Q4 2024 State Street Corp Earnings Call

Instead by Elizabeth Lynn head of Investor Relations at State Street, we ask that you. Please hold all questions until the completion of the formal remarks at which time, you'll be given instructions for the question and answer session. Today's discussion is being broadcasted live on state Street's website at investors thought.

State Street Dot Com. This conference call is also being recorded for replay the Street's conference call is copyrighted and all rights are.

Or.

This call may not be recorded for rebroadcast or distribution in whole or in part without the expressed written authorization from State Street Corporation. The only authorized broadcast of this call will be housed on the state Street website now I would like to hand, the call over to Elizabeth Lynn.

Good morning, and thank you all for joining US with me today are state Street's Chief Executive Officer, Ronald Handily, Chief Financial Officer, Eric Abu off and investment services, CFO and as we announced this morning incoming interim CFO Mark Keating.

Ron Handily: On today's call Ron will provide an overview on 2020 for performance and milestones achieved.

Ron Handily: Eric will then walk through the fourth quarter and full year 2024 earnings results in detail and both Eric and Mark will provide our 2025 outlook after which we'll be happy to take questions.

Ron Handily: Today's presentation is available on the Investor Relations section of our web site investors that state Street Dot Com before we get started I'd like to remind you that today's presentation will include results presented on a basis that excludes or adjusts one or more items from GAAP reconciliations of these non-GAAP measures to the most.

Ron Handily: The directly comparable GAAP or regulatory measure are available in the appendix to our presentation. In addition, today's call will contain forward looking statements actual results may differ materially from those statements due to a variety of important factors such as those referenced in our discussion today and in our SEC filings, including the risk.

Ron Handily: Factors section in our Form 10-K, our forward looking statements speak only as of today and we disclaim any obligation to update them, even if our views change with that let me turn it over to Ron.

Ron Handily: Thank you Liz and good morning, everyone.

Ron Handily: Before we begin I want to acknowledge the terrible wildfires devastating parts of Los Angeles.

Ron Handily: So with all those impacted by this terrible event, including our colleagues and clients as well as the first responders working to protect the impacted communities.

Ron Handily: Okay.

Ron Handily: Turning now to our quarterly Investor presentation, our fourth quarter results represent a strong close to a strong year for state Street, we enter 2024 with a clear set of strategic priorities aimed at driving revenue growth improving our sales performance strengthening our market position and enhancing our operating model.

Ron Handily: <unk> executed well against these objectives, enabling us to serve our clients and deliver strong financial performance and continued business momentum for our shareholders.

Ron Handily: These results included both positive fee operating leverage pre tax margin expansion and higher earnings growth illustrating the power of our franchise and the effectiveness of our strategy.

Ron Handily: The foundation for our strong business performance in 2024 was late in prior years building upon the significant strategic investments, we have made in our capabilities and our client value proposition to be our clients' essential partner and lead with service excellence.

Ron Handily: Actions to position stage III to compete better and win.

Ron Handily: Turning to slide two and beginning with our financial highlights I'm, particularly pleased with our improved revenue performance full.

Ron Handily: Full year fee and total revenue increased 7% and 9% respectively.

Ron Handily: Excluding notable items fee revenue NII and total revenue each increased by a solid 6% year over year in 2024.

Ron Handily: Year over year, each revenue line contributed positively including double digit growth in management fees.

Ron Handily: Trading services and front office software and data revenues, while we also delivered a second consecutive year of record NII.

Ron Handily: Full year EPS was $8 two one as compared to $5 five eight in 2023 <unk>.

Ron Handily: Excluding notable items EPS growth was up 13% year over year pre tax margin expanded by more than 100 basis points, while full year return on average tangible common equity was a robust 19%.

Ron Handily: Turning to our strong business momentum in 2020 for our key business performance indicator, including wins clearly illustrate the effectiveness of our strategy and positioning state Street to effectively serve our clients compete better and gain share.

2024 was an important year of business growth and significantly improved sales performance, which sets us up well as we look forward to drive further fee revenue growth in 2025 and beyond.

Ron Handily: And investment services, we generated very strong AUC wins of over $2 three trillion in 2024, including $1 one trillion of wins in Q4.

Ron Handily: Full year, new servicing fee revenue wins were $377 million, including $154 million in Q4.

Ron Handily: <unk> of our sales performance in the fourth quarter was underpinned by a large strategic and multi regional win with an APAC asset owner.

