Q3 2024 Bank of New York Mellon Corp Earnings Call
Good morning and welcome to the 2024 third quarter earnings conference call hosted by BNY. At this time, all participants are in a listen-only mode.
Later, we will conduct a question and answer session.
Speaker Change: Please note that this conference call and webcast will be recorded and will consist of copyrighted material. You may not record or re-broadcast these materials without BNY's consent. I will now turn the call over to Marius Merz, BNY Head of Investor Relations. Please go ahead.
Marius Merz: Thank you, operator. Good morning everyone and welcome to our third quarter earnings call. I'm joined by Robin Vince, our president and chief executive officer and Dermot McDonogh, our chief financial officer.
Marius Merz: As usual, we will reference our financial highlights presentation which can be found on the investigation page of our website at bny.com
Marius Merz: I also note that our remarks will contain forward-looking statements and non-gap measures.
Marius Merz: Actual results may differ materially from those projected in the forward-looking statements.
Marius Merz: Information about these statements and non-gap measures are available in the earnings press release, financial supplement, and financial highlights presentation. All available on the Investor Relations page of our website.
Marius Merz: Forward-looking statements made on this call speak only as of today, October 11, 2024, and will not be updated. With that, I will turn it over to Robin.
Robin Vince: Thanks, Marius. Good morning, everyone. Thank you for joining us.
Robin Vince: I'll start with a few remarks on the quarter and then Dermot will take you through the financials in greater detail.
Robin Vince: In short, BNY reported strong third-quarter results, reflecting growth across our three business segments and consistent execution on our strategic priorities.
Robin Vince: Stepping back on the macro side for a moment, at the beginning of the year, markets had priced in significant monetary policy easing in anticipation of economic slowdowns.
Robin Vince: Despite numerous shifts in the macroeconomic outlook since then,
Robin Vince: We've now seen the start of the easing cycle in several markets around the world, including a 50 basis point reduction in policy rates in the U.S. as the Federal Reserve recalibrates its policy stance to balance employment, inflation and growth.
Robin Vince: Following increased market volatility and a sell-off in equities in early August, markets recovered and both equity and fixed income values ended the quarter higher.
Robin Vince: A little more micro, but relevant for markets. Around the most recent quarter-end, the market saw simultaneous flows into the Fed's reverse repovercibility, alongside the first meaningful usage of the standing repovercibility, both of which we administer.
Robin Vince: At the same time, sponsored cleared repo volumes increased on the back of higher repo rates, possibly signaling a transition from abundant to ample reserves in the system with potential implication for the pace of QT going forward.
Robin Vince: More broadly, while markets have been constructive, there are clearly risks and uncertainties ahead, and so we constantly prepare and position for the many tale risks that exist.
Robin Vince: from geopolitical tensions and conflicts to fiscal deficits and the impact of impending regulations and elections.
Speaker Change: Now referring to page 2 of the Financial Highlights presentation.
Speaker Change: As I said earlier, BNY delivered a strong financial performance in the third quarter, with strong EPS growth on the back of broad-based revenue growth and positive operating leverage.
Speaker Change: Reported earnings per share of a dollar and 50 cents, we're up 22% year over year, and excluding notable items, earnings per share of a dollar and 52 cents, we're up 20%.
Speaker Change: Total revenue of $4.6 billion increased by 5% year over year and reported expenses of $3.1 billion were flat.
Speaker Change: Excluding the impact of notable items, expenses were up 1% year over year, as we continue to invest in our people and technology, while we also generate greater efficiencies from running our company in new and better ways.
Speaker Change: Pre-Tax margin and return on tangible common equity improved year over year to 33% and 23% respectively.
Speaker Change: For the first time in our history, we reported over 50 trillion dollars of assets under custody and or administration at the end of the quarter.
Speaker Change: Now custody is not something we are, but it is something important that we do.
Speaker Change: This number one market position improves our unique vantage point as a global financial services company and it provides opportunity to drive value across our portfolio of adjacent businesses to deliver more of BNY to our clients.
Speaker Change: We increasingly see that the true power of BNY's client franchise exists in the combination of capabilities across our leading security services, market and wealth services and investments and wealth businesses.
Speaker Change: We have the ability to enhance this and to deliver more to our clients by bringing new, innovative solutions to the market from across the scenes of these businesses.
Speaker Change: As an example, we recently announced the planned acquisition of Archer, a leading technology enabled service provider of managed account solutions to the asset and wealth management industry.
Speaker Change: Archer provides comprehensive technology and operational solutions that allow asset and wealth managers to access one of the fastest growing investment vehicles in the industry, managed accounts.
Speaker Change: At Scale.
Speaker Change: Expanding Distribution, Streamlining Operations, Launching New Investment Products, and delivering personalised outcomes for their clients.
Speaker Change: The integration of Archer should produce a positive impact across several of our lines of business.
Speaker Change: In addition to augmenting our asset servicing capabilities for managed accounts, Archwell provide our investments business as well as our Welfd Advisor platform in Pershing with expanded distribution of model portfolios and access to Archwell's multi-custodial network.
Speaker Change: By at once, use it many if you will.
Speaker Change: The transaction has expected to close before the end of the year and we look forward to welcoming the archer team to BNY.
Speaker Change: Another one of the fastest growing areas in financial services, alternatives, also presents a promising opportunity for us to deliver new client solutions across one BNY.
Speaker Change: We already have relationships with hundreds of alternatives managers, as well as roughly $3 trillion of wealth assets on our platforms.
Speaker Change: We believe there is more for us to do to mind the opportunity and build the technology to reach across our franchise and unlock the fast growing alternatives market for wealth intermediaries, advisors and the investors they serve.
Speaker Change: Last month, we introduced Orts Bridge, a comprehensive data, software and services solution built for wealth advisors.
Speaker Change: York's bridge aims to make investing in alternatives easier for advisors.
Speaker Change: through a streamlined end-to-end experience.
Speaker Change: and Direct Integration into advisors existing Dastots, starting with our Posing NetEx360 Plus and Wove platforms.
Speaker Change: As we continue to deliver new innovative products, we are also addressing the significant opportunity from enhancing our commercial model, making it easier for clients to navigate and be in why.
Speaker Change: In order to accomplish this, we are promoting an Enterprise Approach to client coverage, and we are operationalizing our new commercial model.
Speaker Change: For example, over the summer, and for the first time in recent memory, we brought together several hundred of BNY's client-facing commercial leaders from around the world, as well as members of our Executive Committee, for a two-day event we called Commercial Left Off.
Speaker Change: This program enabled our top client coverage people and their business partners to take a 1BNY view to account planning.
Speaker Change: Creating a shared vision for serving each of our clients who listically across the entire relationship, generating new ideas to meet the clients' objectives and developing action-oriented plans to deliver on those goals.
Speaker Change: During the quarter, we also made progress toward running our company better.
