Q4 2023 Bank of New York Mellon Corp Earnings Call
Please standby.
Good morning, and welcome to the 2023 fourth quarter earnings Conference call hosted by being why Mellon at this time all participants are in a listen only mode. Later, we will conduct a question and answer session. Please note that this conference call and webcast will be recorded and will consist of copyrighted material.
You may not record or rebroadcast these materials without being wiped mellons consent I will now turn the call over to Marius Mers be annoyed Merlin head of Investor Relations. Please go ahead.
Thank you operator.
Good afternoon, and thank you all for joining us.
I'm here with Robin, Vince President and Chief Executive Officer, and Dominic Mcdonough, Chief Financial Officer.
As usual, we will reference a financial highlights presentation, which can be found on the investor Relations page of our website at being why Merlin Dot com.
I'd like to note that our remarks will contain forward looking statements and non-GAAP measures.
Actual results may differ materially from those projected in the forward looking statements.
Information about these statements and non-GAAP measures.
Available in the earnings press release financial supplement and financial highlights presentation, all available on the Investor Relations page of our website.
Forward looking statements made on this call speak only as of today January 12, 2024, and will not be updated with that I will turn it over to Robyn.
Thank you Marius good afternoon, everyone and thanks for joining us.
<unk> performance in the near and medium term, we clarified our strategic priorities, we laid a foundation for a multi year transformation of our company for the long term.
With clearer focus on our direction of travel and having restored some confidence in our ability to deliver on our plans today, we are publishing financial targets for each of our business segments and overall.
<unk> done that we will review, our fourth quarter financials, and the outlook for 2024, and our medium term financial targets in more detail, but let me first briefly address our performance in 2023.
Referring to page two of the financial highlights presentation. Our results for the year no telling me highlight b N Y melons characteristic resilience, but they demonstrate the strength of our execution. When we are appropriately organized and focused.
On a reported basis 2023 earnings per share increased by 38% year over year.
On a core basis, excluding notable items EPS of $5 and five inch.
<unk> increased by 10% year over year.
Both pre tax margin and return on tangible common equity improved on the back of significant operating leverage.
Excluding notable items, we generated approximately 180 basis points of positive operating leverage our OTC a improved half a percentage point to 21, 6% and pretax margin improved roughly 80 basis points to 30%.
Moving on to page three.
At the beginning of last year, we communicated three financial goals for 2023.
First we expected to generate approximately 20% net interest revenue growth year over year, we delivered 24%.
Second we set out to half constant currency expense growth rate in 2022 to approximately 4% year over year expense growth. Excluding notable items in 2023.
We delivered two 7%.
And third we sought to return north of 100% of 2023 earnings to common shareholders through dividends and buybacks, we delivered 123%.
Over the course of 2023, we returned $3 $9 billion of capital to common shareholders, all while having further strengthened our regulatory capital ratios to be well positioned for a wide range of macroeconomic and regulatory outcomes.
So we are still at the beginning of our transformation journey, our ability this past year, not just to deliver on our commitments, but to exceed them gives us confidence that we can affect meaningful change and consistently improve our financial performance over time.
While mindful there was a lot more work ahead of us I am proud of the effort that our people put in over the last 12 months as we embraced a focus on commerciality accountability and efficiency, which drove these results. We are committed to improving the firm's financial performance in the near medium.
And long term and we have framed this work for our people with three strategic pillars, which we described on page four.
Last year, we introduced these three pillars to get at the heart of how we operate and who we are day to day for our clients managing their money moving it and keeping it safe.
Number one the more for our clients number to run our company better.
And number three power our culture.
They are deliberately simple and our people are rallying around them.
As I've said before strategy is important but ultimately just a set of words actually doing it and how we do it matters a lot.
Im encouraged by the progress we made in 2023, some of which we highlight on slide five.
Our global clients across governments pension funds mutual funds unions endowments corporations financial services firms and individuals both trust and wants to do more business with us and our analysis clearly shows that is more for them to do with us as we continue to partner.
Alongside them to help achieve their ambitions.
As the global financial system grows and becomes ever more complex demand for trusted resilience partner with the scale to service clients across the entire financial life cycle, such as being one Merlin grows as well in.
In 2023, we launched several new solutions that allow us to deepen our relationships with existing clients and to open the door to new ones.
Of course that includes the launch of woes Pershing's wealth advisory platform as well as the rollout of our buy side trading solutions offering, but it goes far beyond these more visible product launches all of our businesses are bringing new client solutions to the market sanctify real time payments on.
Fed now white labeling liquidity direct bond wise intra day repo settlement being why Merlin advisors are all examples.
And in 2023, we filed more patent applications than ever before.
At the same time, we have an opportunity to bring more of being why Merlin to clients, who currently use us for just a single service.
Last year, we hired our first chief commercial officer, as we began to operationalize, our one being why Merlin initiative across the organization.
As part of enhancing the organizational setup and focus of our client coverage organization. We created an integrated team to facilitate multi line of business solutions at scale and we also formed a coverage practice group to implement consistency in approach and tooling.
Next while 2023 was a foundational year and what will be a multi year journey to transform to a more streamlined and effective operating model. We took important steps toward running our company better to improve efficiency reduce bureaucracy and be more intentional with how we spend.
And so our investments in the business go further.
We generated nearly double the amount of efficiency savings versus the prior year, which allowed us to self fund over half a billion dollars of incremental investments and we laid the foundation needed to transition to our platforms operating model, including successful pilots in two areas of the organization which were import.
Proof points as we start to unlock the power of our platforms in several phases over the next couple of years.
While we focus on being more for our clients and running our company better we know none of it can happen without our people, which is why we are powering our culture to make beer and wine Merlin a place where people are proud to work and excited to grow their careers, we elevated recruitment and retention <unk>.
Grams, including welcoming the largest class of campus analysts and being one melons history.
Double the size of the previous year, and we're going to double it again. This year, we launched our <unk> program to ground shares for 45000 employees, who didn't previously received stock as part of their compensation to Cascade, a sense of ownership and accountability across our company.
And we rolled out enhanced employee benefits recognizing value in fostering both the human and high performing work environment.
I'll wrap up where I began.
We remain confident in the strength of our culture, our strategy and our ability to execute to help us unlock value for our clients our shareholders and our people 2023 was an important year in which we assembled more of the team that can deliver on what is needed and we got ourselves pointed in the right direction.
Action for what we need to achieve.
But it was also a year, where being humble and resilient method.