Ron Handily: With the strong fourth quarter sales performance, we achieved our goal of $350 million to $400 million million.

Ron Handily: Of new servicing fee revenue wins in 2024.

Ron Handily: State Street Alpha brings together the full depth and breadth of our servicing and software solutions and is a clear competitive advantage for state Street's investment services business.

Ron Handily: Our strong full year sales performance in 2024 demonstrates the strength of this compelling value proposition.

Ron Handily: As a tangible proof point of the more than $2 three trillion of new AUC wins in 2024.

Ron Handily: Alpha accounted for approximately 50% of those wins.

Ron Handily: All told we won seven new Alpha mandates in 2024, including two new mandates in Q4, achieving our goal of six to eight new alpha clients last year.

Ron Handily: Our investment management franchise had another strong year of strategic progress with both <unk> and full year management fees achieving record levels.

Ron Handily: We continued to strategically broaden global advisors product and distribution capabilities, which has positioned the business for future growth and from which we are already realizing the early benefits of these strategic actions.

Ron Handily: We generated 146 billion of net new assets in 2024, including 64 billion in <unk>.

Ron Handily: This equates to over 3% organic AUM growth for the second year in a row well above the 2% target we laid out last year.

Ron Handily: ETF inflows were a record in 2024 with record flows in our strategically important U S low cost ETF suite as well as in the EMEA region, gaining market share in both.

Ron Handily: We also had the highest number of ETF launches and global advisors history last year and announced innovative partnerships with a number of market leaders aimed at leveraging our spider franchise to expanded investor access to new investment opportunities.

Ron Handily: In addition, global advisors made a host of key strategic investments.

Ron Handily: Most notably in investment a leading provider of integrated technology data and wealth solutions.

This investment consistent with state Street's, while services strategy will enhance our access to the independent wealth advisory and high net worth distribution channels driving future growth.

Ron Handily: Building on a record year of inflows in 2023, our cash business generated an aggregate $32 billion of full year inflows, while our institutional business also has had a positive year of inflows with U S defined contribution again.

Continuing to drive inflows with 28 billion in 2024.

Ron Handily: Turning to our markets and financing franchise, despite lower daily average FX volatility in 2020 for FX trading services generated double digit revenue growth supported by strong and growing client volumes.

Ron Handily: Turning to our balance sheet, our markets and financing franchise delivered strong loan growth and support of our clients contributed to record NII performance in 2024, and supporting fee growth and private market servicing.

Ron Handily: Our strong balance sheet position enabled us to return $2 2 billion of capital to shareholders last year, including common share repurchases and a 10% increase in our quarterly common dividend per share.

Ron Handily: As we look ahead, we remain focused on consistently returning capital to our shareholders and are targeting a payout of about 80% of earnings in 2025.

Ron Handily: Subject to market conditions and other factors.

Ron Handily: Finally, 2024 was also an important year for our transformation as we continue to focus on core operating model improvements to enhance our client and colleague experience and generate increased productivity.

Ron Handily: We made a number of key investments and operational simplification automation and technology modernization.

Ron Handily: These actions contributed to the approximately $500 million of year over year productivity savings that we achieved in 2024 in line with our target.

Ron Handily: The majority of these savings are recurring and will enable us to continue to increase our investments in alpha custody private markets and asset management distribution to drive the sales and momentum to power our next wave of growth.

Ron Handily: Further excluding notable items. These transformation efforts supported the approximately 200 basis points of both positive fee and total operating leverage in 2024, even as underlying expenses increased by 4% year over year, driven in part by higher revenue related costs.

Ron Handily: In summary, our fourth quarter results represent a strong close to a strong and important year for state Street.

Ron Handily: Good execution against a clear set of strategic priorities enabled us to support our clients better and deliver strong financial results.

Ron Handily: Our strategic actions have positioned state street to compete better and win as evidenced by the accelerating business momentum we generated from start to finish in 2024.

Ron Handily: As you know last October we announced that our CFO of eight years, Eric <unk> will be departing state Street in February.

Ron Handily: At that time, we launched a formal search process to identify a successor, which is progressing very well and as planned.

This morning, we announced that Mark heating EVP and CFO for investment services will serve as our interim CFO. Following Eric's departure next month, while our search for a permanent CFO continues.

Mark has a 30 year State Street Finance veteran who has worked in almost every area of our business across three continents as.

Ron Handily: As the executive Finance leader within our largest segment Mark has been instrumental in supporting our transformation efforts driving revenue growth initiatives and he brings deep operational expertise a partnership mindset and team building focus.