Speaker Change: including the ongoing transition to a platform's operating model, enhancing the connectivity across our teams and empowering our people to drive change across the company.
Speaker Change: In September, we went live with the next step on our multi-year plan to unite related capabilities around the NY and elevate our execution by doing things in one place and doing them well.
Speaker Change: We now have about 13,000 or about one quarter of our people working in our new operating model.
Speaker Change: As we've said before, powering our 1BNY culture in order to be more for our clients and run our company better requires not just words but action.
Speaker Change: I want to thank our people around the world for their hard work and for collectively pulling together as a team to create the change for our clients, for our shareholders and for one another.
Speaker Change: To wrap up, the combination of our talented team, our portfolio of leading businesses working together, and the strength of our balance sheet gives us a great foundation to deliver more to our clients and drive sustainable, long-term shareholder value.
Speaker Change: Well, our results in the third quarter demonstrate continued execution against our strategic priorities as well as progress toward our medium-term financial targets. Our team remains focused on the work ahead.
Speaker Change: with that over to you, Dermot.
Dermot McDonogh: and good morning everyone.
Dermot McDonogh: Starting on page 3 of the presentation, I begin with our consolidated financial results for the quarter.
Dermot McDonogh: Total revenue of $4.6 billion was up 5% year over year.
Dermot McDonogh: P revenue is up 5%
Dermot McDonogh: This includes 5% growth in investment services fees, reflecting higher market values and net new business across our security services and market and wealth services segments.
Dermot McDonogh: to
Dermot McDonogh: Investment Management and Performance Fees from our investment and wealth management segment were up 2% driven by higher market values, partially offset by the mix of AOM flows and lower performance fees.
Dermot McDonogh: FarmWard AUCA of 52.1 trillion dollars were up 14% over year, reflecting higher market values, net new business and client inflows.
Dermot McDonogh: As the Dundermansment of $2.1 trillion were up 18% year over year, primarily reflecting higher market values and the favorable impact of a weaker dollar.
Dermot McDonogh: Our next change revenue increased by 14% driven by higher volumes.
Dermot McDonogh: Investment another revenue is $196 million in the quarter, reflecting continued strength in fixed income and equity trading.
Dermot McDonogh: The year-over-year increase primarily reflects a strategic equity investment loss recorded in the third quarter of last year and improved results from our C-Capsule investments.
Dermot McDonogh: Next interest income increased by 3% year over year, primarily reflecting improved investment security support for your yields and balance you growth, partially offset by changes in deposit makes.
Dermot McDonogh: Expenses of $3.1 billion were flat year over year on a reported basis, and up 1% excluding those
Dermot McDonogh: This reflects higher investment than employee merit increases partially offset by efficiency savings.
Dermot McDonogh: provision for credit losses was 23 million dollars in the quarter, for a mario-flecting reserve bills related to commercial rule-of-stage exposure.
Speaker Change: As Robin mentioned earlier, we reported earnings per share of $1.52 per year and excluding those relations earnings per share were a $1.52 per year.
Speaker Change: Pre-Tax margin was 33% and return on tangible common equity was 23%.
Speaker Change: Turning to captioning the Quidageet on page 4.
Speaker Change: Our Tier-1 leverage ratio for the quarter was 6%.
Speaker Change: Tier 1 caps are increased by 4% sequentially, primarily reflecting capital generation through earnings and improving the accumulation of the comprehensive income. Pop 2 Lps set by cashers earned for shareholders to come and stock purchases and to dividends.
Speaker Change: I would ask it increased by 1%
Speaker Change: I see each issue on racial at the end of the court was 11.9%.
Speaker Change: The E2-1 capter that increased by 5%.
Speaker Change: and Frisquator's asked increase to Robin Percent.
Speaker Change: We return look at one billion dollars of capsule to our shareholder, so it's the course of the third quarter.
Speaker Change: Year-to-day we return to 103% of earnings through dividends and buybacks.
Speaker Change: Moving to liquidity.
Speaker Change: The consolidated liquidity coverage ratio was 116% for one percentage point increase sequentially due to a favourable change in our departed composition.
Speaker Change: and the consolidated net stable funding ratio was 132% unchanged sequentially.
Speaker Change: Next, let's interest in the underlying balance sheet trends on page 5.
Speaker Change: The National Interest Income of over $1 billion with a pre-percented year and up 2% quarter of the quarter. The Spanish name increased with head to a higher sponsor to reap the activity at its market volatility and increased climate.
Speaker Change: and St. Francis. I've reached a bit of a lot of balances for the main fats he crunched in. Non-interference causes decreased by 2% of the quarter, and an interest-bearing deposit for fat.
Speaker Change: Average interest airing acids were a 4% quirkler of the corger. Our investment security portfolio balances as well as loan balances increased by 1% and cash and reverse repo balances remained flat.
Speaker Change: Our broader liquidity ecosystem reached an all-time high at the end of the quarter, of over $1.5 trillion worth of client cash across deposits, money market funds, security's lending, sponsored cleared repo, and other short-term investment alternatives.
Speaker Change: Turning to our business segments starting on page 6.
Speaker Change: Security Services reported total revenue of $2.2 billion, up to 6% year over year.
Speaker Change: Total investing services fees were up 4% to you over year.
Speaker Change: In assets servicing, investment services fees grew by 5% for merely reflecting higher market values.
Speaker Change: For the third quarter in our row, the impact of repressing was de minimus.
Speaker Change: ETF AUCA of $2.7 trillion was up more than 70% year on year and the number of funds service was up 20% year on year.
Speaker Change: In closing to ETFs on our platform remains strong this quarter with growth across old asset classes.
Speaker Change: As the ETF industry continues to grow, we are dedicated to scaling our best in-class ETF service offering.
Speaker Change: For example, we have successfully onboard several new liquidity providers to our electronic order execution platform to advance digital adoption.
Speaker Change: In issuers services, investment services fees were up one percent.
Speaker Change: Net New Business and Higher Climate Activity in corporate trust was partially upset by lower deposits for received fees reflecting corporate actions in the prior year.
Speaker Change: Against the backdrop of increased issue and activity, we continued to see strength and corporate trust, capitalising on our investments in people and technology to enhance client service and scalability.
Speaker Change: In this segment, Farnex change revenue was up 28% year over year, reflecting growth from newly onboarded clients as well as a higher level of client activity.
Speaker Change: National Interesting Company for this segment was up 2% year over year.
Speaker Change: segment expenses of $1.6 billion were down 3% year over year, reflecting efficiency savings and lower 7 expenses, partially offset by higher investments and employee marriage increases.
Speaker Change: Pre-taxing from a 642 million dollars, a 38% increase year over year, and pre-tax margin was 29%.
Speaker Change: Next, Markson Welles Serbs is on page 7.
Speaker Change: Markson Web Services reported total revenue of $1.5 billion, up to 7% year over year.
Speaker Change: Total investment services fees were up to 7% you over year.
