Q1 2025 Bank of New York Mellon Corp Earnings Call
Please stand by.
Speaker Change: I will now turn the call over to Mary Smirks being why head of Investor Relations. Please go ahead.
Mary Smirks: Thank you operator, good morning, everyone and welcome to our first quarter earnings call.
Speaker Change: I'm joined by Robin, Vince, our President and Chief Executive Officer, and Diamond Mcdonald, Our Chief Financial Officer.
Speaker Change: As always we will reference our quarterly update presentation, which can be found on the investor Relations page of all upside at being why dotcom.
Speaker Change: And note that our remarks will contain forward looking statements and non-GAAP measures actual results may differ materially from those projected in the forward looking statements.
Speaker Change: Information about these statements and non-GAAP measures is available in the earnings press release financial supplement and quarterly update presentation, all of which can be found on the investor Relations page of our website.
Speaker Change: Looking statements made on this call speak only as of today April 11, 2025, and will not be updated with that I will turn it over to Robyn.
Thanks, Maurice Good morning, everyone. Thank you for joining us I'd like to start with a few broader comments before them. It takes you through the financial results for the quarter.
Speaker Change: Reflecting on the operating environment, while there were clear signs of optimism at the beginning of the year. We have now seen a rapid and significant reversal of sentiment driven by uncertainty about trade in fiscal policies, which added to existing tail risks, including a variety of geopolitical tensions in comps.
Speaker Change: Alex.
Alex: Last week's tariff announcements, we're clearly part of our broader strategy and efforts to research trade relations between the U S and the rest of the world.
Alex: This is an attempt at a very fundamental change my last week's announcements provided an initial baseline we should expect that negotiations will take time and it is likely that a clear final picture out won't be reached for a while I have you.
Alex: You reemphasize by Wednesday's news on a three month pause in the market volatility we saw again yesterday.
Alex: The read through this uncertainty into both capital markets and the real economy creates elevated risks in the near and medium term.
In times like this being positioned conservatively with balance sheet strength and operational resilience allows us to remain focused on serving our clients and continuing to execute on the ongoing transformation of being why enjoy more platforms oriented company.
Alex: Turning to the quarter and referring to page two of the quarterly update presentation. We delivered a very solid financial performance in the first quarter earnings per share of a dollar in 58 cents were up 26% year over year on a reported basis and up 22%.
Alex: Excluding notable items.
Alex: Revenue of $4 $8 billion was up 6% year over year.
Alex: Expenses around the company remained well controlled up 2% year over year.
Alex: Taken together, we delivered another quarter of meaningful positive operating leverage 346 basis points on a reported basis and 261 basis points. Excluding notable items, our pretax margin improved to 32% and a return on tangible come.
Alex: <unk> equity improved to 24%.
Alex: As I've noted before the N Y plays a central role in global markets powering our clients with platforms across custody securities settlement collateral payments trading wealth investments and more you know about 100 markets around the world.
Alex: Notwithstanding the current environment, we continue to see a meaningful opportunity for my work to better align ourselves as an integrated financial services platforms company.
Alex: Our transformation strategy includes both eight new commercial coverage approach.
Alex: And our strategic platforms operating model, which together are designed to enhance the client experience and enable greater agility.
Alex: The execution of this strategy is a significant exercise in change management, which requires hard work and takes time, but our teams around the world have embraced the opportunity and we are making progress.
Alex: This past quarter marked the first anniversary since we started the phase to transition into our new operating model and just one year in we have more than half of the N Y working in this new way.
Alex: Already we are starting to see how this transformation can drive topline growth with greater scalability.
Alex: For instance over the past year, our trade finance team is processing trade loans, 60% Foster our enterprise Onboarding team is also working foster while seeing a more than 30% increase in onboarding volume and our payments team has tripled the number of currencies we offer our.
Alex: Bank clients to support consumer activity.
Alex: Complementing our platform work and building on the momentum with which we entered the year, our new commercial coverage model is proving increasingly effective in enabling more integrated client solutions from across the entire company.
Alex: The first three months of the year represented our strongest sales quarter on record the number of clients, who bought from three or more lines of business has increased by 40% over the past two years and we continue to see outsized sales growth with those multi line of business clients.
Alex: <unk>.
Alex: And just one example, a large privately held multinational company, where the N Y has acted as custodian for the pension plan and corporate cash portfolio, while we provide corporate trust and debt capital market services, and we provide wealth management to the company's senior executives, we recently expanded.
Alex: Ended our relationship to also include supporting the company's collateral needs and managing short term cash through our liquidity direct platform.
Alex: As I've said before effectively cross selling the breadth of our platforms in this way and its scale represents the single most compelling growth opportunity for our company.
Alex: As an institution with a long history of innovation, we have not forgotten that delivering new solutions is another important way for us to be more for our clients and to drive topline growth. We recently welcomed Caroline Weinberg to the company as a member of the Executive Committee. She is now.
Alex: Our chief product and innovation officer.
Alex: Many people across our organization are focused on innovating new capabilities instant payments digital assets wealth Tech private markets collateral liquidity all examples of domains, where we are innovating.
Alex: The addition of Carolyn in this new role will increase our leadership bandwidth to drive innovative new commercial opportunities and find new ways to leverage our platforms and data for client solutions.
Alex: While on the topic of innovation I also want to take a moment to specifically call out the opportunity we see from AI at the N y.
Alex: We've been taking a platform based approach to AI capabilities building and deploying solutions at scale with resilient responsible guardrails throughout we believed that our AI platform is going to be an important advantage for us as a large language modal agnostic design leveraging front.
Alex: Chair models from multiple leading providers.
Alex: To that end in the first quarter, we announced a multiyear agreement with open AI getting being why access to cutting edge tools and working with open AI to advance AI use cases in financial services.
Alex: Over 80% of our employees have completed the prerequisite training access Elisa, our AI platform and more than 8000 of them are already experimenting with personal AI agents honing the skills they need to use AI effectively.
Alex: To date, we have deployed more than 40 AI solutions into production with a significant additional lumber at various stages of building and testing.
Alex: Collectively we expect these to drive productivity gains improved risk management and to provide meaningful leverage to our people in the future.
Alex: We strongly believe that by empowering our people with AI to do what we do better every day, we will harness great benefits over the coming years.
Alex: Before I hand, the call over to done it I want to close where I began while the outlook for the operating environment has become more uncertain. We are prepared for a wide range of macroeconomic and market scenarios.
Speaker Change: Wrong going work to operate being why is a more platforms oriented company combined with our highly capitalized liquid and lower credit risk balance sheet positions us to manage dynamically and act as a source of strength as we support our clients in navigating the current environment.
Speaker Change: I'd like to thank our people around the world for bringing intensity and excellence to drive us forward as one being why.
Speaker Change: And with that over to you done it.
Done: Thank you Robin and good morning, everyone.
Speaker Change: I'm, starting with our consolidated financial results for the quarter on page three of the presentation.