While we have a lot of work ahead of US what has started as a theory and a belief now has early proof points and we can see the possibility of what we can achieve.
We have an ambitious agenda as we move forward, but I continue to be optimistic about the opportunity ahead.
With that I'll turn it over to Devin.
Thank you Robin and good afternoon, everyone.
I'm picking up on page six of the presentation with our consolidated financials for the fourth quarter.
And as Robyn notice I'm also going to speak to our 2020 for outlook and medium term targets.
Including how we are going to execute on our goals.
For the fourth quarter, our reported results reflect several notable items.
Proximately $750 million of noninterest expense is related to the FDIC special assessment severance and litigation reserves.
And we had $150 million reduction in investment and other revenue primarily relates to a fair value adjustments of our contingent consideration receivable.
Total revenue of $4 $3 billion was up 10% year over year or up 2% excluding notable items.
Total fee revenue was flat, reflecting 3% growth in investment services fees, which was offset by a 5% decline in investment management and performance fees and a 25% decline in foreign exchange revenue.
Investment and other revenue was a negative $4 million in the quarter, reflecting the fair value adjustment that I mentioned before.
Net interest revenue was up 4% year over year, primarily reflecting higher interest rates, partially offset by changes in balance sheet size and mix.
Expenses were up 20% year over year on a reported basis, primarily reflecting the FDIC special assessment.
Excluding notable items expenses were up 4%, reflecting higher investments and the impact of a weaker dollar as well as inflation, partially offset by efficiency savings.
Provision for credit losses was $84 million.
Primarily driven by reserve builds for commercial real estate exposure.
Reported earnings per share for the fourth quarter were 33.
Pretax margin was 8% and return on tangible common equity was 6%.
Excluding notable items earnings per share were $1 20, as pre tax margin was 28% and return on tangible common equity was 21%.
Turning to capital and liquidity on page seven.
Our tier one leverage ratio up 6% remained largely unchanged down eight basis points to be precise compared to the prior quarter.
Tier one capsule remained essentially flat at $23 1 billion as.
As the impacts of capsule distributions to common shareholders and our redemption of $500 million preferred stock were offset by an improvement in a OCI and capsule generated through earnings.
Average assets increased by 1% sequentially, primarily reflecting deposit inflows in the fourth quarter.
Our CET one ratio was 11, 6%, which represents a 20 basis points improvement compared with the prior quarter.
CET, one capital was up 3% sequentially, primarily reflecting capital generation through earnings and the improvement in the OCI.
Partially offset by the impact of captive distributions to common shareholders.
Risk weighted assets increased by 1%.
Consistent with the prior quarter, we returned $450 million of capital to our common shareholders through share repurchases and repaid approximately $330 million of.
Common stock dividends in the fourth quarter.
The consolidated liquidity coverage ratio was 117% a four percentage point sequential decrease primarily reflecting deposit inflows in the quarter, which are considered non operational until they are seasoned under our operational deposit model.
Yeah.
And our consolidated net stable funding ratio remained roughly unchanged at 135%.
Next on page eight net interest revenue and additional details on the underlying balance sheet trends.
Net interest revenue was $1 $1 billion was up 4% year over year and up 8% quarter over quarter.
The sequential increase was primarily driven by balance sheet growth and changes in balance sheet mix.
Total deposits averaged 273 billion in the fourth quarter up 4% sequentially.
Strong finish to the year.
Interest bearing deposits were up 5% and noninterest bearing deposits remained flat.
Interestingly since August we have seen four consecutive months of growth in average total deposit balances.
Our team is highly engaged with our clients and we're encouraged by the demand we've been seeing for our on balance sheet liquidity solutions.
While we are pleased with this stabilization we remain vigilant preparing for a variety of different outcomes and financial conditions in 2024.
On the asset side average interest, earning assets increased by 2% quarter over quarter.
This includes cash and reverse repo up 5% and loan balances up 3%.
The size of our investment securities portfolio decreased by 3% sequentially.
Moving to our business segments, starting with security services on page nine.
Security services reported total revenue of $2 2 billion.
Flat year over year.
Investment services fees were up 1% year over year.
In asset servicing investment services fees were flat as the positive impact of higher market levels net new business and a weaker dollar was offset by lower client activity.
We ended the year on a high note with our strongest sales quarter of 2023, including wins in the Middle East <unk>.
New mandates from several mid sized investment managers and expanded mandates from some of our largest existing clients.
And we saw continued strength in our ETF servicing business. We're another quarter of strong net inflows capped a year of above market growth.
Within issuer services investment services fees were up 5%, reflecting healthy new business and higher client activity.
Foreign exchange revenue was down 21% year over year on the back of lower volatility and lower volumes.
And net interest revenue was down 3% year over year.
Expenses of $1 $7 billion were up 5% year over year, reflecting higher investments and higher revenue related expenses as well as inflation, partially offset by efficiency savings.
Pre tax income was approximately $460 million, representing a 21% pretax margin.
Next March and wealth services on page 10.
This segment reported total revenue of $1 5 billion up 7% year over year.
Total investment services fees were up 6% year over year.
Encouraging investment services fees were up 1%, reflecting higher equity market values and higher client activity, partially offset by the impact of expected loss business.
Net new assets were negative $4 billion for the quarter also reflecting this expected loss business.
In Treasury services investment services fees increased by 5%, primarily reflecting higher client activity, partially offset by higher earnings credits for noninterest bearing deposit balances.
In clearance and collateral management investment services fees were up 16%, reflecting broad based strength across clearance and collateral management, both in the U S and internationally.
Net interest revenue increased by 10% year over year.
Expenses of approximately $814 million were up 7% year over year, reflecting higher investments and inflation, partially offset by efficiency savings.
Pretax income was approximately $630 million, representing a 42% pretax margin.
Turning to investment and wealth management on page 11.
Investments in wealth management reported total revenue of $676 million down 18% year over year.
In investment management revenue was down 26%, reflecting the fair value adjustment of the receivable and the impact of the prior year divestiture as well as the mix of AUM flows, partially offset by higher market values C capital gains and a weaker dollar.
And our wealth management business revenue decreased by 3% driven by changes in product mix, partially offset by higher market values.
Expenses of approximately $680 million were down 2% year over year, primarily reflecting efficiency savings and the impact of the divestiture in 2022.
Partially offset by higher investments inflation and the unfavorable impact of the weaker dollar.
Pretax income was a loss of $5 million.
Excluding the impact of notable items pre tax income of $151 million increased 1% year over year and represented an 18% pretax margin.