Speaker Change: In Pershing, Investance Services fees were down 1%, reflecting the impact of loss business in the prior year, partially upset by higher market values.
Speaker Change: Net new assets were negative $22 billion for the quarter, reflecting the ongoing deconversion of loss business in the prior year, which is now largely behind us.
Speaker Change: Excluding the de-conversion, we saw approximately 4% annualized net-uatic growth in the term quarter.
Speaker Change: World continues to see strong client demand.
Speaker Change: We signed up 14 additional clients in the third quarter and we remain on track for the 30 to 40 million dollars of revenue in 2024 as we guide us in January.
Speaker Change: Wolves is helping us attract new clients and deepen relationships with existing ones.
Speaker Change: For example, Persian provides custody and clearing solutions for sanctuary, a large and fast-growing wealth manager servicing the high net worth and ultra high net worth segments.
Speaker Change: Sanctuary will also leverage wolf portfolio solutions, trading and rebalancing, and reporting for teams that custody with Persian as well as those that use another custodian.
Speaker Change: In clearance and collateral management, investment services fees increased by 16%. Primary reflecting higher collateral management fees and higher clearance volumes.
Speaker Change: Against the backdrop of a growing market and active trading, U.S. curishes clearance and investment volumes have remained strong.
Speaker Change: As you may remember, we created our global clearing platform earlier this year through the realignment of Persian institutional solutions.
Speaker Change: Will please to see the pipeline of this platform continue to build for our full squeeze of institutional clearing, settlement, execution and financing solutions in over a hundred markets around the world.
Speaker Change: In Treasury Services, investment services fees were up a level percent, primarily reflecting net new business.
Speaker Change: The business continues to execute well against the Grilled Agenda we presented in January.
Speaker Change: and we are seeing our investments in modernizing and digitizing our payments platform pay off in the form of growth in our strategic target markets.
Speaker Change: Nash interest income for the segment overall was up 3% year over year.
Speaker Change: The segment expenses of 834 million dollars were up 5% year, reflecting higher investments and employee marriage increases, partially offset by efficiency savings.
Speaker Change: Pre-tax income was up 8% year over year at $704 million, representing a 46% pre-tax margin.
Speaker Change: Turning to investment and wealth management on page A's
Speaker Change: Investment and wealth management reported total revenue of $849 million, up 2% year over year.
Speaker Change: In our investment management business, revenue is up 1%, reflecting higher market values and improved sea-capsial results.
Speaker Change: Partial set by Lord performance fees and the mix of AUM flows.
Speaker Change: and in wealth management revenue increased by 6%.
Speaker Change: reflecting higher market values and net interest income, partially offset by changes in product mix.
Speaker Change: segment expenses of 672 million dollars for flat year over year, as efficiency savings of less than employee-marging increases entire investments.
Speaker Change: Pre-Tax thing comes with 176 million dollars, up to 7% year, and Pre-Tax margin was 21%.
Speaker Change: As I mentioned earlier, acid-sunder management of $2.1 trillion increased by 18% year over year, primarily reflecting higher market values and the favorable impact of the weaker dollar.
Speaker Change: In the third quarter, we saw strength in our short-term strategies with 24 billion dollars of net inflows into cash, reflecting our leading position and strong investment performance in our drive as money market funds.
Speaker Change: Long-term active strategies saw 8 billion dollars of net outflows spread across multi-affers LDI and active equity, partially offset by net inflows into fixed income.
Speaker Change: and we saw 16 billion dollars of net outflows from index strategies.
Speaker Change: Well, this management kind assets of $333 billion increased by 14% year, reflecting higher market values and cumulative net inflows.
Speaker Change: Page 9 shows the results of the other segments.
Speaker Change: The End.
Speaker Change: Before I wrap up, I'd couple of comments on the outlook for the year.
Speaker Change: Starting with the National Infist Enco.
Speaker Change: Remember, we began here setting up for positive operation in our British despise and expectation for a full year-netch interest income to be down 10% in 2024.
Speaker Change: While recurrently forecasting for fourth quarter national interest income to be slightly below, what we saw in our strong third quarter results. The resilience of our national interest income over the first nine months of the year has positioned us to outperform our outlook for the full year national interest income growth rate, from January by approximately 5 percentage points.
Speaker Change: Regarding expenses, we continue to work hard to keep core expenses, excluding those relations for the full year 2024, roughly flat.
Speaker Change: We now expect our effective tax rate for the full year 2024 to be at the lower end of the 23 to 24% range we estimate is in January.
Speaker Change: And lastly, as we said at the beginning of the year, we expect to return a 100% or more of 2024 earnings to our shareholders through dividends and buybacks.
Speaker Change: and we remain on track having returned 103% of earnings here today.
Speaker Change: in conclusion.
Speaker Change: Our results this past quarter reflects blood-based growth across our three business segments and continued progress on our strategic priorities.
Speaker Change: We're pleased with the company's performance here today and we're proud of our people who continue to execute well toward our medium-term financial targets.
Speaker Change: While we all remain focused on the work and the tremendous opportunity ahead of us.
Speaker Change: With that operator, can you please open the line for Q&A.
Speaker Change: If you would like to ask a question, please press star one on your telephone keypad.
Speaker Change: As a reminder, we ask that you please limit yourself to one question and one follow-up question.
Speaker Change: Please go ahead.
Speaker Change: We'll take our first question from Brennan Hawken with UBS. Good morning. Thanks for taking my questions. You flagged some of the ETF wins that you had in the servicing side. Curious about that number one, how much of that was the BlackRock business that you've won and has the revenue from that win, that they win fully turned on. And did those dynamics have something or like is the fee rate well or because fees in assets servicing were up about 5% but AUC 16. And I know sometimes the ETF fee rates are a little well or so curious to flesh that out a bit. Thank you.
Speaker Change: So thanks for the question. I don't really want to get into the specifics on one client or transaction, but...
Speaker Change: to just to take a step back on ETFs generally.
Speaker Change: You know, it is a growing mark as you may have
Speaker Change: You may have watched Larry from BlackRock on CMBC this morning. It is a secular trend.
Speaker Change: is a very big and growing marcus.
Speaker Change: and we are a key player on that.
Speaker Change: As I said in my prepare to mark...
Speaker Change: You know, we have 2.7 trillion on the platform, that's up 70% year on year.
Speaker Change: and the number of phone service is up 20%.
Speaker Change: That's on the back of, you know, strong leadership and a real investment in technology so we can be best in class. So without going into specifics we're there to take advantage of the secular trend and we'll continue to innovate and solve for our clients' needs.
Speaker Change: Okay, thanks for that. Maybe if I could word it a little differently, there's a strong ETF growth that you have seen in this quarter, is the revenue fully reflected this quarter or is some of those wins still have some revenue ramp to come.