Speaker Change: Total revenue of $4 $8 billion was up 6% year over year and excluding notable items total revenue was up 5%.
Speaker Change: Fee revenue was up 3%.
Speaker Change: That included 6% growth in investment services fees, and our security services and marketing, while it services segments, driven by net new business and higher market values.
Speaker Change: Investment management and performance fees were down 5% driven by the mix of AUM flows and then adjustments for certain rebates, partially offset by higher market values.
Speaker Change: Well not on the page I would note that firm wide AUC, a $53 one trillion were up 9% year over year, reflecting client inflows higher market values and net new business.
And the assets under management up two trillion dollars were flat year over year as higher market values were offset by cumulative net outflows.
Speaker Change: Foreign exchange revenue was up 3% year over year, driven by higher spreads on the back of higher volatility.
Speaker Change: Investments and other revenue was $230 million, which included a fortune millions of water disposal gain and notable item in the quarter.
Speaker Change: Net interest income was up 11% year over year, driven by the reinvestment of a maturing investment securities at higher yields partially offset by changes in deposit mix.
Speaker Change: Provision for credit losses was $18 million in the quarter, reflecting reserve increases relating to commercial real estate exposure.
Speaker Change: Expenses of $3 $3 billion were up 2% year over year, driven by higher investments and employee merit increases partially offset by efficiency savings.
Speaker Change: Taken together, we reported earnings per share of $1 50, as both our reporters and on an operating basis.
Speaker Change: Excluding the impact of notable items earnings per share were up 22% year over year.
Speaker Change: Our pre tax margin was 32% and our return on tangible common equity was 24% in the quarter.
Speaker Change: Turning to capital and liquidity on page four.
Speaker Change: Our tier one leverage ratio for the quarter was six 2%.
Speaker Change: The sequential increase reflects capsule generated through earnings preferred stock issuance and improved accumulated other comprehensive income partially offset by caps of distributions through common stock repurchases and dividends.
Speaker Change: Our CET one ratio at the end of the quarter was 11, 5%.
Speaker Change: The sequential increase reflects the before mentioned increasing capsule, partially offset by higher risk weighted assets.
Speaker Change: Over the course of the first quarter, we returned approximately $1 $1 billion of capital to our common shareholders.
Speaker Change: Presenting a 95% total payout ratio of ear two days.
Speaker Change: With regards to liquidity the consolidated liquidity coverage ratio was 116%.
Speaker Change: And the consolidated net stable funding ratio was 132%.
Speaker Change: Next net interest income and balance sheet trends on page five.
Speaker Change: Net interest income of $1 $2 billion was up 11% year over year and down 3% quarter over quarter.
Speaker Change: The sequential decrease reflects changes in balance sheet size and mix, partially offset by the continued reinvestment of maturing investment securities at higher yields.
Speaker Change: Average interest, earning assets decreased by 1% sequentially.
Speaker Change: <unk> lower cash and reverse repo balances.
Speaker Change: Partially offset by higher investment securities and loan balances.
Speaker Change: Average deposit balances also decreased by 1% sequentially, reflecting lower noninterest bearing balances compared to the seasonally strong fourth quarter.
Speaker Change: Average interest bearing deposit balances remained flat.
Speaker Change: Turning to our business segments, starting on page six.
Securities Services reported total revenue of $2 $3 billion up 8% year over year.
Speaker Change: Total investment services fees were up 4% year over year.
Speaker Change: In asset servicing investment services fees grew by 5%, reflecting higher market values and net new business.
Speaker Change: And in issuer services investment services fees were up 2% driven by net new business in corporate Trust.
Speaker Change: And this segment foreign exchange revenue was up 10% year over year, driven by higher spreads on the back of higher volatility.
Speaker Change: Investments and other revenue of 100 and fortune millions of dollars in the quarter included a $14 million disposal gain that I mentioned earlier.
Speaker Change: Actual interest income for the segment was up 8% year over year.
Speaker Change: Segment expenses of $1 $6 billion were up 3% year over year, driven by higher investments revenue relationship expenses and employee merit increases partially offset by efficiency savings.
Speaker Change: Securities Services reported pretax income of $708 million up 20% year over year, and a pretax margin of 31%.
Speaker Change: Onto marketing wealth services on page seven.
Speaker Change: And our marks are whilst surfaces segment, we reported total revenue of $1 $7 billion up 11% year over year.
Speaker Change: Total investment services fees were up 8% year over year.
Speaker Change: In Pershing investment services fees were up 4% driven by higher market values and net new business.
Speaker Change: Net new assets were $11 billion in the quarter and we started off the year with a meaningful revenue from Cambridge investment research.
Speaker Change: A longtime client and to growing independent firm.
Speaker Change: And clearance and collateral management investment services fees were up 10% driven by broad based growth in clearance volumes and collateral balances.
Speaker Change: And in Treasury services investment services fees were up 14% driven by net new business.
Speaker Change: Net interest income for the segment overall was up 17% year over year.
Speaker Change: Segment expenses of $866 million were up 4% year over year, driven by higher investments and employee merit increases partially offset by efficiency savings.
Speaker Change: Taken together, our marks and while services segments reported pretax income of $816 million up 20% year over year, and a pretax margin of 48%.
Speaker Change: Turning to investments in wealth management on page eight.
Speaker Change: Our investments in wealth management segments reported total revenue of $779 million down 8% year over year.
Speaker Change: Investment management fees were down 4% year over year, driven by the mix of AUM flows and the adjustment for certain rebates, partially offset by higher market values.
Speaker Change: Segment expenses of $714 million were down 4% year over year, driven by lower revenue related expenses and efficiency savings, partially offset by higher investments.
Speaker Change: Investments in wealth management reported pretax income of $63 million down 41% year over year, and a pretax margin of 8%.
Speaker Change: As I've described earlier assets under management of two trillion dollars were flat year over year.
Speaker Change: In the first quarter, we saw $18 billion of net outflows driven by index cash equity and multi asset strategies, partially offset by net inflows into fixed income and LTI strategies.
Speaker Change: Wealth management client assets of $327 billion increased by 6% year over year, driven by higher market values and cumulative net inflows.
Speaker Change: Page nine shows the results of the other segments.
Speaker Change: I'll just note that in this segments to sequential improvements in both revenue and expenses reflects the absence of net losses on sales of securities recorded in the fourth quarter as well as lower severance expense in the first quarter.
Speaker Change: So as with a few comments on the financial guidance for 2025 that we provided on our earnings call in January.
Speaker Change: Well I was just scared that the outlook for the operating environment has become more uncertain, our financial guidance and what is our determination to drive positive operational leverage and a wide range of scenarios remains unchanged.
Speaker Change: That means we continue to expect full year 2025, NII to be up mid single digit percentage points year over year.
Speaker Change: We continue to expect some fee revenue growth of course market dependent.
Speaker Change: And we continue to expect approximately 1% to 2% year over year growth in expenses, excluding notable items.