Assets under management of two trillion dollars increased by 8% year over year, reflecting higher market values and the weaker dollar.
Largely offset by cumulative net outflows.
In the quarter, we saw a $7 billion of net inflows into short term strategies and $4 billion of net inflows into long term active strategies.
While we saw $10 billion of net outflows from index strategies.
Wealth management client assets of 312 billion increased by 16% year over year, reflecting higher equity market values and cumulative net inflows.
Page 12 shows the results of the other segments.
Total revenue improved year over year, primarily reflecting the absence of a net loss from repositioning the securities portfolio recorded in fourth quarter of 2022.
And expenses of 693 million included $505 million related to the FDIC special assessment.
Having reviewed our results I will now turn to page 14, and our current outlook for 2024.
We're entering the year on a strong footing and we set ourselves up determined to at least breakeven from an operating leverage perspective.
Considering our healthy pipeline across the businesses, we expect fee revenue growth to turn positive in 2024.
With regards to net interest revenue our expectation for an approximately 10% decrease year over year is based on the assumption of marks implied forward interest rates and we assume ongoing quantitative tightening puts further downward pressure on deposit balances.
We intend to keep expenses, excluding notable items roughly flat in 2024.
And finally with regard to capital management, we expect to return north of 100% of 'twenty 'twenty four earnings to common shareholders through dividends and buybacks.
As Robin discussed earlier 2023 was a foundational year for us.
We took decisive actions to demonstrate some early evidence of our ability to deliver stronger financial performance and.
And importantly, we have developed a clear roadmap for our multiyear transformation.
Over the next couple of slides will provide you our medium term financial targets for the firm.
And some of the most impactful actions, we're taking to keep delivering on our goals.
Page 15 summarizes our consolidated targets.
It is our goal to improve the firm's pre tax margin to 33% and our Aro TCE to 23% over the medium term, while maintaining a strong balance sheet.
I'll double click on our business segments in a moment theres a lot of our three strategic pillars. There are a number of teams that transcend our lines of business and segments.
Robin mentioned several of these when he talks about our progress in 2003, so I'll highlight just a few of them.
The first is our enhanced commercial model.
We're driving a new culture of commerciality to deliver all of BMI Merlin in a unified front to facilitate deeper client relationships with solutions from across the firm.
With our clients at the center. Our module is led by client coverage teams with clear accountability to retain business expand revenue into new areas and drive client satisfaction.
Our new sales operations and enablement organization, the client coverage practice would make it easier for our clients to do more business with <unk> Mellon and create consistent commercial roles to Wilson support internally for an enhanced and more efficient sales experience.
And what we call integrated solutions represents a new more focused approach to assembling components from multiple client platforms into a piece will go to market capabilities that span across our lines of business driving better value for our clients and higher profitable growth.
The second one I would like to highlight is our transition to our platforms operating model.
By grouping similar activities together into logical platforms and uniting related capabilities, we are enabling the streamlining of internal processes to drive higher efficiency and further enhance resiliency and risk management.
Our model is based on two types of platforms.
Client platforms will own the delivery of a commercial solution to our external clients.
While enterprise platforms will own the delivery of internal services.
Over the past few months, we have developed a detailed implementation approach and our transition into this new model will be gradual and deliberate starting with our first implementation waves. This spring.
And the third is our culture.
People come to BMI Merlin to make an impact on global financial markets.
We focus on driving growth and running our company measure none of it can happen without our people.
That's why we're making meaningful investments, including an enhanced learning development and feedback to foster excising careers.
Moving to our segments, starting with security services on page 16.
Here, we are reiterating our existing tier 2% pre tax margin targets.
Over the past 24 months, we've improved the margin from 21% in 2021% to 25% in 2023.
We're pleased with the performance of the business over the past two years, but we appreciate that the path from 25% to 30% will be the harder yards.
First of all we're firmly focused on driving down the cost to serve.
We have and we continue to make significant investments in uplifting several platforms that support core services, including fund accounting tax services corporate actions and loan administration.
Additionally, we continue going after inefficient processes.
Over the past couple of years, we cataloged all of these processes and we've made some good progress in our digitization efforts, but theres more work to do.
We're also taking a more strategic approach to deepening client relationships going forward.
Using enhanced tools to better understand client behavior quality of serve as economics and revenue opportunities were expanding wallet share and improving client profitability.
Last but not least we're pursuing several opportunities to drive an acceleration of underlying growth.
On the back of our investments over the years, we have become a premier provider of ETF servicing globally, and we expect to maintain our strong momentum through continued innovation.
Similarly in private markets. Another one of the fastest growing market segments, we've established a strong market position with more room to expand our capability SaaS.
Moving onto <unk> services on page 17.
As you can see on the left side of the page. This segment has a good track record of solid growth and attractive margins.
Our focus here is to accelerate growth through deliberate investments without compromising profitability.
I'll start with Pershing, our company's second largest line of business.
As the number one clearing firm for broker dealers and a top three RIAA custodian Pershing benefits from a strong position in one of the fastest growing segments in financial services I E. The U S wealth markets.
Notwithstanding near term headwinds from the events of 2023, we are confident that our investments in the core platforms and client experience will drive further market share gains in the attractive market segments of the growing $1 billion, plus <unk> and hybrid broker dealers.
And our Wolf platform continues to gain momentum.
As we are capturing business from existing clients and new opportunities to deliver the platform data and investment solutions, we're currently projecting $30 million to $40 million of.
Incremental revenue from Rolls in 2024.
In Treasury services, we're benefiting from a strong position with financial institutions and we are one of the top five U S dollar payments tiers in the world.
Leveraging the strong position, we're selectively expanding our reach by targeting new client geographic and product segments.
For example, we've been adding bankers to drive growth with E Commerce, and <unk> clients and the completion of multi year uplift of our payments platform is expected to drive an increase to our swift market share through growth in several geographies.
Additionally, by joining forces with our markets business, which provides FX solutions in over 100 currencies Treasury services will enhance the FX capabilities that it can provide its clients.
Rounding out the segment clearance and collateral management.
As the primary provider of assessment for all U S government Securities trades, and the largest global collateral manager in the World. We have a special role in financial markets and we're taking this role very seriously.
No doubt this business grows as markets grow.
We're not resting on our position.
Clearance and collateral management business is one of the most innovative in the company.
And so we're confident that this business can maintain its healthy growth trajectory by continuously launching new flexible collateral management solutions.
That position our clients to meet their growing liquidity needs and by continuing to increase collateral mobility and optimization across global client venues.