Speaker Change: I would say it's the last verse, it's you know
Speaker Change: Generally speaking, strong pipeline, we're always adding new clients to the platform and they because of the size of what's been on boarded, they tend to do it in a phase to approach, so some revenues on the platform some revenue to come.
Speaker Change: Excellent. Thanks for that, Dermot. Thank you also for the update on NII, encouraging to see things working better. Could you speak to the deposit beta that you experienced with the first rate cut and given that we're seeing rates coming down now? Is it reasonable to think that deposits could begin to grow from here?
Speaker Change: So the basses, I think we've said on previous calls, reviews, has some matricles.
Speaker Change: for us the first rate cause was, you know, a hundred percent passed on.
Speaker Change: So we feel pretty good about that.
Speaker Change: I think in terms of...
Speaker Change: Where we are in the fed easing cycle, I think it's probably a little bit too early to see how that's going to feed into
Speaker Change: The Deposit Balance Story, I think, overall.
Speaker Change: We've held in there. We had a strong Q3 for a variety of different reasons. So I would say I expect where we are to moderate a little bit on balances.
Speaker Change: Thank you for, and we'll see what happens next with the next Fed Measings, but no significant change for us as we kind of sit here right here today.
Speaker Change: Great, thank you for taking my questions.
Speaker Change: If you find that your question has been answered, you may remove yourself from the cue by pressing star 2.
Speaker Change: We'll move to our next question from Mike Mayo with Wells Fargo.
Mike Mayo: Hey, how are you doing?
Speaker Change: Hey, Mike, how are you?
Mike Mayo: Good. That's a big number of the 50 trillion dollars that you see, a nice round number. You did be, you know, a staff soul that you'd be expectations for the quarter and the year so far as you highlighted. But I'm just trying to figure out.
Speaker Change: How much of this is Locky vs.
Speaker Change: Bing Smart.
Speaker Change: and um...
Speaker Change: and Madgen is a bit of both, but the lucky part is record stock market, volatility, trading.
Speaker Change: The other factors in the market that have gone your way.
Speaker Change: and I don't feel like we have enough information on your client growth, the underlying client growth, the most repeatable part of the company, so could you get some color on whether it's growth in clients or maybe it's revenues per client or maybe it's products per client or all those adjacent businesses that you talk about, you know, how you're managing the company better, versus simply a better environment-toffered.
Speaker Change: I understand the question and it's obviously a very legit question, you know, we broke through the 50 by the way we ended up 50.
Speaker Change: II, so good news is we didn't stop at the round number.
Speaker Change: I'd say that.
Speaker Change: It isn't just fashionable, it's actually old-fashioned, traditional, just the way that we want us to do it in terms of being able to have this deliberate growth in this focus. And so, we've tried to provide as much...
Speaker Change: Visibility as we reasonably can into the inputs of what it is that's ultimately driving this progress because we understand we have benefited from a terrific backdrop in terms of markets and of course it's part of our business to be able to be well positioned to take advantage of those backdrops. We've got parts of our business, we respond to asset values, we've got parts of our business that respond to the number of accounts, we've got parts of our business that respond to software sales, transaction volumes, and having that multifaceted set of business.
Speaker Change: Response Functions, if you want to call it, that is actually a deliberate strategy so that we can participate in the growth of markets. And so if you believe that overall debt issued in the world, equity valuations in the world, financial market activities are going to grow, we're trying to hitch our wagon to all of those growth trends. We think that's good. Having said that to the heart of your question, this is the work that we've really done in the early days since this management team took over, which was to understand the components that we had, and to really start to understand how they could work together, so that they could hum together in order to be able to unlock more potential. And so we rally to the firm around three strategic pillars, this thing of being
Speaker Change: and more for our clients. And that's just not just words. It's been about maturing this 1B and Y philosophy that we've talked before about. It's about having a different type of dialogue. It's about the movement over time to solutions as opposed to just products. It's like the examples that I gave and Dermot gave in our prepared remarks where clients are coming to us because we can do more than one thing for them. And it's not just that we're selling more things to them. It's that they actually want to take advantage of bundles of things which actually provide a better solution to that business.
Speaker Change: and then our second pillar of running the company better. That's been about sales rhythms and sales targets and bringing our people together and having them understand what it is that we're trying to do. And then wrapping the whole thing is this culture of wanting to have a winning culture, wanting to push forward, wanting to make BNY of the future more than BNY Mellon was of the past. And those things are all quite deliberate. And we start, and we believe that we're starting to see the results of that, although it's still early in our results. But, you know, Dermot can give you a couple of additional things on this which I think also would be helpful.
Speaker Change: So the way I, from just thinking about it from a numbers perspective, right, we're up 5% year on year and fee growth, and constructive markets, and so we've been able to take advantage of constructive markets, but a couple of important points that I would draw out is that in all three of our business segments, we've seen solid underlying growth, and in Robin's prepared remarks, he talked about the fact that we're evolving into a platform company, and we have platforms that we're investing in at scale, so when you have high volume, and you have constructive markets, we have the platforms in situ that can take advantage of that.
Speaker Change: Assets servicing, we're winning an onboarding new business. We came into the year with a backlog. We onboarded the business throughout the year, and we're beginning to go into the queue for a bigger backlog than we came into the beginning of the year. So Assets servicing, I feel very proud of.
Speaker Change: Corporate Trust, a positive receipt. Corporate Trust specifically.
Speaker Change: A good margin business, but something that has been devoid of investment over a number of years, and we've put money to work there in terms of leadership and scaling our technology, and that's going to be a business important business for us in the future. And Treasury and services and clearance and collateral management have really kind of shown what when you have a scale platform with high volume, strong markets, lots of issuance, lots of payments, you take advantage of that. And then on the just declined specific thing, all be it's a small base.
Speaker Change: and we can, we've highlighted a couple of transactions this year where we're able to have a much more sophisticated conversation with clients and clients are now buying from us across more than one line of business. In some cases four lines of business. That was something that we just could not do a couple of years ago and Robin's point about bringing the one-be and why to bear on clients is really beginning to pay dividends.
Speaker Change: All right, well that was a very comprehensive, just last follow up. Are you implying? And by the way, on all the metrics, you get into the client growth numbers and thanks for tuning back.
Speaker Change: The layers of the onion there, but always like even more layers, never enough for us, but you know in terms of growth and clients and more specifics going down the line, but the expenses clearly the plat expenses, that's very clear of that part of it. Are you implying even lower expenses in the fourth quarter based on your new guide today? Thank you very much.
Speaker Change: So the thing I would like to convey to you and to our shareholders is that we work really hard over the last couple of years to build credibility that we are good stewards of our expense base. And we guided flash at the beginning of the year. And broadly speaking, you know there's been some pressure, I would say on expenses.