Speaker Change: We also continue to expect our effective tax rate for the full year 2025 to be in the 22% to 23% range.
Speaker Change: Considering our 20% tax rate in the first quarter that means approximately 23 to 24 for each of the remaining three quarters of the year.
Speaker Change: And we continue to expect to return approximately 100% plus or minus of 2025 earnings over the course of the year.
Speaker Change: I'll repeat what I said in January we continuously manage the pace of our buybacks, considering macroeconomic and interest rate environment balance sheet growth and many other factors with a conservative bias.
Speaker Change: To wrap up <unk>.
<unk> posted another set of solid results in the first quarter, which demonstrates our consistent execution and delivery.
Speaker Change: On the back of our strong balance sheet, we're focused on supporting our times and navigating the crosscurrents if this uncertain operating environment.
Speaker Change: All the while continuing to drive is unlocking the opportunity embedded in our company.
Speaker Change: With that operator can you. Please open the line for Q&A.
Speaker Change: Thank you.
Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad. As a reminder, we ask that you. Please limit yourself to one question and one related follow up question.
Speaker Change: Our first question will come from Ken Houston with Autonomous research.
Speaker Change: Hi, Robin Derek good morning.
Speaker Change: Okay.
Speaker Change: Another really good quarter in terms of the NII generation and a good deposits I know you guys have talked about how deposit stability is important to NII generation I know, it's early in the year and we have all of this uncertainty obviously, a better start than the run rate guide wouldn't what what would imply but just wondering just what do you think about just the world.
Speaker Change: Deposits do you see any benefits in an uncertain world in terms of flows flight to safety and just how we should think about some of the moving parts going forward. Thanks.
Speaker Change: Thanks for the question look Q1 as it relates to deposits Ah was right in line with our expectations are in terms of balance and mix shift.
Speaker Change: Q4 is seasonally strong quarter for us as it relates to overall balances. So we saw some of that moderation in Q1 now with the elevated uncertainty and volatility in the markets over the last couple of weeks, we have seen a little pickup in deposits overall, but not in a meaningful way that we would have say so we would have seen.
Speaker Change: Two years ago in the regional bank crisis. So.
Speaker Change: We haven't yet seen that kind of portion of the storm flight to quality, but you know people that know what the strength of our balance sheet and the strength of our liquidity and capital. So we have seen a little bit of a tick up but not in a way that we saw two years ago.
Speaker Change: Okay. So we'll just see if that holds up and.
Speaker Change: Go from there.
Speaker Change: Bigger picture about just the environment. We're in you have a lot of different businesses.
Speaker Change: This is the type of environment, where we see a lot of that.
Speaker Change: Activity potential I guess.
Speaker Change: It was notable to see FX, a little softer, but I was just wondering how we should how do you guys see this world in terms of just businesses that either get more active or potentially less active based on this cal.
Speaker Change: How clients Act and where you expect to see kind of the money flows.
Speaker Change: As you can think about how past cycles.
Speaker Change: What I'd be interested to this one.
Ken: Yeah, Ken I'll take that one so.
Ken: I think it's fair to see the phases of these types of events is sort of split it into two so there's one which tends to be a little bit more frenzied activity in the marketplace. That's what we've been seeing over the course of the past 10 days or so in terms of activity and so that does give <unk>.
Ken: Rice to higher volumes, and we're seeing that across our platforms for sure now we're not a huge trading firm like some others out there, but we see it in terms of high counts on clearing volumes in terms of activity on liquidity platforms collateral activity, all the places where you'd expect it to be what we're already capturing the fact that.
Ken: Market volumes are up.
Speaker Change: And to <unk> point earlier on about liquidity. The reason why we probably haven't seen a big flight into us at this point is because a lot of the activity has been delevering by people who've been raising cash to pay back lines not raising cash just have more dry powder on the sidelines that hasn't yet been as much a long.
Speaker Change: Only liquidation, which tends to raise cash and that cash often ends up on our balance sheet. So it's sort of a little bit of a phasing thing and then what what can happen and we'll have to see if that does happen, but as things calm down.
Speaker Change: Some point it causes Ceos and leadership teams to reflect on how do they want us to think about the strategic consequences for that business and that's where our rentable scale on our platforms and the fact that we have all of the <unk>.
Speaker Change: Brett broad capabilities built on this sort of a rock solid foundation. That's what allows us to then capture potential follow on opportunities where people say you know what there are things I used to do for myself that I would now rather someone like being why does for me using that platform. Since that's how I'd think about the world right now and Ken just to clarify you.
Speaker Change: <unk> softness in FX is up 3% year over year.
Speaker Change: It kind of you know the numbers we presented there are the firm wide numbers. When you kind of go underneath the hood on that and talk specifically about our markets business that was a solid year over year uptick, whereas on the other side, our corporate Treasury Department are doing FX placements and the other side of that is is a reflected in NII.
Speaker Change: Youre seeing a firm wide view there as opposed to a specific markets. If you and the market's view for us year over year was solid.
Speaker Change: Got it thank you.
Speaker Change: And the next question will come from Alex Blaustein with Goldman Sachs.
Alex Blaustein: Hey, good morning. Thank you for the question as well, maybe starting with a bit of a strategic question. I'll also just kind of thinking about the position of the bank, obviously very strong capital base lots of liquidity at times of uncertainty and dislocation there might be some interesting inorganic opportunities that may come up time and again.
Alex Blaustein: How are you thinking about that maybe its too early but just wanted to get your sense for appetite for M&A, if something compelling comes along and if there are areas of particular interest were inorganic growth might make sense.
Speaker Change: Yeah. Thanks, Alex I mean look what we're carefully looking at the opportunities that's not a spot moment in time thing its just as sort of the rhythm as this management team has been driving through things over the course of the past two and a half years, we think we've got a lot of things.
Speaker Change: Under control in terms of running the company better you can see us driving now on the sales side you can see is driving the execution platforms. You can see the innovation and so we're always going to be out there thinking about what could be additive to our platform. We just think it's the responsible thing to do for shareholders now we're gonna what Hasnt changed is <unk>.
Maintaining great discipline in an acquisition would need to check all of the boxes of like clear alignment with all priorities strong cultural fit and I underline that because that is important to us and attractive financial returns, obviously, but youre right. You know at times like this can present opportunities and we'll be thoughtful about it and I feel that we've we've we've cracked.
Speaker Change: Some of this with all at your acquisition that wasn't huge but nonetheless, it was a sort of a small to medium size thing. It was a capabilities by but we're going through all of the training processes internally to understand how to look at and then and then purchase and then integrate something like that.
Speaker Change: First class way and then the final thing I'll say is platforms operating model is quite additive to our capability over time to be able to I think be a better integrates out because it creates the road map for us internally on how to take things and plugged them in better.
Speaker Change: Got you. Thanks, and then my follow up is actually double clicking into your earlier response to Ken's question around deposits.