Next investments in wealth management on page 18.
Investments in wealth management reported a pretax margin of 12% for the full year 2023 or 17% excluding notable items.
Our plan is to improve the segment margin to 25% or higher over the medium term on the back of a combination of growth and efficiency initiatives.
First we are unlocking <unk> mellon's distribution power for the benefit of our investment firms and our clients.
Most importantly, we're in the process of creating a firm wide distribution platform that combines in house product with offerings from select third party managers to provide best in class solutions.
Additionally, we're making enhancements to how we're offering dreyfus cash products across our enterprise wide open architecture liquidity ecosystem to improve visibility and hence platform share.
Second we're expanding our products and solutions with a focus on scaling our investment capabilities across investment management wealth management and Pershing.
And third we're driving efficiency and scale by realizing the benefits as multiyear infrastructure investment programs are nearing completion and by better leveraging the enterprise to transform fragmented and subscale support activities into scaled enterprise platforms.
Moving onto our capital management philosophy on page 19.
<unk> Mellon benefits from our capital light business model that allows us to drive organic growth, while typically returning nearly 100% of earnings to our common shareholders over time.
Over the past 10 years, the firm grew dividends per share at an 11% CAGR and returned almost 100% of earnings to shareholders through a combination of dividends and buybacks.
Our philosophy for capital deployment and cap some distribution remains unchanged.
We've entered the year with strong capital ratios at or above our management target of approximately five 5% to 6% tier one leverage and approximately 11% CET one.
And assuming interest rates follow Mark's implied forwards, we expect to generate additional excess capital from the unrealized loss related to <unk> securities pulling to par over time.
Wrapping up on page 20.
Over the past year, we conduct a thorough strategic reviews, we developed detailed business and financial plans and we've taken the first steps on what would be a multiyear transformation of our company.
Our business plans drive is achieving what we laid out across our three strategic pillars.
The more for our clients run our company better and power our culture.
And our financial plans aimed to improve their firm's pre tax margin to 33% and our oral TCE to 23% over the medium term, while maintaining a strong balance sheet.
And publishing our medium term financial targets together with our most important strategic priorities and the actions that will help us achieve some we're providing transparency to allow you to track our progress and we are confident that we will deliver.
We are excited about the work ahead of us and today is an important milestone for our team.
Now for those of you who are still with US we promised electric Starcher long weekend soon.
With that operator can you. Please open the line.
If you would like to ask a question. Please press star one on your telephone keypad. As a reminder, we ask that you. Please limit yourself to one question and one related follow up question.
Our first question comes from the line of Brennan Hawken with UBS. Please go ahead.
Good afternoon, Thanks for taking my question.
And thanks for all the detail that you provided in the deck on the targets really very very helpful very very thoughtful.
I'd love to start there. So it seems as though you guys see a really strong pre tax margin enhancement opportunity.
Where do you expect that youre going to see the results of that opportunity come through first and while I. Appreciate that the targets are over a three to five year period is the profile of the improvement that you expect likely to walk straight line or is there going to be sort of a more parabolic.
Curve, resulting in more of a back end weighting. Thanks.
Hi, Brian This is <unk> I'll start off so.
The way I kind of think about it if you take if you take the comments that both Robert and I have prepared and we've just laid out over the last 30 to 35 minutes.
You can see truly that 2023 was the foundation of the year. We did a lot of kind of exploratory work detailed planning we've made a bunch of investments both of which will drive efficiency, which will drive growth we've talked to loss over the last few quarters about Wolf, which we launched last June and in my prepared to.
<unk> talked about $30 million to $40 million of revenue. This year. So I would say we are.
Making investments in all of our segments and you can also see as an investor.
Investments in wealth management, where we are beginning to see green shoots and you can see we're making a lot of investments in our security and fiserv serves as been as businesses modernizing our platforms.
So I would say youre going to see is quarter by quarter and I think over time as you get to know Robin and myself Youll see US do is and then talk about us rather than pre announcers and then do us. So we're in execution mode, and we will deliver but youre going to see this happen quarter by quarter.
Okay.
Thank you very much for.
For that color I appreciate it.
The environment is rather different from the last time, we spoke we've seen a indication.
The indication of a fed pivot.
Everyone's now expecting.
Far more short order rate policy rates to be declining.
And so we saw an uplift even though there was only a little bit of averaging in of of policy rate a little higher this quarter, we did see an uptick in on the deposit cost side.
So what drove that and then.
How should we be thinking about the mechanics of.
The.
Lower policy rate and how that might flow through on the deposit side and whats captured in your NII outlook for 2020 for few questions in there sorry Jeremy.
Say for.
A follow on question that oil.
Great.
Yes.
Hopefully others won't have to ask the same question again.
So look if you go back 12 months, when we gave our 20% guidance for 2023, there was a disconnect between what the market thought it was going to happen in 'twenty, three and what the fed was going to happen in 'twenty three the market was calling for rate cuts in June of 'twenty three.
The fed wasn't we guided to 20% the year plays out very very differently to what everybody thought it was going to happen.
And we.
We ended up with a 24% year.
One of your questions were wider deposit costs go up I think our NIM for Q4 was in the 126 range and that really is.
Balances rolling off of new balances coming on at market rates, and we ran strong to the tape in.
We ran strong to the tape at the year end and look I have to say, how we did on deposit in Q4 was a little bit off of <unk> Mellon effort between lines of business are.
Our deposit team, our treasurer and our CIO book, So we feel very good about how we finished the year and we outperformed $1 1 billion of revenue. So all in all feel very good about that this year again, I think the fed and the market are a little bit at odds. We had a fed commentaries are talk a couple of days ago about March being.
Too early notwithstanding that the market thinks there's an 80% probability of a rate cut happening in March so we're neutrally positioned and the outlook for 'twenty for on balance if rate if the rates happen six cuts happened. This year, we might expect balances to go up if it's higher for longer we expect people to optimize and we say.
Continued outflow of deposits, what we start the year strong with $273 billion of average deposits in Q4, we feel good about our NIM for 2024. So we're we feel we're set up nicely, but the balance of outcomes, we think down 10% for 24.
Okay. Thanks for taking my questions and thanks for the patients with a multi parter.
Our next question comes from the line of Mike Mayo with Wells Fargo Securities. Please go ahead.
Mr. <unk>. Your line is Unmated. Please go ahead check your mute button.
Mike We got we can't hear you so Mike.
Mike We can't hear you. So we'll come back to you maybe have had an issue cannot.