Speaker Change: That's for the most part our revenue relays is and so if revenues are higher there's some aspects that you just have to pay more expenses so my life guided roughly flat for the full year there may be a little bit of pressure over the course of that because of higher revenues and also you know as Robin said in his remarks we've announced the acquisition of Archer and there will be some integration costs associated with that but I feel very good. The fact that now we have 53,000 people who understand the importance of financial discipline and that goes to pillar number two of being a really well-run company.
Speaker Change: Alright, thank you.
Speaker Change: We'll move to our next question from Brian Bedell with Deutsche Bank.
Brian Bedell: Oh, great. Thanks. Thanks to Morning, folks. Thanks for taking my questions. Maybe just on just sticking with the revenue, a dynamic. The, talking about the, obviously the commercial liftoff and the enterprise approach. The early traction that you're getting, I think you referenced some clients now doing multiple services. Can you talk a little bit more about how you think that might impact the, the, the, the, the, the.
Speaker Change: Revenue growth trajectory, and then also just if you can just re-confirm the general Revenue Delta to equity markets, I think it was like 10% equity market moves can have an impact of about 1% revenue, so I just wanted to break apart this two dynamics, just really kind of showing that you're actually generating this revenue growth aside from markets.
Speaker Change: So if I take the last question first, hopefully that was your two questions in one go. So 5% gradual change in equity markets is roughly 60 million dollars in fees annually and a 5% gradual change in fixed income markets is roughly 40 million dollars in fees annually. So that's a little bit on the sensitivity analysis. And so on just the commercial lift off that Robin talked about in his remarks, it really is.
Speaker Change: Katinka...
Speaker Change: It's awesome who's with us now for over a year, spent the first year really on a listening tour and organizing roughly our 12 to 1500s, leading client coverage people around the world in terms of what we want our ambition to be, what are the products that we have.
Speaker Change: and how can we educate our total force to be able to out there with lines to living the whole of the firm.
Speaker Change: I think, and also a few kind of just...
Speaker Change: Talk about Archer for a second.
Speaker Change: I think a couple of years ago, if we were to do that acquisition.
Speaker Change: You know, one part of the firm would abolish it for its business.
Speaker Change: and I think Robin's point in his remarks are really really important where you buy his wants.
Speaker Change: You use it multiple times and it's an acquisition that's done for the enterprise that will serve multiple lines of business.
Speaker Change: and that's how you should think about how our client coverage model is going to work in a strategic way going forward. We're going to deliver holistic solutions for clients.
Speaker Change: I have a better understanding.
Speaker Change: of the diverse night nature of our business franchise and they're just buying more from us and it's just going to show up in review and we feel very good about where we are today in terms of planning for the budget season for Q4 and the opportunities that I want to come our way in 2025.
Speaker Change: Great, that's up, I'll get back in the queue for another question actually.
Speaker Change: We'll move to our next question from Alex Flasstein with Goldman Sachs.
Alex Flasstein: Thanks. Thanks. Good morning, guys. So maybe just wrapping some of the comments you made around fee in a bigger picture question. When you guys think about a number of different growth areas, you outline some of the specifics and obviously the approach to cross selling has taken a whole different turn here. So when you zoom out and you look at the business holistically, how do you think about the organic fee growth that the enterprise can generate over time? Thank you.
Speaker Change: So, um...
Speaker Change: So we don't guide on fees, haven't done, don't intend to do it here, but what I would say is...
Speaker Change: and I gave this answer as an earlier question. We are seeing underlying growth across all three of our business segments.
Speaker Change: Our Underline Organic Growth this year we feel quite happy about and we feel it reflects a really good nine months of the year and there's no reason to expect that that momentum won't continue and I do feel the way we set up for the back half of this year and into next year. It's a kind of flywheel of innovation and we have a lot of growth initiatives.
Speaker Change: and we come together and we have a group of people who are working on what we call integration solutions.
Speaker Change: and so we have a number of interesting things in the pipeline.
Speaker Change: Robin talked about all the sprays and these remarks.
Speaker Change: Talks about Oksher and his remarks, there are things that we're doing within specific lines of business coming together.
Speaker Change: We talked about purging, being re-aligned into clearance and collateral management and that's driving growth as well So the decisions that we've taken over the last couple of years in terms of re-aligning certain activities into different parts of the firm are showing up in our revenues
Speaker Change: this year, and we'll continue to do that in the next year.
Speaker Change: Alex, I just add, you know, and Dermot really alluded to this in what he just said, but
Alex Flasstein: Right from the beginning
Speaker Change: We've had two approaches, one is to think about this endeavor.
Speaker Change: of fully realising BNY's potential as a multi-year endeavour and we recognise that there are going to be different ways in which that will come together in different years and North Star as you know for us is operating leverage and that came about in a slightly different way in 2023 than it did in 2024 and it could be different again in 2025 as we really get into that conversation ultimately.
Speaker Change: When we talked to you in January, but we've simultaneously invested in things that we knew would be important for the shorter term and for the medium term and for the longer term. And so both Dermot and I have talked about this platform's operating model. That's a great example.
Speaker Change: There have been some benefits that come early on in that process. We brought like things together across the company. There have been benefits on the revenue side. There have been benefits.
Speaker Change: on the expense side from doing it. But then the value of having done it creates medium term momentum because now we're able to be more dynamic for clients, we're able to solve problems more quickly for clients. And so there's a payoff there. And then over the longer term, it actually makes it easier to be able to assemble these new solutions that Dermot was just talking about. And again, there's a revenue story there, but there's also an expense story. And that's how we're thinking about it. Notwithstanding, we haven't given you a specific growth target number, make no mistake, we're invested in creating that growth.
Speaker Change: Yeah, no fair enough, I appreciate all that. Smaller kind of tactical question for you guys, so the repoptivity continued to be quite elevated, and you mentioned that in your prepared remarks as well. Is it possible to help size how much repo contributed sort of across the enterprise that hits you in a couple of different ways? Obviously, there's the NII benefit and there's some p-benefit, so as you think about the more normalized level of repoptivity versus what you saw in the quarter, how big of a contributor was that, you know, in kind of totality, and as you look forward, given changes in monetary policy expectations, but also some of the climb behavior that you mentioned earlier, how sustainable do you ultimately think this more elevated pace of activity in this market?
Speaker Change: So, on the repo question, so cleared repo for sure we saw elevators activity.
Speaker Change: particularly going into the back end of the quarter and then the early part of this quarter and that in large part contributed to the outperformance for the Q3 NII that has now moderators somewhat and so in my prepared remarks and in terms of the guidance that's why I kind of feel like you know roughly for NII we're about a
Speaker Change: in terms of peer-to-peered repo.
Speaker Change: Overall, as a kind of contributor to the NRI, I also think about it.
Speaker Change: of the year. It's roughly about...
Speaker Change: 5% of the number.
Speaker Change: as a relates to elevators activity in terms of volume and activity.
Speaker Change: I think from what we see on our platforms we kind of see that continuing to be the case.
Speaker Change: in the medium term. There's no reason for the slowdown. It's been a very strong year.