Speaker Change: So up a little not a ton so far in April can you comment also on the mix between interest bearing and noninterest bearing in April and then ultimately as you sort of think about a more normalized percentage of noninterest bearing deposits. You guys are at 17% I think now even pre COVID-19, so kind of before the spike in industry wide liquidity.
Speaker Change: We're running north of 20, how do you think about that sort of run rate mix going forward and more sort of uncertain environment and and and if in fact, you enter in a recession, where would that likely look like.
Speaker Change: So I guess there are a lot of questions in that follow up question Alex bus.
Speaker Change:
Speaker Change: To think of think about the NII for a second and the reconfirmation.
Speaker Change: The guide of 5%, which we feel pretty good about I think it goes back to something that we've discussed on previous calls which is fast.
Speaker Change: Very very strong joined a partnership between the C I O the treasurer and.
Speaker Change: Our deposit desk and a lot of the work that drives our confidence around NII for this year are the actions that we took last summer over after Jackson hole, where are we kind of immunized the firm for 2025, NII. So a lot of work on the asset side.
Speaker Change: In terms of N B's as it relates to like as rates have trended higher you would expect a reasonable amount of cash sorting to go on people optimize for years, we don't lead with deposits clients come to us to.
Speaker Change: Do other activities in the firm and with that comes a deposit switching then turn into operational deposits. So in terms of the overall guide of like the two ways you one number which we have seen tick up a little bit this quarter.
Speaker Change: And it is a seasonal business Q4 is our strongest quarter for deposits. Typically then Q1 is a little bit less than that Q3 is our is our seasonal low so theres nothing that we see kind of changing our view of the overall deposit mix for the balance of the year, which kind of gives us a lot of confidence.
Speaker Change: Around the guide that we gave you.
Speaker Change: Great Alright, Thank you guys.
Speaker Change: Okay.
Mike Mayo: And our next question will come from Mike Mayo with Wells Fargo Securities.
Speaker Change: Okay.
Speaker Change: I guess my first question is.
No. Good deed goes unpunished. So I do note your revenues are up 5% year over year in your head Count's down 2%, but.
Speaker Change: So you raised the bar for yourself, but did note that the non comp expenses are growing mid single digits year over year I'm wondering how much that might continue and also the impact on revenues from the decline of noninterest bearing deposits is that even though or is that something that just.
Speaker Change: A result of the macro environment. Thanks.
Mike Mayo: So look Mike I think our ability to deliver positive operating leverage through the cycle is the north star and I think this is the fifth quarter that we've delivered consistent positive operating leverage.
Mike Mayo: And hopefully you are beginning to give us credit for being a financially disciplined well run company, where we have got our expenses under control over the last couple of years, while at the same time, making investments in the strategies that are powering our topline growth and our efficiency.
Mike Mayo: And so you're beginning to see those investments paying off and I'm pleased that you highlighted the head count number which just generally means that we're able to do more with less and are digitally empowered way and as Robin mentioned in his prepared remarks, we still haven't really unlock.
Robin: Locked the power of AI. So when you think about where AI is going to be on our platform as a financial platform company, where you say, 20% of the world's investable assets flowing through our pipes, when we kind of get the AI strategy.
Mike Mayo: Integrated into the strategy of the firm, we see a lot of dividends coming into us.
Robin: And then.
Robin: Non interest bearing deposit question, which might not be answerable, but just any thoughts there.
Robin: Yeah.
Robin: Noninterest bearing deposits I think are roughly in line with where we we don't really expect them to go meaningfully higher are meaningfully lower from where they are now which reinforces our guides like so NII is made up of what we've done on the asset size and what we pick the forecast is going to be.
Robin: In terms of the mix in the overall level of deposits at the end of the year. We ran about 35 different scenarios, which at the same thing at Q1, we feel we've kind of cut the tails off the risk of what we believe the reasonable outcome of NII is going to be and to give you a little bit of an indication like you know up down if the fed.
Robin: Where to cut rates by 50 basis points Tomorrow.
Robin: Wouldn't really impact how we think about NII for the balance of the year.
Speaker Change: That's great and my second question is for Robyn.
Speaker Change: Yes, I saw your you on CNBC and you talked about the hard data is good but the software is bad and so <unk> one way or another.
Speaker Change: Mike.
Speaker Change: You will also but.
Speaker Change: How long can this go on before.
Speaker Change: Thanks Chip like the hard data goes to soft data soft data goes back to our data.
Speaker Change: Do we have one mine.
Speaker Change: Our country and economy, one month three months six months 12 months kind of what's what's your sense, there and what is the risk of being an international company and being a services company and potential retaliation. There I don't know, how you think or frame that but I'll take any thoughts you have thanks.
Speaker Change: Sure I Love that you asked an answerable question, but nonetheless.
Speaker Change: I'll give them both well.
Speaker Change: Okay. So first of all yeah. There at this point about and we saw it again today with the confidence taking a little bit of another bj's in the survey data that was released this morning. It is at its going down and it's not surprising because if you're a CEO you've got an uncertain environment potentially out over the horizon. It doesn't help you thinking.
Speaker Change: Longer term commitments, including building factories, including making commitments to sort of new initiatives or whatever the case may be and if youre a consumer the the fair of oil prices going to go up whats it going to mean, obviously, there's also a jobs angle on all of this as well could be economy chip into a recession, there's real legit question.
Speaker Change: Is that a consumer would have and thats going to be a little bit of a dampener of confidence. So I think there are plenty of reasons to think that that will continue to be low and my point when I talked about this before is that the two things that at some point just kind of have to converge and the longer that it goes on the greater the probability that effects converge down to the sentiment as opposed to if the summer.
Speaker Change: Reason, we suddenly had clarity and we suddenly had a sense of confidence being able to come back then it would converge back up to the facts and we'd be in a better space, but I think with a 90 day pause on tariffs and then.
Speaker Change: Probably a fairly long tail on full emergence of a clearer picture I think you have to be a little bit pessimistic here about how the economy is going to evolve over the course of the next six to nine months I'd love to be wrong on that one, but I think as everyday goes by let's call. It. This trade has negative carry.
Speaker Change: To be able to to be able to hold so so we'll see on the second question that you asked internationally. We are a global firm, 40% of our revenues come from outside of the U S. But we're also a firm that provides really critical services to our clients and so clients always have choices.
Speaker Change: We have to earn that business every single day with how we behave and how our platforms operate but it is this combination.
Speaker Change: Having this reputation of being trusted having this rock solid underpinning, which as you know creates this port in a storm capability plus the fact that we do things that are really important you know clearing treasuries for most people is not an optional activity having access to a global collateral platform that lets your business operate more effectively.
Speaker Change: Maintaining your access to the rails of the financial system. Those are very very core significant things and so.
Speaker Change: Like to thank the combination of the trust the reputation and then the day to day operation will cause will cause our clients to continue to see value with us, but obviously, that's something that we'll have to see how it evolves.
Speaker Change: Great. Thank you.