Can you hear me now.
Yes, just in the Nick of time.
Okay, Jeff made it.
So let me see if I did okay in my math class and skull solid 'twenty honey for Youre guiding for flat expenses flat or flat or higher operating leverage NII down 10% that implies these up 3%. So did I do my math correctly, and if I did it correctly why only up 3%.
So Mike it's Robin.
We're not going to quibble with your math over the our English comprehension, either from our commentary you've gotten you've gotten the right. What we said we've intentionally not guided on fees because of the nature of the year and we recognize that there are a lot of different inputs to that.
So we recognize that the <unk> can in fact turn out in various different ways, we feel committed to the flat to plus on the operating leverage that we've committed to and we've guided to how we think the other things are going to play out and so that was quite deliberate and we're focusing.
You on the things that we've talked about but obviously from my math point of view, we understand how the math works.
The more important question would just be your medium term target.
And your returns to 23% up from 21% last year, I guess $21 five or so this past year, how do you define the medium term and for that 150 basis point increase from here, how would you segment that efficiency revenues buybacks or some other way just to give us like a simple waterfall.
Chart and words.
So the way I would think about it Mike is.
Not to give you a kind of a weak answer it really is all of the above and if you think about fee revenue, we're very focused on higher organic growth.
And we set about that and we've made a lot of mentioned about the chief commercial officer, <unk>, Maryland won't be why Mellon and kind of just generally <unk> the organization and we really feel optimistic about being able to deliver over time higher organic growth also in 2023.
FX volumes around the world and volatility was lower and so we expect FX revenue that to normalize which give us a boost and look we kind of.
We're optimistic about where equity markets are going to go and so in our plans we have mid single digit equity market appreciation to support staff.
<unk> revenue growth.
Unexpected look I think 2023 was a year, where we got 50 plus thousands of employees on the same page as how Robyn and I think about and the management team think about running our company better we don't talk about cost cutting our head.
Head count layoffs, we talk about what are the things that we need to do to run this company better and I think we have 50000 people aligned with US now and I feel very optimistic through all the projects that we have underway to digitize the firm automate processes deliver more for our clients. So everything will feed together.
I will do a lot at the same time.
And with all of that will be able to buyback more stock, which will drive us to that higher.
TCE and pre tax margin that you talked about and Mike I would just add one thing to that which is we told you at the beginning of 2023 and you pressed us on this and rightly. So in 2023 about the fact that we hadn't before managed to tell the improved expense story that we think we actually ended up telling on in 2023 and that.
He was an important focus we also recognize that we were likely to have a good NII year, and we took the opportunity of those two things to be able to invest for future fee growth and we never thought 2023 was likely to be a very strong fee year, because the fees take time to be able to generate a return from the <unk>.
<unk> that we're putting into it through the various different things that <unk> just detailed and so we've set ourselves up we think to now be able to really leverage those investments and that's a 'twenty four 'twenty five 'twenty six story now of course, we'll stay focused on NII will absolutely stay focused on efficiencies and expenses, we think AI will.
Play a story and that over time, we're really not a short term story, but more of a medium term story and thats. How the whole thing comes together from an operating leverage point of view. So the way we got there in 'twenty three is probably going to be different in the way we will get there in 'twenty four we're trying to point you to that through the disclosures.
Thank you.
Thank you.
Our next question comes from the line of Brian Bedell with Deutsche Bank. Please go ahead.
Great. Thanks, Good afternoon folks thanks for taking my questions again also thanks for all the detail.
Around the businesses and our long term outlook as well.
If I can focus on slide 16, and the securities servicing.
Her goals there.
Do you think about it.
Those are automating the processes.
Those first two boxes that drive the cost to serve down and then the second one on deepening client relationships. How do you think about the.
Effect of digitizing and automating these processes and weather.
So that sort of matching that against.
You know to what extent you can actually enhance the revenue profile as well or are you favoring lowering the costs and not so much enhancing the revenue profile by digitizing that services are there.
Two parts of that.
There you can also improve the service and quality.
Okay. So here.
Here's how I would answer that Brian.
So we've and I've said in my prepared remarks, we've made a loss of through last year and this year in the budget process. We have made a lot of investments in our foundational infrastructure that supports the asset servicing business.
And so that's going to result in.
At greater automate greater ultimate automation and a better client experience, we hired a new head of operations last year and he's made a tremendous impact and are spending a lot of times a lot of time with our clients.
Through understanding client behaviors, where theyre able to explain to us what they need and we can then figure out how to change our processes to be more automation to deliver their solutions. So we've made a lot of good progress there so through driving down the cost to serve we're going to give better client experience.
Periods, which will then ultimately lead to enhanced <unk>.
Revenue and enhanced client experience because the clients would be happy with us.
The other thing I would say is for asset serving specifically.
We had our strongest sales quarter in 2023, we come into 2024 with a very healthy one installed book of business and we feel very good about the mandates. We won in Q4 and we feel very good about the pipeline coming into 2024, So I feel very very good about all the leadership changes that we've made in asset servicing over the last.
12 months the hires we've made and the impact that they've made since they've joined.
And then within the other part of our security services Corporate Trust and depository receipts were making significant investments in corporate trusts. This year to do a lot more digitization to and a lot more autonomous automation. So we can scale the business and drive that margin higher.
That's great color and then just to follow on on on the balance sheet.
Deposit beta.
That cuts and maybe if you can also comment on international cuts from the bank of England and ECB.
How are you viewing your deposit beta on the downside.
Within your guidance are you able to move that down commensurately or is there a significant lag and does that differ between U S and Europe.
So just to kind of give you a general framework at nothing really hasnt launched changed quarter over quarter.
The dollar book, which is roughly 75% of the overall portfolio has an 80% base as I've said many times, we have sophisticated clients, they're with us for not just deposits, but for a variety of goods and services, which feeds the stickiness of our overall deposits being two thirds operational so that's a good story.
Base, we pass onto prices I've said.
It's a grind a little bit higher from here, but I think I feel pretty good about the dollar book of where that's at and then euros and Sterling, which make up the balance are in the 55 to 65 beta range and so as the rate as the fed kind of ultimately, we'll pivot and rates will come down we do expect that to fall.
Symmetrically unfilled go down with the same way it came up so that's how I would view that.
Okay, great great. Thank you.
Thanks, Brian.
Our next question comes from the line of Ebrahim <unk> with Bank of America. Please go ahead.
Hey, good afternoon.
A brief question.