Speaker Change: Once again I want to thank Eric for his leadership and wish him well in his new role.

Speaker Change: With that let me hand, the call over to Eric who will take you through the quarter in more detail.

Speaker Change: Okay.

Eric Abu: Thank you Ron.

Eric Abu: Before I begin my review of our financial results. Let me briefly discuss some of the notable items, we recognized in the fourth quarter on the right panel of slide three.

Eric Abu: Fourth quarter notable items collectively totaled $58 million pre tax or <unk> 14, a share and were largely driven by an acceleration of expenses associated with certain prior period deferred incentive compensation awards to allow our compensation program to be more competitive with peer practices.

Eric Abu: Notable items. This quarter also included an FDIC special assessment release, and some other small items.

Eric Abu: Okay.

Eric Abu: Our fourth quarter results are the culmination of the important work we accomplished throughout 2024 and reflect broad based fee growth across the entire franchise up 13% higher NII up 10% and continued capital return.

Eric Abu: As detailed on the left panel of this slide and excluding notable items in the fourth quarter. We also achieved a pre tax margin of about 30% and an ROE of over 13% while year on year EPS growth was a robust 27%.

Eric Abu: On a full year 2024 basis and excluding notable items, we were pleased to deliver strong revenue growth of 6%.

Eric Abu: <unk> positive fee and total operating leverage of about 200 basis points each.

Eric Abu: And the pre tax margin of approximately 28% contributing to strong EPS growth of 13% and an ROE of roughly 12% for the year.

Eric Abu: Our 2024 results demonstrate the strong momentum, we're seeing across our various businesses and provide a strong step off as we move into 2025.

Eric Abu: Turning now to slide four as detailed on the left panel of this slide period, and AUC and AUR, both increased nicely year on year in the fourth quarter supported by the market tailwind and positive client flows.

Eric Abu: On the right panel of the slide we detail some of the key market indicators that impact our business.

Most of the market drivers global equity markets bond markets FX volatility and industry flows are up year on year, which had successfully monetize in the form of revenue growth this quarter.

Eric Abu: Okay.

Eric Abu: Turning to slide five we saw good momentum continuing our investment services business this quarter with strong sales and strong installations.

Eric Abu: On a year on year basis servicing fees increased 6%.

Eric Abu: Quarterly performance reflected higher average market levels, and net new business, partially offset by pricing headwinds lower client activity and a previously disclosed client transition.

Eric Abu: The impact of that previously disclosed client transition was a headwind of roughly one percentage point to year on year growth, while lower client activity, including the asset mix shift into cash was still a slight headwind to the year on year growth, though nowadays as clients put more money to work.

Eric Abu: As Ron mentioned, we were pleased with the meaningful progress we achieved in our investment services business. During 2024 with a strong performance in four Q, we comfortably met our annual servicing fee sales goal of $350 million to $400 million in 2024.

Eric Abu: In addition, our strategically important private markets business, which continues to be a key growth driver increased 15% year on year and <unk> and represents approximately 9% of full year 2020 for servicing fees.

Eric Abu: Taken together, we are encouraged by the strategic progress, we're making in our investment services business.

Eric Abu: Moving to slide six in the fourth quarter management fees increased 20% year on year to a record $576 million, primarily reflecting higher average market levels and quarterly net inflows of 64 billion.

Eric Abu: As Ron mentioned in 2024, we delivered organic AUM growth of over 3% for a second year in a row as we continue to drive incremental net inflows to the expansion of our distribution and product capabilities.

Eric Abu: Product innovation continues to be a strategically important growth driver for global advisors.

Eric Abu: In the fourth quarter, we launched three new Etfs, bringing our full year total to 24 new launches.

Eric Abu: Efforts such as these broaden our product capabilities and have contributed to the strong organic AUM growth we have achieved.

Eric Abu: So taken together we are quite pleased with the strong performance of our investment management business in the quarter, which generated a pre tax margin of approximately 32%.

Eric Abu: Turning now to slide seven fourth quarter, FX trading revenues increased 17% year on year as investor confidence and increased FX volatility drove double digit increases in client volumes across most of our trading venues.

Eric Abu: Securities Finance revenues increased 22% year on year in <unk>, primarily driven by strong Prime services performance as we put another $2 billion of risk weighted assets to work to support our clients.

Eric Abu: Agency lending volumes grew 25% year on year and <unk> as we continue to engage with our clients, even though U S equity specials activity and spreads remained muted.