Speaker Change: And moving on to Ebrahim, Pune wallet with Bank of America.
Ebrahim: Hey, good morning.
Speaker Change: I guess maybe robin.
Speaker Change: Just to that last point, Hey, government and Robin you mentioned the clearing of casualties.
Speaker Change: Very deep sort of understanding of the market infrastructure, there's obviously concerns around potentially the market what's happening with the fed needs to intervene just give us.
Speaker Change: That's sort of a preview into what you've seen over the last few days things were looking at smoothly as you would expect.
Speaker Change: And what the risk looks like there are the need for the fed intervention.
Speaker Change: Sure.
Speaker Change: I I would separate the treasury market into a couple of different pieces. The rails of the system are working really well, we're seeing high volumes, yes for sure, but everything is functioning really well and we have a as you point out a very good view into that there was a little bit of a tail on a three year.
Speaker Change: Sure and of course as was well publicized earlier in the week, but then we had a very solid 10 year auction and and long bond auction as well.
Speaker Change: But what has evolved and this is not unique to treasuries in any way we've seen it in equities as well is that the depth at the top of the order book is reduced and so bid offer spreads have widened the amount of risk that can be moved at the top of the book is much smaller you have to go deeper into the book to be able to move blocks of risk and that is true in the treasury.
Speaker Change: Market as it has been true.
Speaker Change: In equity markets and we've seen all the things that you would normally expect just a little bit of dislocation with MTF nabs versus the underlies those types of things all indicative of people trying to move blocks of risk and there's a bit of a consequence to it in terms of liquidity.
Speaker Change: The fed will have to will make their own decisions.
Speaker Change: About how they think about things, but if you look at history. What history suggests is that they intervene when they see markets that become fundamentally dysfunctional or dislocated, where it's not possible to move risk in the market is really functioning properly and that's absolutely not what we have seen this week markets are working fine.
Speaker Change: We're just seeing situations, where liquidity is reduced and therefore people are having to pay up and I think that's the distinction that I'd make for you.
Speaker Change: That's helpful and I guess a separate question.
Speaker Change: Maybe not a timely given all the macro concerns, but global head of digital assets testified in front of Congress with regards to the stable coin legislation. That's a huge priority for this administration just give us a sense of how we should think about what the stable go into legislation be invited had relationships with circulating going back.
Speaker Change: A few years ago, what all of that means in terms of your ability to play in digital assets are there.
Speaker Change: Meaningful implications on revenue growth deposits that we should be thinking about.
Speaker Change: We've all I think the short answer is we don't see it as a near term a big revenue item on the list, but we've always seen digital assets as a long term play whether it is the creation of new stuff or new packages of stuff look we're in the business of looking after things in one of our platform that's all cost.
Speaker Change: The business 53 trillion world number one and so there's going to be new stuff in the world, we want to be able to look after it but then more broadly the token as Asian, and leveraging the technology to find better ways of being able to move assets through the system more efficiently less cost less infrastructure required to do it we actually.
Speaker Change: Those will be a net net plus net net over time for us and so our strategy is being pretty simple, which is we've been very engaged with all of the participants in the system, you mentioned Congress and the regulators, but it is true with the clients as well we provide a lot of our traditional roles to these new players and that's been a great way to build.
Speaker Change: Relationship you mentioned, one particular client that we do exactly that for now I think it's very positive that Congress is looking at this question because stable coins or or some form of digital currency on chain is necessary in order to be able to make unchanged transactions efficient bitcoin as a more volatile.
Speaker Change: Asset and so it doesn't lend itself as well too good D V. P behaviors of a settlement system. So we see stable coins being one way of being able to facilitate that and so being able to do.
Speaker Change: It sort of transitions between the Fiat currency world in the chain World seems to be a sensible place for us to play it's great to see that legislation proceeding, but then behind it is also a market structure bill and that would set ready the rules of the road in terms of engagement for how different participants can participate and digital assets I think they're very helpful thing from this.
Speaker Change: In Australia and has been just sort of create more of this level playing field and say, it's a new technology, we don't want anybody to be disadvantage, we want everybody to be able to participate and let's do what the U S is so good at which is innovate and defined global standards and so that's why we sit today I wouldn't have this huge revenue item in the 2025 P&L.
Speaker Change: But that isn't to undermine its promise over time.
Speaker Change: Thank you.
Speaker Change: And we'll take a question from David Smith with <unk> Securities.
David Smith: Hi, Good morning, a couple of questions on NII first it looks like.
David Smith: From repo and fed funds increased again this quarter.
David Smith: Do you see this sustaining.
David Smith: Is there like an expectation for a meaningful drop off just help us frame that and then secondly, your deposit beta was really high around 90% again this quarter.
David Smith: It's a very fluid rate backdrop.
David Smith: Based on what Youre seeing when might that start to level off since I think last cycle. Your beta was around 75% or 80% for the cumulative cycle.
David Smith: Yeah.
Speaker Change: So thanks for the question look AR.
Speaker Change: On the repo side part of NII higher than expected and we've invested quite heavily in that over the last couple of years and we feel it's an important business for us as it relates to clients and delivering our products to them, but it does it's quite small in the context of our overall NII, it's only about five.
Speaker Change: So.
Speaker Change: You know I think the business has held in nicely, it's doing well the balances are higher and spreads are a little bit tighter. So there's kind of a couple of puts and takes there but in the context of our overall NII, it's quite small.
Speaker Change: In terms of the basic question look this is a question I guess that's come up on a lot of calls over the last several quarters and as you know, we we deal with a sophisticated client base and we kind of pass on the rates as we get them and so on.
Speaker Change: Betas have always been quite high like you know in and are in the low to mid eighties, and that's kind of where we see the book and so the marginal beta is around 100% and if rates were to go down and we'd see that the basis to perform in line with the way on the on the on the way up so that's kind of roughly how we see us.
Speaker Change: Thank you and then just in terms of how the macro environment is affecting client activity did you find clients are less willing to move around from one provider to another in a turbulent environment. Like this are the custodians with differentiated capabilities become more attractive to large enough extent that people will still consider.
Speaker Change: Moving moving where they hold funds.
Speaker Change: Hi.
David Smith: I think it depends on the platform and this is really where the breadth of our platforms is a real advantage for us David because we have these platforms that are higher frequency in terms of volumes with things like collateral management things like treasury clearing things like global clearing one.
David Smith: Six trillion dollars ecosystem in terms of liquidity direct and so there's absolutely the ability to move around there, but we just have these great platforms and people gravitate to us at least at these times given what we have and then there are the longer burn opportunities where people are reflecting on how to run their businesses in the best possible way.
David Smith: And I don't think at this point, it's it's the environment, where you would kick off something Super Big that was going to take a lot of distraction of leadership time, but most of the work and most of the platforms that we provide they don't really fit into that into that category and so I don't see a reason why we're not sort of business as usual in terms of the.
David Smith: Today, but we'll have to see how it plays out.