Still down looking at your medium term targets and I heard what you said.
In response to Mike's question on the fee revenue guide for this year, but when I look at their strategic targets.
I guess, it's deliberate that we don't have a revenue growth number and then on our revenue growth target.
Just wondering.
Is that due to the macro or your view on the business, where you don't have a line of sight around being able to sustain a certain level of revenue growth and I ask this because I think that's probably the toughest part of the <unk>.
<unk> is growing is what's the sustainable level of revenue growth you gave a lot of details around products and businesses, but would love to hear in terms of how you think one should think about <unk> revenue growth.
More or less normal macro environment over the coming years.
Yeah.
Okay. Thanks for the question Ebrahim. So I've been here in 2014 months now so I'll give you my perspective rise in terms of my history and are starting to firm and how what we've accomplished over the last 12 months and how I see the future.
So over the past year as BMI Madden has delivered organic growth north of 2%, but hasnt done it in a consistent fashion.
And so we want to be able to talk to you in a consistent manner and we'll give you guidance we want to know that when we give guidance do you believe that we're going to do us.
So for 'twenty four we think we're going to turn positive on fee growth. We feel we've set the firm up but we don't want to kind of give out guidance that is not got a track record of success.
And so I've kind of said this in answer to some other questions asset servicing we feel like we have strong momentum we feel we're making the right investments to power that business forward and that will it's our biggest business and so we feel like pre tax margin is going to go up as a result of efficiency.
<unk> fee growth and then if you take marketing <unk> services, our most profitable segment clearances.
Clearance and collateral management Treasury services and Pershing all have mid forties pretax margin and all have good opportunities for growth, but then again fee fee growth is a little bit dependent on the market and a big part of it is what happens to the market and that guides us to be a little bit more.
Cautious with giving you guidance overall on fee growth, but each of our business in terms of the underlying fundamentals, we feel very very good about.
Ebrahim I'll just add to that.
We debated this a lot about the fact that you don't have the dollar output guidance on fees and so as a result, what we've been trying to do is really make sure that we're communicating to you on all of the inputs to that but as David said there is both a market impact potential we'll have to see.
How the markets evolve.
And there's a bit of a portfolio effect, which is we've really invested in a lot of different places we have good good confidence around the fact that several of those are going to yield something in 2024, and then hopefully continue to yield more in 2025, but it's hard for us to be able to know exactly what's going to hit and exactly when it's going to hit so we've got a confidence.
On a portfolio basis around those investments, but we don't have the absolute line of sight that makes us comfortable to tell you. The exact number in the exact quarter that is actually going to going to hit and so all we can do is show you the inputs and now points to a year of track record in 2023 around the fact that.
We have in fact made progress on the things that we said we were committed to make progress on.
That's helpful color. Thank you Andrew.
Great question, I mean, I'm sure most investors like the fact that you're going to be buying back stock, but when you think about.
Given the sort of run in the stock valuation wise is there any sensitivity to way you probably don't want to be leaning.
Leaning into buybacks and secondly.
Other good uses of capital one of them being inorganic M&A driven growth or is that just off the table right now.
So youre right that we have an implied waterfall of how we think about our capital and the first is to be able to invest it profitably well in the business.
And then towards the bottom of that waterfall is if we have surplus capital. After we've taken those things into account we want to return it to our shareholders and that's what we've been doing and so that waterfall hasnt changed and how we think about it now in terms of M&A right. Now we're focused on what we have and how we think that.
We can improve it that's really been the story them. It really made the point around running our company better and we think that there's so much opportunity in the franchise to be able to run ourselves better and have the growth that we haven't wanted to distract ourselves with M&A.
Now we have a high bar, we have had a high bar we continue to have a high bar, but we are keeping our eyes open and I think thats the right thing to do particularly for things that would help us to accelerate our delivery. We're not looking at transformation, we're not looking at big pivots, but we are always interested in things that can in their own.
Wei speed us on the journey that we've laid out to you.
Thank you for taking my questions.
Our next question comes from the line of Ken <unk> with Jefferies. Please go ahead.
Okay.
Thanks. Good afternoon. So last year, you guys did a really good job setting.
<unk> bar on the NII point that he made earlier and we ended up seeing a nice increase to NII to the end of the Europe to $1 1 billion. So I'm just wondering given that youre still setting a new bar to downturn, which incomplete, which implies definitely like a settling down from the $1. One I'm wondering to the prior conversation on rates just can you help us understand.
Like the cadence of that.
<unk> travel and then.
With regards to the rates forecast you're building in like when when that settles back down towards the bottom. Thanks.
New yearly guidance I'm, not too sure I really want to commit to quarterly guidance.
Deposit level, we finished the year strong.
That was a variety of factors as I said in my prepared remarks, we had four months of consecutive growth.
I talked at Barclays in September I told to Goldman in December we feel very good about the deposit franchise, we feel very good about what clients are doing with us.
And so you know we bank is as it comes boss when I sit back and I look out at the macro.
And this is what we said this time last year, we expected deposits to go down by mid mid to high single digits and there'll ultimately be it was down 4% for us that that's the trajectory I expect to happen this year and so I don't have a particular.
Magic ball on what's going to happen quarter by quarter. So I will just take the down 10% and <unk>.
Divided by four for your model and just see where that gets you.
Okay got it and then as a corollary to that.
Your comment on the movement to a flattish expense base from a successful plus three last year is a meaningful move and I know it foots to that point, we just ended on which you're still incorporates a downturn.
I.
Presuming, we get past this point in NII does get stable and or the fee income starts to grow I presume youre not trying to point us to a flattish expense trajectory for the longer term future, but maybe you can talk us through how you will manage that positive operating leverage gap.
And relative to you know needed and needed investments and then and then the sorry. The margin targets you just gave us too in terms of how you.
Kind of.
Deal with volatility in the macro environment, while getting to that point of seeing those margin target improvements.
So Ken it's Robin I'll start off them it might want to add something look I think about this at a fairly high level of us being focused on positive operating leverage at least until the point that we get to the sort of margin targets that we are.
We're talking about and Theres, a little bit of work between here and there and we also recognize the each year is going to have unique factors and so the year in which we have a fairly significant NII jump of the 24% is going to create different conditions that allowed us to have a fee a year, which was fine but.
Growing in a meaningful way and that allowed for some headroom on expenses, which was which is something that we've used in order to be able to make investments now 2024 is a different year, it's got a different composition, but every one of the years that we.