Eric Abu: Moving on to software and processing fees fourth quarter revenues were up 9% year on year, mainly driven by higher front office software and data revenue associated with CRD, which is described in greater detail on the following slide.

Eric Abu: Turning to slide eight now front office software revenues increased 10% year on year and for Q with our software enabled and professional services revenues up a robust 25%.

Eric Abu: We continue to have very solid momentum in the front office as evidenced by the record quarterly new bookings of $48 million in the quarter and over $70 million for the year.

Ron Handily: As Ron noted, we reported two additional alpha mandate wins in the quarter, bringing our full year wins to seven <unk>.

Ron Handily: Importantly, all seven of these mandates either included the back office as a component of mandate or built upon an existing back office relationships consistent with our goal of prioritizing our sales mix towards faster time to revenue products.

Ron Handily: State Street Alpha continues to be an important differentiator for our business and in 2020 for a substantial portion of servicing fee and aea wins were driven by alpha.

Ron Handily: Moving to slide nine <unk>, NII increased 10% year on year to $749 million as higher investment portfolio yields and higher loan growth more than offset continued deposit rotation.

Ron Handily: On a sequential basis NII increased 4%, primarily driven by higher deposit balances with average noninterest bearing deposits, increasing 2 billion as well as healthy loan growth.

Ron Handily: Good.

Ron Handily: As detailed on the right panel of this slide we benefit benefited from very strong average deposit growth. This quarter as we saw more cash in the banking system and higher assets under custody as well as typical fourth quarter seasonality.

Ron Handily: In addition, our continued focus on client engagement also helped to contribute to this strong growth consistent with prior quarters.

Ron Handily: Average total deposits were up 15% year on year, and 5% quarter on quarter and <unk> marked our fifth consecutive quarter of sequential growth in average deposits.

Ron Handily: Our strong deposit performance together with our targeted management actions throughout 2024 were the principal drivers of the improvement in our NII performance relative to our expectations at the beginning of last year.

Ron Handily: I'd also note that we modestly shortened our investment portfolio duration in the early part of the quarter in anticipation of rising long and rates and this mitigated the OCI impact on our capital, which I'll come back to shortly.

Ron Handily: Turning to slide 10, as we calibrated our expense base to the more constructive revenue environment in the fourth quarter, we generated positive operating leverage of four percentage points. Excluding notable items.

Ron Handily: And in <unk> revenue related costs, including performance based incentive compensation represented three percentage points of the 8%.

8% year on year increase in total expenses, excluding notable items employee benefits contributed to another percentage point.

Ron Handily: As we continue to invest in our business for future growth, we remain intensely focused on maintaining expense discipline.

Ron Handily: Outside of performance based incentive compensation and employee benefits expenses, our fourth quarter compensation expense was roughly flat year over year.

And.

Ron Handily: As detailed on the bottom left of the slide our pro forma head count actually fell by an additional 4% year on year as we continue continued to benefit from our ongoing organizational simplification and process improvement initiatives.

Ron Handily: We continue to drive sustained productivity improvement to the transformation of our operating model and other savings initiatives and <unk> totaling approximately 500 million of productivity savings in 2024, thereby meeting the target we set at the beginning of the year.

Ron Handily: This allowed us to self fund roughly $375 million in incremental business and technology investments, including those that will drive further revenue growth.

Ron Handily: Okay.

Ron Handily: Moving to slide 11, our capital levels remain well above regulatory minimums, allowing us to put our balance sheet to work in support of our clients.

Ron Handily: As of quarter end, our standardized set one ratio of 10, 9% was down approximately 70 basis points quarter on quarter.

Ron Handily: <unk> increased roughly $5 billion sequentially largely due to the impact of the appreciating U S dollar on our FX trading business.

Ron Handily: In addition, we saw good volumes and utilization in our lending and Prime services businesses, which also contributed to the <unk> increase.

Ron Handily: We were pleased to deliver another quarter of increased capital return with common share repurchases of $550 million up from $450 million in the prior quarter.

Ron Handily: Part of this came from our strong earnings generation and part from our active OCI management, which I mentioned earlier.

Ron Handily: In total we returned $770 million of capital to our shareholders in the fourth quarter equivalent to a total payout ratio of 106%.

Ron Handily: And for the full year, we returned $2 2 billion of capital to shareholders for a total payout ratio of 87%.

Ron Handily: Yeah.

Ron Handily: Turning to slide 12, let me first share some of the macro assumptions underlying our current view for the full year.