Speaker Change: a very, very active client engagement product innovation.
Speaker Change: and particularly on the international side we said at the beginning of the year in our kind of street.
Speaker Change: G. J. Colin January.
Speaker Change: That international is going to be a key area of focus on...
Speaker Change: on the platform, and that's been the case, and that's shown up in the results, so, um...
Speaker Change: I think overall and I said in my prepared marks as well
Speaker Change: in terms of the liquidity ecosystem in total hit a high for us at one and a half trillion. That's up from 1.2 trillion a couple of years ago and that's in the backdrop of, you know, liquidity coming out of the system. So we've grown quite substantially and that again is coming back to connecting the dots across the firm, getting teams collaborating more, being more digital providing innovative solutions to clients and that is really powering the growth.
Speaker Change: If I could just relate that back to a question that Mike had asked earlier on because I think these things are relevant, you ought to remember that this strategy of us having roughly the right ors in roughly the right waters to be able to participate in things that are happening in the world, that's very important. So if I just supplement what Dermot said with the additional observation that with the world's largest security's lander, that generates re-proactivity.
Speaker Change: and the U.S. Treasury Market, which participates in the growth of U.S. Treasury Repot.
Speaker Change: We have all of these different touch points and so there are different ways in which we can collect across software in some cases services that we administer in others and participation in different both global markets and also product types which align in indirect ways to that. So that's an important part of how we look at the overall system and understand how our products and services can help clients navigate those and we can participate in the benefit of their growth.
Speaker Change: Yeah, that's a helpful framework to discuss this way, yeah. Thank you guys both.
Speaker Change: We'll move to our next question from Gerard Cassie with RBC.
Speaker Change: I'm Dermot, I'm Robin
Gerard Cassie: Robin, can you give us some thoughts with obviously you talked a little bit about the acquisition you accomplished in this quarter. What your outlook is for you know you're obviously a very strong capital levels your stock is very nicely this year you get a better currency. What the outlook is for just other types of acquisitions if there are some that could be complementary to what you're currently doing.
Speaker Change: Short, short. First of all, just make a quick comment about art show, looking forward to closing that transaction in the fourth quarter and welcoming the team in. This relates a little bit to a couple of other things that we've already talked about on the call. You know, one is participation in markets and the other one earlier on on ETFs. If you just think about the way that we view the world construct, once upon a time there were mutual funds.
Speaker Change: More recently in the past decade or so it's really been the explosion of ETFs.
Speaker Change: and there's a simultaneous thing going on which is the growth of separately managed accounts.
Speaker Change: and so in the same way that Dermot described how we've participated in sort of outside part.
Speaker Change: Disappation of the ETF migration, Archer is a transaction that pre-positions us to be able to participate, hopefully in an outsized way associated with the transition to separately managed accounts. So it relates to that strategic question of growth and participating in different markets that we talked about.
Speaker Change: Now stepping back to the other part of your question really, the heart of it on M&A, you know, look, our primary focus is what we have and how we can improve on it. And Dermot, I both talk a lot about the fact that...
Speaker Change: We've looked very carefully at our businesses, and we love our businesses.
Speaker Change: We think we have a great set of businesses, we think there are great ones to be in and we think that they have a lot of adjacency to each other and we think that the spread of those things can provide a lot more services to our clients and more joined up way as solutions than maybe we have before. So it isn't that we do M&A from a position in any way of needing to do things it's we're able to be very opportunistic and we obviously like that a lot but notwithstanding that we're pleased with what we have we don't want to be complacent so we keep our eyes open and we look at things and Archie came about as a result of a strategic business review that we did internally looking at long-term trends, looking at how we might adapt to those trends and then we went out and we looked very specifically for a capability that would be
Speaker Change: We do that with the key emphasis being on the word capability, digestible bolt on things that accelerate what we're trying to do or the risk delivery of what we're trying to do, and if we can buy a piece of technology that can be more efficient or less distracting and building it ourselves with a great team, great technology, ideally like this one an installed book of business is also helpful, then we feel very good about it as long as it aligns with those priorities as a good cultural fit as a good attractive returns. So that's our M&A thought process.
Speaker Change: And then if that fits into the overall waterfall which we've talked about before, which is if we have excess capital, we're going to of course be prudent and so we like excess capital. That's not a bad thing in an uncertain world. And so that's a very important consideration. Then we look at whether or not we could invest it. Good news, as you know, we're a pretty capital-like model. We're very capital-generative, so we don't need a ton of capital to reinvest in our business to keep growing it. Then we look at whether or not we need something for some type of additional need. We'd like the archery example, and then we distribute the rest. And this has been obviously a-
Speaker Change: Good year to see all of that on display. We've been prudence, we've run at elevated capital levels and as Dermot's indicated we intend to return 100% plus of net earnings to shareholders and we've been able to make an acquisition and so this is a pretty good model year for how we think about the world. Thank you very much.
Speaker Change: Very good. Thank you for the answer. And then just a quick follow up, Dermot, you gave us that sensitivity analysis about a gradual 5% change in the equity markets and fixed income and the impact it would have on revenue. Was that for up markets, meaning that the gradual increase was 5% up? Does that also reflect a down market? If markets were down 5%, that's the kind of impact we would expect to see. Thank you very much.
Speaker Change: That's correct, that's correct.
Speaker Change: Okay, great, thank you.
Speaker Change: We'll move to our next question from Ibrahim Punowala with Bank of America.
Ibrahim Punowala: Hey, good morning.
Ibrahim Punowala: Good morning, Ebrahim. I had a follow-up with some of your responses. I think I guess depending how maybe starting with this capital allocation, so how do you respond to your question around M&A and such. But just talk to us how you think about me.
Ibrahim Punowala: When we think about the valuation of the stock on price warnings, price detangible work, at the same time, this year has been pretty good market backdrop wise. And as an investor, Shareholder, you care about ROE resiliency of these firms. So one maybe Robin Dermot, talk to us about your comfort around ROE resiliency, if the market backdrop is unfavorable, what's the flex in the system. And give it my thanks to Ann today. Okay, how do you think about the stock valuation versus the commitment to return 100% plus in buy-backed dividends. Thank you.
Speaker Change: I'll take the second bit first, and then Dermot will reflect on the first part of your question. So, you know, the good use is that we can also pay attention to the way that you all think about the stock and your views of our stock and, you know, we appreciate the fact that many of you have expressed confidence in our forward direction. We believe in ourselves as well. And so, what we do of course consider price as one of the many inputs into our capital return framework. We don't view current prices as being problematic in terms of continuing our stock buybacks.
Speaker Change: Oh is it when I took on the role?
Speaker Change: A couple of years ago, I guess I got a lot of questions about is it's just going to be more the same or what's different.
Speaker Change: and now we're severed.
Speaker Change: Fortress into the new team and Robin has really kind of bolstered that team.