We face has each of these inputs. It has fees has NII and has expenses and we're trying to be very purposeful around solving for operating leverage in the context of the year that we actually are faced with and we think that that's the right thing to do recognizing that markets move around.
And each year brings serves us something different we manage what's in what's in our control.
So.
Can I go a little bit off script here, it's a bit of a cultural moment for us on just expense management financial discipline running our company better I talked with one of the Executive Committee yesterday.
And he said Dermot you have a very high bar for yourself on flat expenses for 2024, and I said I said no. We have a high bar, we as a firm and that's down to all of US and we talk to our managing director population earlier today and we're all in it together about running our company better and I think that's in <unk>.
Important cultural pivot that we've managed to achieve over the last 12 months.
Yeah got it. Thank you guys I appreciate it.
Our next question comes from the line of Glenn Schorr with Evercore ISI. Please go ahead.
Thanks very much.
So just one big question if I could.
So I think you've been talking about getting clients to do more business with bank of New York, Merlin, which and youre executing on getting them better and you've invested a lot.
I did hear you today talk about improve the service and then clients will consolidate business.
My question is.
High level it feels it's natural and it feels like it's working but youre, putting a lot of effort and expense and improving our margin on modernizing and digitizing your businesses that actually haven't been growing as much <unk> need to modernize more and have lower margins to improve them and us.
Is there any thought towards maybe youre supposed to put capital towards actually your highest profitability business than ones that grow and it's a question on do you need the whole portfolio basically.
Speaker Change: And so the short answer to your question Glenn is yes, we do and Derma has laid out and we've laid out in the materials, particularly there is a subtly different flavour to the investments that we're making in each of our segments and so in the security services segment.
Our focus is on the efficiency and cost to serve as well as growth, we haven't ignored growth, but we recognize that making sure that our margin in that business continues to improve will allow us to be even more competitive because we're the world's largest custodian we want the the benefits of our scale to <unk>.
Fully translate into our pricing with customers and the service that we can provide so it's got a tilt towards efficiency in that business and there's a lot of digitization that can be brought to bear. There. We are excited about the medium term potential of AI. We are excited about the shorter term benefits of our new leadership team in opera.
<unk> and the things that Emily and her team are working on are really targeted to that but we haven't forgotten about growth in the space and that's why doesn't mentioned, we actually had our best sales quarter at the end of last year in that business now youre right in our market and wealth services business, which has a margin that frankly, we're quite happy with and you haven't heard.
His talk about growing that margin, we really want to grow that business at that margin and Thats. All focus there. So that's really where our drive drive drive around more revenues a lot of our investments around our new business. That's why we built <unk> is in that business.
<unk> talked about the clearance and collateral management business, where we've had very significant growth over the course of this year you talked about the investments that we're making.
In our Treasury services business as well, where we've got so that's where we are really wanting to try to grow the overall revenue and then in our investment and wealth management business, where we've had higher margin before and now we've been subject of course to the more difficult market environment.
That's driven it down, but that's a place where we'd like to return to our prior margins a little bit of market would help on that but also some of the structural changes that we'd be making the new product launches that we've been doing the opportunity to make investment management part of being why Merlin as opposed to just a separate piece not availing itself of the two and a half.
Five trillion plus of distribution we have.
At the end of the day was completely orphaned.
Previously from the two trillion dollars worth of manufacturing so that the way in which we're solving the problem varies according to the segment.
And then.
What I would add there Glenn is it's in my remarks, but we investors half a billion dollars last year.
And things that we wanted to do that was going to grow the company, while keeping our expense growth rate of two 7%. So we're very disciplined about what we want to do getting value for money while at the same time.
Manage the expense base of the firm.
Thanks, so much for all that.
Okay.
Our next question comes from the line of <unk> <unk> with Morgan Stanley. Please go ahead.
Hey, good afternoon.
Could you talk about your assumptions around Qt in your NII Guide and are you assuming it continues at the current rate. So if the fed does snow and it does in Q T R. The.
Speaker Change: Would that be a big benefit to do your deposit growth and NII.
So.
So our NII.
Guidance is based on market implied forward rates at the end of the year with Q T continuing and so with Qt continuing.
We expect deposits to roll off if Q T were to change then obviously, we would revisit and see what the benefits of that would be and run our models again and then we will come and talk to you, but that is not our base case Qt ending anytime soon.
But on a net basis that should help the noninterest bearing deposit balances.
It should have bus.
I Couldnt give you a sensitivity to adhere today and it's not our base case.
Got it okay, great and then.
If you could help us with how we should think about the securities book with six rate cuts.
Is there still a large chunk of the securities book re prices higher even if we got six cuts.
So Q4 I'll start with Q4.
As you will see in the financial supplement.
The Securities book Roll down by about $4 billion, largely deployed deployed into into cash and some mortgages et cetera, and we had a yield pickup there of about 300 basis points in 2024, we expect the yield.
Pick up from the roll down to be about 150 to 200 basis points. So rolling off is about 3% into current market rates.
It's very liquid quite like short in duration. So overall, we feel good about the outlook for the book in 2024.
Great. Thank you.
Thanks Malone.
Our next question comes from the line of Gerard Cassidy with RBC. Please go ahead.
Good afternoon Robin Dermot.
Hey, Gerard.
I know you touched on this with the net interest revenue already in terms of your expectations for <unk>.
<unk> 2024 being down 10% following.
The forward curve correct me, if I'm wrong there.
The forward curve is incorrect currently six rate cuts and it comes in closer to two or three for the year.
Does that affect that 10% guidance.
Yeah.
So I would say the theoretical answer to that is your higher for longer and so therefore people will continue to optimize their deposits into higher yielding assets. So you could see that base case.
Let's see.
Balances run off more but we've kind of analyzed this top down bottom up left to rise and so the best guidance. We gave you is 10%, but if it transpire to be a different number obviously, the NII number would be different.
Sure No I understood. Okay. Thank you and maybe Robin.
I apologize if you guys already talked about this or no.
In the deck.
Your new business wins this quarter, what was the dollar amount of that and what's the installed base that you have for next year.
So we don't give specific guidance.
On the installed base, our backlogs, but I would say look I said in answer to an earlier question and it's in my prepared remarks.
Q4 sales was our strongest of 'twenty three we won mandates in the middle East asset managers largest clients, giving us more business. So.
Look we feel very good about what we accomplished.
In asset servicing in 'twenty, three and the team feel very kind of bold up about 24, and what the opportunities are in front of them.
Okay. Okay I appreciate it thank you.
Our next question comes from the line of Rob <unk> with Autonomous Research. Please go ahead.