Ron Handily: We expect global equity markets to be up 5% point to point in 2025.

Ron Handily: Which equates to a daily average being up approximately 8% year on year.

Ron Handily: Our interest rate outlook for 2025 broadly aligns the forward curve as of the end of 'twenty.

Ron Handily: <unk> 2024, which I would note continues to move.

In addition, we expect to see a modest increase in volatility.

Mark Keating: With that as an economic backdrop I'd like to turn the call over to Mark to walk through expectations for 2025.

Mark Keating: Thank you, Eric and Ron for the introduction and good morning, everyone.

Mark Keating: A pleasure to be on the call today I am excited by the opportunity ahead of US at State Street as we aim to build upon the strong results we achieved in 2024.

Mark Keating: Now turning back to slide 12.

Based on the macro assumptions that Eric laid out for the full year and excluding notable items. We currently expect fee revenue will be up approximately 3% to 5%.

Mark Keating: This includes a headwind of nearly one percentage point to servicing fee revenue.

Mark Keating: The previously disclosed client transition weighted towards the second half of the year.

Mark Keating: Turning to NII based on our current assumptions, we expect NII to be roughly flat for the full year with a range from up low single digits to down by a similar amount in percentage terms.

Mark Keating: Of course, the path of NII is subject to global monetary policy and deposit mix and levels, which are difficult to predict.

Mark Keating: We currently expect that the 2025 expense growth rate will moderate relative to 2024 with expenses excluding notable items.

Mark Keating: <unk> to be up approximately 2% to 3%.

Mark Keating: Importantly, we expect continued productivity savings will enable us to once again self fund incremental growth investments in our business this year.

Mark Keating: One final point with the outlook for a stronger U S. Dollar we expect currency translation to have an unfavorable impact on fee revenues, but a favorable impact on expenses worth roughly one percentage point each on fee revenues and expenses.

Mark Keating: So stepping back given our positive outlook for fee revenue growth together with continued expense discipline. We currently expect to achieve another year of positive fee operating leverage excluding notable items.

Mark Keating: I would also note that we see a path to delivering positive total operating leverage excluding notable items in 2025 contingent mainly upon NII coming in roughly flat or slightly better which is market dependent and we will have more to say as we move through the year.

Mark Keating: Lastly, we expect an effective tax rate at or just above 22% for the full year.

Eric Abu: And with that let me hand, the call back to Eric.

Eric Abu: Thank you Mark.

Speaker Change: As this is my final earnings call I want to take a moment once again to say how much I've enjoyed my eight years at state Street and that it's been a privilege to work with Ron the leadership team and the thousands of fellow employees that I've had the pleasure of collaborating with.

Speaker Change: At this point I'm, leaving things in the good hands of Mark and the whole finance team.

Speaker Change: And finally I'd like to thank all of our analysts and shareholders I've appreciated your engagement your candor and your support over the past eight years.

Ron Handily: And with that let me hand, the call back to Ron.

Ron Handily: Thank you Eric.

Ron Handily: As we look ahead to 2025 Europe intensely focus on a set of strategic priorities to deliver for our clients shareholders and people.

Ron Handily: These are one driving revenue growth by sustaining the solid broad based growth and momentum we're seeing across our businesses to further advancing operational excellence to deliver enhanced productivity and client service.

Ron Handily: And three continuing to develop an even higher performance culture employee experience and destination for talent to.

Ron Handily: To conclude we are encouraged by the strategic and financial progress. We made in 2024, and we look forward to continuing that progress as we move into 2025.

Speaker Change: Operator, we can now open the call for questions.

Ron Handily: Okay.

Speaker Change: Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure. Your mute function is turned off John while you're staying up to reach our equipment again. Please press star one to ask a question and no pause for just a moment to allow everyone.

Speaker Change: No question to signal for questions.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: Our first question comes from the line of Alex <unk> from Goldman Sachs. Your line is open.

Speaker Change: Hey, good morning, everybody. Thank you for the question I was hoping you could start with a question around servicing fee growth outlook.

Speaker Change: Your slide implies that you expect to see some growth there in 2025.

Speaker Change: Given favorable market and organic growth of favorable Mark Thornton makes total sense.

Speaker Change: Pretty pretty reasonable inorganic growth sales feels right as well give it given the momentum you're seeing in the business but.

Speaker Change: Maybe what are some of the other assumptions in terms of client retention or attrition rates pricing has always been a factor as well so maybe just a little more granularity there on that.