David Smith: If we're gonna have up 678% in the stock market everyday then obviously that creates a chilling effect almost in an exhaust gen effect almost by definition, but I don't think we're at this point we're for all businesses.
David Smith: The uncertainty really cascades through into into client choices today.
David Smith: The point I would add onto it is.
David Smith: At some level it does create opportunity for us as well as as we make our platforms badger and as clients look to optimize for their individual environments, it's going to create opportunities for us to help our clients do run things better for themselves. So.
David Smith: I would feel quite optimistic on our ability to serve clients in a better way as a result of our transformation that's going on and also a significant part of our revenue is recurring once we have clients on our platform they tend to stick with us and at times like this that has a tremendous thing to have.
Speaker Change: Thank you.
David Smith: Okay.
Speaker Change: And we'll take a question from Brian Bedell with Deutsche Bank.
Brian Bedell: Hey, good morning folks.
Speaker Change: If you could start off with a good morning.
Speaker Change: Just the platforms a question going back to Robyn I think what you talked about it in your earlier remarks over half of them are being wise now on the platform model and then you talked about the costs you know the.
Speaker Change: The efficiencies and you cited some examples.
Speaker Change: The question would be is is now that you've got half of the firm on the model of our U S.
Speaker Change: The efficiencies and the cross sells and then if I can throw AI in there as well or are these contributions exceeding your expectations. So far and if that is so would that either translate into lower expense growth or would you tend to channels.
Speaker Change: You know that those savings into you know reinvest in our growth initiatives.
Speaker Change: Well, Brian I'm, just going to take you back to some comments that I made a few quarters ago, which is just to remind of the fact that we've been simultaneously investing in the short medium and long term. We did this thing it's now than in the past, but project catalyst, which was designed to be able to have this 1500 ideas that we're gonna be.
Speaker Change: <unk> to save us money on a run rate basis 2025 is actually the first full year, where we have the full benefit of catalyst in the numbers. So we're still benefiting from some of those short term actions that we took a little while back and then simultaneously we've been investing more in and done it talked about this in answer to mikes.
Speaker Change: Question earlier on actually the gross numbers in terms of the savings and the investments both of them are meaningfully higher than they've been impasse in past years, and sometimes it's a little hard to see that under the hood, but this investment into platforms operating model. It's a means to an end we think that actually people working in this model.
Speaker Change: Provide some immediate benefits the agility and the ways of organizing teams create some efficiency and some some more sort of pointed ability to get things done quicker with a little bit less bureaucracy and sort of nonsense getting in the way but.
Speaker Change: It's really a means to an end because the objective of operating in the platforms has always been we will be able to do more business and we will be able to do it better and quicker at risk management benefits efficiency benefits. It's just got a lot of things that really suit us and for that you don't really see those benefit.
Speaker Change: It's until you've got a platform operating for probably at least six to 12 months to start to see that and we in fact had a great example, ourselves internally where one of our earliest entrance into the platforms operating model is starting now to rethink and re imagine how the infrastructure and systems underlying that.
Speaker Change: Platform operate how do those processes work across the company and it took a year for them to be in the model before they've really been able to set out their stall. So that's a long way of saying.
Speaker Change: I think the benefits of this are very much to come than more of a 26 and a 27 story, although there's some benefit in 'twenty five and probably throw into 28, and then we see AI as the longer term thing to layer onto that not too much benefit in 'twenty five, but we clearly started but that les and I would say.
Speaker Change: <unk> 26, 27, 28 29 through the end of the decade and so it's this choreography that we've laid out as a leadership team to the different things that we're doing and how they will benefit us at different periods of time, but we got going on all of them early and that was the case.
Speaker Change: Like.
Lance: From the CFO Lance.
Speaker Change: I'll give you a little bit of a history lesson. If you kind of go 2022.
Speaker Change: Expenses were up 8% 2023, there were two 7% 2020 for flat to slightly up due to the revenue growth outperforming expectations and this year, we're guiding 1% to 2% and all of the projects that Robyn referred to.
Robyn: Feeding into those numbers, they're not something distinct in Cyprus. So all of the things that we're doing gives us a lot of confidence to be able to give you good guidance and ultimately the journey never ends because we're becoming a much better run company. The flywheel of initiatives is just going to outpace the ifs.
Speaker Change: <unk> and that's going to lead to more growth opportunities.
Robyn: No that's it that's great color.
Speaker Change: You wanted to a.
Speaker Change: Convert the entire company by the end of the year on the platform. It's not at all is that correct or is that into choice.
Speaker Change: Yeah, Yeah. So I would think like by by this time next year when we do this call.
Speaker Change: You know all things kind of going according to plan. We would have we would say at the firm is fully operating in the new way of working but I would double down on what Robin said that we can see real tangible benefits from the people who went first versus the people who are.
Speaker Change: Just starting now and it's a mindset change, which is really should people showing up in a different way in the firm and they are much happier and the new way of working so culturally it's very powerful.
Speaker Change: Okay.
Speaker Change: Good color. Thank you.
Speaker Change: And we'll take a question from Stephen <unk> with Wolfe Research.
Stephen Wolfe: Hi, good morning, and thanks for taking my questions.
Speaker Change: Good morning so.
Speaker Change: Hope you guys are well.
Speaker Change: Have a couple of questions on the Pershing business as you know there were some press coverage, noting recent changes to the sharing of cash economics with some of your RNA in IBD clients.
Speaker Change: Hoping you could just speak to what informed the pricing changes the feedback you've gotten from the clients, thus far and how we should think about any potential benefit to NII as you retain more of a spread economics.
Speaker Change: Okay.
Speaker Change: So its something that were.
Speaker Change: It's something that we're continuing to do we've opened up our platform. We are we want to offer our clients a lot of choice at competitive rates, we've not really made any significant changes and we kind of keep it under review because the math that the backdrop of the environment is so.
Speaker Change: Fluid, but in terms of the overall context of the NII and how it feeds into the 5% guide it's de Minimis.
Speaker Change: A couple of contacts that are made and for my follow up just on the M&A outlook in Pershing and the flow rate. It was a touch softer versus some of the recent call. It mid single digit or better and then they flows that you've been seeing in recent quarters.
Speaker Change: I recognize there's a lot of volatility and uncertainty in the.
Speaker Change: In the current backdrop, but was hoping you could just speak to what drove the moderation in flows whether you expect that to continue and made the recent volatility and if you could also clarify the timing and impact of the pending atria departure just to make sure. We have all the moving pieces accounted for.
Speaker Change: So are there as it relates to the Pershing so on the on the positive side lot of volume on the platform you know Robyn talk to different platforms and the uptick in volume over the last couple of weeks. So we see a lot of volume in terms of transaction activity flowing through the <unk> pipes, which is which is good for us.
Speaker Change: As it relates to Anna N a growth opportunity, it's like it's a choppy environment I would push it down to timing we had some decent size mandates that you know could have signed and in Q1 slipped to Q2 and thats like.