Speaker Change: and through the strategic pillars, communication, the principles, the medium-term financial targets has really started to evolve the culture of being a lie.
Speaker Change: and so it is our commitment to deliver to our shareholders positive operating leverage through the cycle.
Speaker Change: and so if you just take a step back and look at these quarters financials.
Speaker Change: You know, 5% revenue growth.
Speaker Change: Flatic Spence Growth, 33% Pretext Margin
Speaker Change: Opera End of Tier 1, Leverage 6%.
Speaker Change: 23% return on tangible common equity and a 22% EPS growth.
Speaker Change: and you know what I would say is a solid beast.
Speaker Change: So I don't really think about the valuation of the firm.
Speaker Change: Annie given day, we just care about delivering for our clients and our shareholders and if we do that in the first last way, the valuation will take care of itself. And you asked about the returns and our sort of comfort with them. Look, we've given medium term targets as Dermot just said, that's sort of greater than or equal to 23% for ROTC and so we obviously appreciate touching that. But doing it consistently over time is how we really view achieving targets.
Speaker Change: In terms of the resiliency, remember that the very nature of our business is actually got this diversification, we talked about the equity markets and the fixed income markets. I talked about the fact that it is software, its services, platforms and market valuations and transaction volumes. These are all things that we participate in. Capital markets activity has been important to us in 2024. The fact that we participate through our corporate trust business, through our debt capital markets business, those are things that are participating in the growth of capital markets generally. We participate in the scale of markets and things like the Treasury market as a good example. And so this diversification of our mix.
Speaker Change: helps us to be resilient in terms of the vagaries of any one particular market or cycle. Now, of course, things will move around and that's why Dermot mentioned the point about our commitment to positive operating leverage in almost all reasonable scenarios that we can imagine because we recognize that NII, which is part of our mix, but so too are the fees and then our ability to control expenses. We could make expenses less than they are now. We've chosen to manage them at the level that they are because we believe that investing in that business of future growth is exactly what we should be doing right now given the environment, but it wouldn't always have to be so.
Speaker Change: I appreciate that, and if I can sneak one quick or follow up, Dermot, I think you mentioned Fort Coroni, slightly lower than 3Q, we've seen a few rate cuts in Europe , in the US now, in September , is it fair to assume that absent the dramatic change in rates, this billion dollar in quarterly NII is kind of where we are bouncing around at the bottom, and then if deposit growth picks up, QT stops, that it should go off that base, or am I missing something?
Speaker Change: So if you look back at our last five quarters, we've kind of toggled between a billion and 1.1 billion.
Speaker Change: Q3
Speaker Change: was a stronger quarter for us for a number of reasons, principally.
Speaker Change: Volatility in the market at the beginning of August and clients held more cash.
Speaker Change: and then towards the back end of the quarter.
Speaker Change: Once there was a cure, a few of you on where the Fed was going to go at rates.
Speaker Change: Klein started to put money into money market funds which ended up with us.
Speaker Change: We kind of benefited from those two principal things and so our deposit balance is of kind of level to off here. We expect maybe NIB's going down a little bit from here and so as I kind of said maybe ten minutes ago.
Speaker Change: A billion dollars for Q4 is the best guidance I can give you today and for 25, I don't see NI being a kind of a headwind for us and we take an extensive action over the last several weeks in terms of repositioning our CIO book to insulate 25.
Speaker Change: That's helpful. Thank you so much.
Speaker Change: As a reminder, if you find that your question has been answered, you may remove yourself from the queue by pressing star 2. If you would like to join the queue, you may press star 1. We'll move to our next question from Betsy Grasic with Morgan Stanley.
Betsy Grasic: Hi, good afternoon.
Speaker Change: Hey Betsy!
Betsy Grasic: Okay, two quick questions. One is on the buyback question, and I know you said, you know, look, you're very creative, earnings accretion, you don't need a lot of capital for the business model, of course, as we know.
Betsy Grasic: and your above your targets, CP1, 11 and tier 1 leverage, target 5.5 to 6, you're at the behind of that range.
Betsy Grasic: And so when we think about 100% plus, how should we think about the plus part of the 100% plus? Because it feels like totally 100% makes sense. But there's room to bring these, you know.
Betsy Grasic: Optimize the Capital Structure more. So...
Speaker Change: You know, I'm kind of thinking about, I'm wondering, what kind of time frame are we talking about to optimize your capital structure to you feel?
Speaker Change: So thanks for the question Betty, last year we returned a little north of 120% this year in January we guided a 100% or more.
Speaker Change: given the uncertainty in the market's geopolitical, the US.
Speaker Change: Presidential Elections.
Speaker Change: The wide range of uncertainty would fed
Speaker Change: You know, in January we talked the year was going to be very different where it then developed and I think...
Speaker Change: and previous calls we said we wanted it for now.
Speaker Change: Stick towards the upper end of our Tier 1 leverage ratio, which is to 6% range. And so when you take that and the Archer transaction, we kind of think, you know, we're still on track to do the 100% or more through three quarters. We're at 103%. So I wouldn't expect that to materially change from here.
Speaker Change: Okay, got it. And then the other question, as you mentioned, 1-3rd of BNY is now on the platform model.
Speaker Change: Are you taking 100% of the firm there and...
Speaker Change: This is wondering about implications for...
Speaker Change: You know, the runway for efficiency improvements as you execute on that, thanks.
Speaker Change: So, um...
Speaker Change: A quarter of the farm roughly 13,000 employees are on the platform now, happened in two waves, March and September, with another wave going live in Q1 of next year and so.
Speaker Change: I wouldn't necessarily think about past-form operating model as a mechanism just for efficiency. It really is, it's going to drive top-line growth and it's going to run the company better and it's going to help us have a different culture in terms of more joined up thinking. So it really is the mechanism by which we deliver the three strategic pillars.
Speaker Change: and so...
Speaker Change: The answer to the question about 100% is yes.
Speaker Change: and from probably from here it's probably another 18 months before the firm is fully up there but by the end of Q1 of next year we expect about half the firm will be live on the model and the feedback so far from our from our team around the world is extraordinarily positive so it's really worked well for us as a firm. And Betsy remember the tale of benefit extends way past the 18 month point because sometimes it's not until folks are in the model in operating in that new approach that they're really able to examine some of the core questions that that platform is confronted with in terms of how to optimize so we expect the benefit that Dermot is describing to be a multi-year endeavour past that 18 month point.
Speaker Change: God, it, all right, thanks so much for your ship.
Speaker Change: We'll move to our next question from Glen Shore with Evercore ISI.
Glen Shore: Hello, I just want to wrap up for me. Dermot, I love you pointed out the 5% revenue growth, flat as expensive, lead to 20% earnings growth, that is the powered, the BK model. If you look, just, I know it's just one quarter, but if you look at the sequential numbers, the story changed a little bit with everything about flat learnings down a little bit. I'm just all I'm asking is, does that inform us in any way how we're looking at as we roll into 25? A lot of your business metrics and bounds and client wins are up, so my gut is no, but I just want to see from that perspective how you feel about that.