Hi, guys a couple more on deposits you know Jeremy you mentioned a couple of times that you've had four straight months of deposit growth to close 23.
Seems that a lot of the things that would weigh on deposits and 24 were already are headwinds in 'twenty, three and yet despite that you've been able to grow deposits. So I'm curious if there's anything else that you think might change or become more of a headwind from the last third of 'twenty three and into 'twenty four and if there is a possibility or an environment where deposits actually.
We did come in better than that and what's in the guide.
Okay.
So look overall, a big part of the deposit base, our deposit base too is is and IBM.
Where that goes.
So look <unk>.
The reality is Q4 was clients and hard work by our team.
And it worked out and we outperformed by $100 million and we take us.
Boss.
Hindsight is everything and it's behind us So we bankers and we move on.
When I sit here today and I sat here last January 23 didn't turn out the way everybody total was going to turnout and so who knows what's going to happen in 2024, and so there is a lot of uncertainty out there. So I feel very comfortable with the down 10% and if that changes to the upsides were going.
The first people to Italia, because we would like it to be not that number we'd like to be at to be a better number but that's the number we gave you today.
Rob I'll just add it is easy to forget we still got a lot of complexity in the world as Dennis said earlier on if Q T continues that's one thing if Q T ends maybe that's to the plus you've also had a massive run up in liquidity over the course of the in money market funds.
In other places we have to see how that gets put to work or not as the case may be stopped market. Therefore, it becomes a little bit of a wildcard as we see the flow of funds. So we still have the complexity of.
We talk about the fact that the fed might cut in March the fed talks about the fact that they might not cut in March so theres enough.
Variation in the exact way that this is going to play out and that's why Dummitt answer one of the earlier questions in the way that he did around at 10% and the path of it because we just don't have that type of visibility, but we do have the sense that we can we can kind of work the problem to our current guidance.
Okay. Thanks, and then I think earlier, you mentioned something about deposits that were not yet seasoned or not yet operational and I was.
Just wondering if you could expand on that once the criteria for a deposit to be considered operational and then how long does it take for something like that to play out.
So there's a very long answer to that which we can take you through offline boss the general sense of to be operational you have to be doing stuff with us in another line of business and you have to be making payments and you have to be sticky to us as the firm and over time.
Then we'd classify you is operational in nature and that helps us on the liquidity ratio standpoint, so if you're a relatively new client and you Havent established that track record. Then you are considered non operational until such time as you meet those criteria, but as I said earlier two thirds of our off.
All of our deposits overall are sticky and that's a good fact.
Got it thank you guys.
Thanks, Sean.
Our next question comes from the line of Rajeev <unk> with Morningstar. Please go ahead.
Great can you comment on the pricing environment within your security servicing segment.
It's up 9% against flat fee revenue.
Is pricing pressure would you say, it's stable or would you say it's intensifying.
Thanks.
So I would say, it's overall stable and it's something that we gave particular focus to last year.
And we've gone through a client by client analyzed client profitability, which clients are profitable which lines aren't.
What we can do in terms of cost to serve and how do we price on a marginal basis versus a fully loaded basis.
So over the last 12 12 months, we've done a lot of foundational work on how we have become more sophisticated in terms of how we price our business and how we talk to clients vis vis pricing. So I would say stable with a positive momentum to us.
Great. Thanks.
And our final question comes from the line of Mike Mayo with Wells Fargo Securities. Please go ahead.
Hi, Thanks for the follow up of Acne, Boston Bank Conference in November and more importantly, the head of your asset servicing business and very excited about AI and <unk>.
Implications and the implementation of that in the asset servicing business and I'm, just wondering if that excitement and shared.
Route be NY, Merlin and what you see as potential use cases, and the ability to go from pilots to production is it.
Beyond the high whereas the reality of AI in.
Any specific numbers of what it might be able to do.
Yes, Mike.
The short answer is yes, we are excited about AI. We're excited about it over the medium term we stood up in 2023, what we call. The AI hub, where we gathered up a bunch of engineers and the sort of top talent leadership to really focus on building out a set of capabilities. They work.
With every business in every function in the firm to canvas for use cases, we had hundreds of those we developed a series of different themes for investment because theres a lot of duplication actually across the different use cases, when you think about them on a fundamental functional basis and then these themes for investment are things that we've actually been investing in and so.
We do have things in production, we actually have a piece of software today that is creating predictions for clients in our treasuries business actually that looks at fails. We've talked about that before that is a good example, and that was a very early AI implementation that we made and it's actually a piece of software that we currently are.
On some revenue on as part of our Ccs business. It also contributes more broadly to market stability and it's a great client service on the flip side of that the question is going to be well for an organization, which has as many processes as we have and people performing processes, there's going to be an opportunity there to create more efficiency and so.
We've invested in and are investing in that space as well. We're also investing in the employee experience the opportunity to have AI do tasks, which are mundane or repetitive in one particular case is helping our research team get a get a march on the day, so rather than getting up at four o'clock in the morning to write research they get up at six o'clock in the morning to write research.
Because the AI has given them a rough draft to start with and served up a bunch of data for them. So there were all sorts of different things now we haven't put it into numbers and so it is not directly in our outlooks in terms of the way that we're thinking about it but it would not surprise me. If this is something that over the course of the next decade.
Jade is going to be able to provide benefit on the top line and the bottom line and so what we're doing exactly what <unk> said before were not talking too much about things that we're still working on that we cant give you line of sight into the exact input, but I'm answering the question because you asked it but we are excited about this under the hood for sure.
Alright, thank you.
Youre welcome.
And with that that does conclude our question and answer session for today I would now like to hand, the call back over to Robyn with any additional or closing remarks.
Thank you operator, I'd like to close by reiterating that 2023 was an important foundational year for us and that the multiyear transformation of our company is off to a good start as we begin our company's 240th anniversary year. We're excited about the opportunity ahead of us.
I'm immensely proud of everything that our people here at <unk> Mellon got done over the past 12 months I'm grateful to our clients who are leaning in to their relationships with being why Merlin and allowing us the opportunity to serve them in even greater ways and I appreciate the faith and support that our investors old and new.
Are placed and being why Mellon Marriott and the IR team stand ready to assist you should you have any questions be well and enjoy the long weekend.
Thank you.
Does conclude today's conference and webcast a replay of this conference call and webcast will be available on the BN wide Merlin Investor Relations website at five P. M. Eastern standard time today.
Have a great day.
[music].
Yes.