Speaker Change: Just more about the timing of when stuff comes on so so from quarter to quarter I I expect we'll see a little bit more choppiness of that.
Speaker Change: But on the more positive side I would say you know we continue to see kind of strong client uptake and the pipeline for wove. We gave a guide in January which was for 2025, roughly $60 million to $70 million, we still feel very good about that guide. We've now got 52 clients on the platform we signed 22.
Speaker Change: New contracts in Q1, and so now we're kind of building up a head of steam in terms of client migrations onto the platform and so that.
Speaker Change: The clients excitement about that product continues to kind of give us confidence about saying mid single digits through the cycle.
Speaker Change: As it relates to M&A that's great.
Speaker Change: And the atria impact.
Speaker Change:
Speaker Change: Don't necessarily disclose.
Speaker Change: Individual transactions, but you now coming to a store near you this either next quarter or the quarter after.
Speaker Change: Understood well, thanks, so much for taking my questions.
Betsy: And we'll take a question from Betsy <unk> with Morgan Stanley.
Betsy: Hi, good morning.
Speaker Change: Good morning Betsy.
A couple of questions. One just on the Treasury direct Express program, that's moving over to your platform I just wanted to confirm that already started and.
Speaker Change: I wanted to get a sense as to any thing you can share on how we should expect that's going to roll through and impact if at all visible P&L.
Speaker Change: So I don't think that Betsy.
Speaker Change: P&L won't be visible in terms of size or Lumpiness. We're very excited to have won the business. It was really you know to be honest with you that was a real strength of the platform operating model in terms of our ability to bring the firm together to win that mandate. So that was a real kind of nice proof point for us that we're on the right.
Speaker Change: Track as it relates to the Treasury service model.
Speaker Change: We expect it to ramp up in the latter part of this year, but the in terms of moving the needle for the firm's revenues. It's just another happy clients wanting to do business with being Y and its going to come into the run rates latter part of this year so to be in the full year numbers next year.
Speaker Change: Okay, and then as I'm looking at the deposit and the SKU and B I B I thought in the past and I be we're thinking that might move down towards 44 billion and is that the case still or not.
Speaker Change: And if that changed or why.
Speaker Change: So, we're a little bit higher than that and so you know our current.
Speaker Change: We kind of believe that that's it's gonna roughly hanging into the ZIP ZIP code that is currently in may moderate a little bit from here due to some cash sourcing, but we don't expect any meaningful change on us and that kind of feeds the 5% guide.
Speaker Change: Okay.
Speaker Change: And then you mentioned if the fed cuts 50 bps tomorrow, there's no and I I impact what what should we be keeping.
Speaker Change: Keeping an eye out for that would drive an NII impact is it.
Speaker Change: Flattening of the curve sharp flattening.
Speaker Change: Anything or you are good in any situation.
Speaker Change: I think under a wide range of situations for 25.
Speaker Change: With you expect with a on the Red curve.
Speaker Change: Where it goes and obviously, if something happens materially with levels of balances and mix shift that would that would impact it but we've done a lot of analysis and so we feel reasonably goes under a wide range of scenarios. The NII is okay.
Speaker Change: For sure.
Speaker Change: Thanks, guys.
Speaker Change: Yes.
Speaker Change: And that was a deliberate strategy Betsy because we really wanted to take the risk of 2025 sort of out out of things and that was work that the team did last year too because you know NII is obviously, a very valuable contribution to our firm and we appreciate it as part of our overall operating leverage but it's.
Speaker Change: <unk> said earlier on positive operating leverage is the north star and we have other levers around cost fees now market as a variable, but its remember all feeds on only about market because theyre also about volumes activity levels wove as a software sale as well and then we have.
Speaker Change: The all important lever of our expenses, which is as dumb and I. Both said, we've been spending a considerable amount of money on investments, we see nothing in the environment today to suggest that we should stop that but given the fact that the total gross of savings and investments is bigger and as part of the 1% to 2% guide that.
Speaker Change: Dave you it follows from that though we have choices underneath that if we needed them. So positive operating leverage the anchor NII is sure great, but like kind of it's all about the other stuff.
Speaker Change: Thank you.
Speaker Change: And we'll take a question from Gerard Cassidy with RBC.
Speaker Change: Good afternoon.
Speaker Change: Jeremy can you share with us.
Speaker Change: Your thoughts about you you talked about the organization that you guys did in Robert and you just touched on it.
Speaker Change: Last year following Jackson hole for this you know this year's NII.
Speaker Change: Would you consider doing something like that for 2026 as the year progresses or was that kind of a once one and done kind of strategy.
Speaker Change: No absolutely very much focused on 26 active work and.
Speaker Change: So yes, it's a we're always looking at the markets, we're always looking at how to optimize our balance sheet.
Speaker Change: That the partnership between the we call. It the tripod internally is just really really strong and I think we'll feel good about the 26 outlook when we come to talk about this.
Speaker Change: Very good.
Speaker Change: I don't think you guys touched on this I apologize if you did if I missed it.
Speaker Change: There's a lot of talk about regulatory change on the horizon, specifically when it comes to the supplementary leverage ratio, which I think you guys in the past I've pointed it out to all of us.
Speaker Change: That's your binding capital constraint, assuming there is relief, where they exclude those treasury securities and possibly mortgage backed securities from the calculation of the SLR can you share with us how that would impact the way you manage your balance sheet and the outlook.
Speaker Change: For revenue should that change.
Sure. Let me split the question into two pieces. So first the impact on us and it can get a little weedy here because there is actually three different leverage ratios. There's an E. S. L. A which is the feds gift to takeaway there is an S. L. A which is a three agency rule across the FDIC deal.
Speaker Change: <unk> and the fed and then Theres, a tier one leverage ratio, which there's some legal debate about whether or not the fed has the ability to make changes to that but it's really in Dodd Frank and so that's the one that applies to all banks, we have a little bit of a different treatment on us just given the nature of the businesses that we're in.
Speaker Change: But we are bound by tier one leverage ratio and we've said that we saw.
Speaker Change: Had that before and so SLR and have some change, but maybe not quite as much on us.
Speaker Change: But now let me take the other part of the question and just.
Speaker Change: Sort of respond to what's going on in the space. We've had a point of view for a long time that we actually think that leverage ratio was ill advised and it's not really about banks kind of came about to some extent out of the financial crisis as almost like a in a moment of anger towards banks that existed at that point, but the problem.
Speaker Change: Is the casualty of the situation as markets, because we want banks to be able to flex that size, particularly in cash on their balance sheet.
Speaker Change: And in treasuries on their balance sheet and remember the SLR penalizes, a one day cash management Bill.
Speaker Change: In terms of the balance sheet and so it does not help markets. When we take out one of the the accordion flexes to be able to absorb treasury supply and we've probably been seeing that as a contributor to treasury spreads being wider over the course of the past week I don't see this administration or the.