Speaker Change: As well as what are your sales growth expectations for 2025, one in servicing.

Mark Keating: Thanks, Alex This is mark Keating.

Speaker Change: Take that nice to meet you and look forward to working with you.

Speaker Change: When I think about the momentum in our servicing fee business I think it's important maybe if we go back a little bit and think through where we've come from because it's really has been a multiple year journey and how we're building our servicing fee business.

Speaker Change: About a year and a half ago, we laid out a plan on how we're going to power our sustainable growth in our servicing fee business at.

Speaker Change: At that point, we knew we needed to perform better in <unk>.

Speaker Change: Our.

Speaker Change: Core custody and servicing business, our near in history at that point in time, if you recall and I think we've talked about this a couple of times, we had been doing sales of approximately $140 million to $160 million a year in 2019 and 2020.

Speaker Change: We then took a step up in 2021, and 2022 to around $250 million to $260 million and at that point, we set a goal for ourselves which is the target that we've been talking to you in that you know now which is around the $350 million to $400 million range. We did 300 last year and today, we're announcing that we did.

Speaker Change: Nearly $380 million and it's important to note two of that $380 million about 85% of that is related to the back office, which as you all know brings.

Speaker Change: NII brings FX bring securities financing a lot of other products that we can cross sell.

When you think about it in that way as I just laid out we've really increased our servicing fee sales about 45% from 2022 and over 250% from 2020, and we did that by restructuring our sales teams. Our RM team is realigning incentives focusing on service excellence and importantly, as we've talked about investing in our business.

Speaker Change: Products and services features and functionality Eric mentioned our growth in private markets. I think is a good example of that and so we expect that to be the range right now for our business and as we target.

Speaker Change: That the team knows that is the level that we need to achieve in order to grow the business and when you talk about things like revenue retention. You mentioned, we tend to talk about our business around 97%. That's a target we've set for ourselves Thats consistent and then also we tend to target about 2% of fee compression which is.

Speaker Change: Been consistent so that level of $3 50 to 400 is in the equation that we need in order to provide sustainable growth.

Speaker Change: One other thing I would one.

Speaker Change: One other way to think about the sustainability of our fee revenue growth of servicing fees is to also take a look at the backlog that we have been now disclosing over the last several quarters, which is roughly $350 million at the end of 2024.

Speaker Change: If you go back and we've disclosed this year that figure was roughly $200 million.

Speaker Change: At the end of Q3 2023, so that's an increase of nearly 75%, which I think is another good proof point because that represents future revenue to come on our platform and we expect that that needs to be in that range. As we go forward to power sustainable growth. So those are the things that I think about in terms of gauging our ability to continue to drive.

Speaker Change: Our fee revenue growth.

We laid out a plan we reported on that plan.

Speaker Change: We continue to measure ourselves against it and we are delivering on it so hopefully thats a helpful. Some helpful context.

Ron Handily: Yes, now thats, great very helpful framework I appreciate that Yeah go ahead Ron.

Ron Handily: Alex what I would add to what Mark said is kind of why do we believe that this is sustainable there were three things that enabled mark described.

Speaker Change: One was an intense focus on improving service quality, which had a lot to do with the technology investments that we were starting to make back then and now.

Ron Handily: Come to fruition, we've got a few more that we want to make.

Ron Handily: <unk> was enhancing capabilities in areas such as core cost three private markets.

Ron Handily: As well as alpha broadly and we've talked about alpha being a back office and servicing fee gathering machine and then thirdly was just in our raw sales capabilities. There has been a significant.

Ron Handily: Buildup of those capabilities change out of some people. So that stuff is all in place and therefore give a whole lot of confidence as we look forward.

Speaker Change: Great. That's helpful. Thank you both.

Speaker Change: My follow up is around capital management, and then Ron I heard you say, 80% or 80% plus for 2025 payout.

Speaker Change: Given the fact that tier one leverage I think slipped a little bit at the end of the quarter given the high balance sheet and the client activity component also seems to be a bit more.

Speaker Change:

Speaker Change: So in aggregate for the year, 80% return.

Speaker Change: To our shareholders, a combination of dividends and buybacks.

Speaker Change: There is a seasonality to this.

Speaker Change: Saw what it was last year and probably you should expect to see something similar this year or so starting out modestly and then continuing to progress.

Okay, great. Thanks, Mark Thanks, Dmitry as well and Eric Best of luck all best wishes.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Okay.