New York Mellon's (NYSE:BK) Margins Will Remain Under Pressure

New York Mellon (NYSE:BK) will continue to have their margins under pressure, according to Barclays (NYSE:BCS), even though operating leverage has slightly improved in the fourth quarter of 2010.

Barclays says, "Bottom line, while we are encouraged by BK's return to posting modest operating leverage in 4Q10, we look for its recent margin pressure to continue amid the current low rate environment and dampen a portion of the earnings leverage that naturally arises from its recent new business wins. A difficult comparison with the seasonally strong 4Q is something to consider near term. Still, we are hopeful positive operating leverage can persist as expense savings offset what is typically a seasonally weak fee income performance.

"Following BK's 4Q10 results, we are reducing our 2011 EPS estimate to $2.45 from $2.60 to largely reflect a lower net interest margin assumption near-term as short-term rates remain low. Our inaugural 2012 EPS estimate is $2.80."

Barclays reiterates an "Overweight" rating on Bank of New York Mellon (BK), which closed Thursday at $31.63, up $0.15, or 0.48 percent. Barclays has a price target of $38 on the bank.