Speaker Change: The incoming leaders into the agencies to want to continue to be in this gold plating business, which is what some of these rules have been in the U S. I see them in the business of wanting to unleash the power of U S capital markets and make sure that capital markets are working for the U S economy, and banks are fully able to.
Speaker Change: Operate to support capital markets and make them run as efficiently as possible.
Speaker Change: Robyn Thank you very insightful.
Speaker Change: Happy to do it.
Speaker Change: Yeah.
Speaker Change: And we'll take a question from Jim Mitchell with Seaport Global Securities.
Jim Mitchell: Hey, good afternoon.
Speaker Change: I think maybe a broader question on organic growth I think Robin you mentioned earlier that you might have had record new business wins. So is there a way to kind of frame that in terms of percentage terms year over year terms, just trying to think through.
Jim Mitchell: Yeah.
Jim Mitchell: The progress towards getting that organic growth rate up and where you stand today.
Jim Mitchell: Yeah.
Jim Mitchell: Yeah, well you know we tried to put one stat in my prepared remarks, but we've got a few that sort of relate to this in terms of the increase I like was one good indicator and we talked about this in the last earnings call. The number of clients buying from three or more lines of business.
Jim Mitchell: Platforms of which as you know we have many increased by 40% over the past two years and so that's actually the biggest driver which is having those clients who are doing two or three things with us do an extra thing and in fact, the clients who do more with US I mean again, we talked about.
Jim Mitchell: This back in January the clients, who do more with us tends to understand us better and tend to do even more things with us because they appreciate the breadth of the relationship. They appreciate how our platforms can link together and we can just be a more efficient ecosystem for them I'll give you. One example, if.
Jim Mitchell: You do clearing with B N y.
Jim Mitchell: And you do collateral with B N Y then in treasuries as an example, the ability for us to link up the ecosystem around our liquidity direct platform, our collateral management platform World number one U S Treasury platform World number one the world number one in global custody.
Jim Mitchell: We can link those things up and those become book entry transfers on our custody ledger and so thats just a more efficient way to operate and we see that linkages, we get better operating as one firm deploying all commercial model, having clients understand how they can see all of those different.
Jim Mitchell: Forms their actual more and more synergy benefits for them. So this is the we've said this all along this is the single biggest avenue of growth for US is to have more of our clients do more of what we do and then we add to that the innovation, we add to that finding new clients, we add to that the mega trends that we talked about loss.
Jim Mitchell: Time, but we all we are quite optimistic about the amount of runway we have under this heading.
Jim Mitchell: And look if you if you go back and look at the script from two years ago versus a script today in terms of our how we talk to the markets. We're talking about more things with your more products wove Archer our growth in Etfs quite strong, which we haven't talked about today and.
Jim Mitchell: We're also building out our infrastructure in alternatives and Robin mentioned it in his prepared remarks like the appointment of Carlin Weinberg is a really important strategic step for us in terms of innovation around new products.
Jim Mitchell: Yeah, absolutely so I guess versus two years ago. We did is it fair to assume you seem even more confident in driving.
Jim Mitchell: This improvement and still kind of early days is that a fair.
Jim Mitchell: Way to think about it.
I would say that we've matured and this week. We originally if you. If you were to analyze all language over time. The theme is very much there, but our conviction around it is grown and importantly, we've moved it along the maturity curve. Originally it was connecting the dots then it was one being why mentality.
Jim Mitchell: Now it is how our commercial model. This is our first full year operating in our new commercial model under the leadership of our Chief commercial officer. So we've been maturing the concept, but our vision of this is unchanged, but our conviction in it and the maturity Operationalization repeatability embedding in this company is.
Jim Mitchell: Growing.
Jim Mitchell: Great. Thank you.
Mike Mayo: And our final question will come from Mike Mayo with Wells Fargo Securities.
Mike Mayo: I was just looking for one wrap up number just even if it's just what you're conceptually thinking because you're talking about all these revenue growth initiatives product platforms processes and people and you talk about clients involving more than three lines of business. But then you also said, there's some caveats because markets what markets will bill.
I'm, just saying you can help us out with your earnings models, but not in the next quarter for the next three to five years.
Speaker Change: One question is what should be the core organic growth rate ahead, and why it hasn't been in the past.
Mike Mayo: So like I think that's a that's a conversation for our offline I would say, Mike when you visit us bars.
Mike Mayo: I kind of when I come in every day I, just I care about positive operating leverage consistently through the cycle, which is made up of fees NII and how we manage the firm as it relates to expenses.
Mike Mayo: As it relates to phase, we make fees are off a couple of different components balances volume and other and so I feel a lot more confidence today.
Mike Mayo: Than I did two years ago, and our ability to drive innovation drive execution and to do more with our existing client set and also add new clients to the firm and that's just a journey, we're going to be on and we're going to execute to a very high standards and so we kind of feel very good about our.
Mike Mayo: Ability to do positive operating leverage through the cycle in good times and bad and.
Speaker Change: And Mike I'll add to that just by saying that look if you step back and I'm. Sorry. This is a little bit I'll give you. The one number reminder, and then I'll make a bit more of a philosophical comment. So two thirds of off 6% fee growth in 2024 was market and currency and a third was organic and that's good.
Speaker Change: But and that was a step up versus the prior year, but obviously with we are determined to see that grind higher and so if you take that as our aspiration. Then the question is do we actually have the right inputs are we doing the right things that actually make that legitimate and plausible. So number one are we actually getting around.
Speaker Change: And operationally more with our clients all we oh, we actually covering them better or are we actually driving outcomes from them, that's important, whereas our trust and reputation to people worry about the no. They're very confident at this point about platforms built on a very solid foundation, making our balance sheet high quality Derisked access.
Speaker Change: Capital high amounts of liquidity that they gives them confidence to be able to lean in and all indications are that that is what happens when they have that reaction and then critically do we actually have the right products and so this is where the breadth of the firm really matters, we're not a two trick or three trick pony.
Speaker Change: We're a dozen trick pony, we can do everything from investments and well to retail wealth to collateral management to clearing payments to liquidity ecosystems et cetera et cetera. So we have this breadth and then the question is can you actually operationalize the joining of.
Speaker Change: These things together and then do you have innovation and so we think we're actually attacking the problem through all of those dimensions and if we do that we do it consistently and deliberately and relentlessly than we think we will win and that's what we're doing.
Speaker Change: Well that was the comprehensive answer thank you very much.
Mike Mayo: Thank you Mike.
Mike Mayo: And with that that does conclude our question and answer session for today I would now like to hand, the call back over to Robyn with any additional or closing remarks.
Robyn: Thank you operator, and thanks, everyone for your interest in being why please reach out to Marriott and the IR team. If you have any follow up questions be well and good luck out there.
Robyn: Thank you. This does conclude today's conference and webcast a replay of this conference call and webcast will be available on the B N Y Investor Relations website at three P. M. Eastern standard time today have a great day.
Robyn: Okay.
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