A disclosures in Q1 2026 earnings.
- Net interest income trajectory: NII is stabilizing across the group — any acceleration would disproportionately benefit STT and NTRS.
- Capital return announcements: BK's low 27.6% payout ratio creates buyback optionality that could drive further EPS growth.
Sources: BK, STT, NTRS quarterly filings (Q4 2025), company snapshots via Diggr.