Speaker Change: So, I think you're got correct.
Speaker Change: It is no land and it's all just about timing and when we unbore clients and put people on the platform and when the revenue starts to get recognized.
Speaker Change: Just in terms of the backlog across all our businesses, strong pipeline continues to grow and yeah so your intuition is correct.
Speaker Change: Alright, awesome, thank you.
Speaker Change: We'll move to our next question from Reggie Vodia with Morningstar.
Reggie Vodia: Yeah, just a quick one for me. I guess on the depository and receipt business.
Reggie Vodia: and I appreciate it to small business, but the number of sponsored programs continue to decline. That's something we should continue to accept to decline in as a competitive takeaway or something else. Let's drive that. Thanks.
Speaker Change: So, I wouldn't really read too much interest, that's, you know.
Speaker Change: We've talked about that for several years about the sponsored program going away and not being around. It's still here.
Speaker Change: at the Poster Receive.
Speaker Change: is a small business.
Speaker Change: In the totality of it, but it is a very, very important business for us because it gives us another opportunity to connect with clients.
Speaker Change: and it's got a very good margin to it and we have like very...
Speaker Change: Significant market share in that business, so it's something that we continue to invest in, we think it's very important for our franchise, and we don't see a secular decline in that business from where we see it today. We also afforded some of the smaller clients in that particular business, so the headline of total numbers, a little bit misleading actually, when if you were able to dig under the hood and see some of the clients that made up that decline, you'd see that they disperportually skewed to the small.
Speaker Change: God, thank you.
Speaker Change: We'll move to our next question from Jim Mitchell with Seaport Global Securities.
Speaker Change: As a reminder, if you find that your question has been answered, you may remove yourself from the cue by pressing star 2.
Speaker Change: We'll move to our next question from Brian Vidal with Deutsche Bank.
Brian Vidal: Great. Thanks for taking my follow-up. Just one more on the margins. You're mostly at your 33% target in most areas. So as you generate more saves from moving to the platform model, and as we move into say next year or beyond, I guess what's the view on spending some of that in investing in the business versus actually generating, you know, potentially generating margins, you know, well about 33%.
Speaker Change: So, my answer to that one, Jim would be...
Speaker Change: We want to err...
Speaker Change: We want to demonstrate to you that we can prove that we can deliver 33% margins through the cycle.
Speaker Change: We gave guidance for the first time.
Speaker Change: in January and then we just managed to get there pretty quickly, but we want to stay there and show that we can deliver that over a period of time.
Speaker Change: We're heading into a very, what's going to be quite an interesting budget season for us because we've done a lot of great things this year and I know the various teams around the firm want to do great things next year and to offset that balance we want to be able to deliver positive operating leverage and so the next eight weeks and how we set up the firm for next year will inform how we communicate with you in January but we'll see you in the next one.
Speaker Change #100: We set out those targets because we believe we could hit them, the positive is we got them earlier than we told.
Speaker Change #100: and now we want to show that we can improve and maintain those margins that we've guided to previously. And Brian, the best clue I could give you in terms of how we think about that is sort of a little bit more detail. If you actually look at us on a segment by segment basis.
Speaker Change #100: You can see us prosecuting the operating leverage journey differently in our three segments and we told you a year or so ago that that's what we were going to do and so maybe to a lay your concerns in terms of growth and investment if you look at market and wealth services we aren't trying to grow the margin there we're very happy with the margin we just wanted to grow the total size of the business which is exactly what we've been doing there are other say the other segments where we said we actually do want to grow the margin towards our medium term targets for those segments there we are really growing the margin and so you can see exactly your question at work in our segments
Speaker Change #101: Yeah, that's great holler. Thank you very much.
Speaker Change #102: and for our final question, we'll return to the line of Mike Mayo with Wells Fargo.
Mike Mayo: Hi, with all this talk of the transitioning of the employees, I guess half the employees to the new platform over the next one to two years.
Mike Mayo: How much do you see AI playing a role and can you give any metrics? I mean, keeping expenses flat. I don't know how much you're still investing in AI. When Emily presented at the Boston Bank Conference last November , she seemed like DNY was all in for AI. It was one of those bullish cases made yet you've heard out, you know, in the broader world. Sometimes you have hit, sometimes you have missed it. So where, how does AI relate to the whole platform strategy? And how committed are you to AI? And you have any numbers that you can give us some concrete metrics. Thanks.
Speaker Change #103: Sure, so just to reiterate, we've got a quarter of our people in the platforms operating model and you know as Dermot said, it's sort of an 18-month trajectory from here. That's really my, the way I think about platforms operating model is this concept of if you take it that we are in fact more and more of platforms company in terms of these large at-scale capabilities, often software and services that we deliver.
Speaker Change #103: Generally in market leading positions, number one in a variety of different markets, we talked about the things the businesses before I won't repeat them. Then it follows to us from that, that it makes sense for us to operate ourselves in a platform's operating model, which is the way that many other platform companies in the world operate themselves. And so that is a strategy around how we organize ourselves in pursuing, being pursuant to our broader strategy. Now AI, which is, of course, part of that, we have an AI hub, we have a couple of hundred people in that AI hub and we are absolutely investing in AI and do believe in the power of AI to be able to help our business in terms of both.
Speaker Change #103: with revenue opportunities over time for clients and also ways to make our people more effective and efficient. And we haven't made a lot of noise about it, but don't misunderstand that for a lack of interest or investment because we haven't slowed down, in fact, we've increased our AI investment. And of course, notwithstanding all of that, you can see that from running the company well on an expense line, we're not allowing that enthusiasm to distract us from the important task of expense management. And this is where I don't mean to be petty, but it's very, very important learning for us is that we as a company can walk and chew gum at the same time. We can invest in things that matter and we can manage the company well. We make choices and AI.
Speaker Change #103: A choice of something we're leaning into and we think that's important for the future.
Speaker Change #103: Thank you.
Speaker Change #103: Thank you.
Speaker Change #104: and with that, that does conclude our question and answer session for today. I would now like to turn the call back over to Robin for any additional or closing remarks.
Robin Vince: Thank you, operator, and thanks everyone for your time today. We appreciate your interest in BNY. Please reach out to Marius and the IR team if you have any follow-up questions. Be well.
Operator: Thank you.
Operator: This does conclude today's conference and webcast. A replay of this conference call and webcast will be available on the BNY Investor Relations website at 2 o'clock PM Eastern Standard Time today.
Speaker Change #105: Thank you. This does conclude today's conference and webcast. A replay of this conference call and webcast will be available on the BNY Investor Relations website at 2 o'clock PM Eastern Standard Time Today. Have a great day.
Operator: Have a great day.
James Mitchell: James Mitchell, John