Q2 2025 Bank of New York Mellon Corp Earnings Call
Operator: This is a second quarter earnings conference call hosted by BNY. At this time, all participants are in a listen only And later we will conduct a question and answer session. Please note that this conference call and webcast will be recorded and will consist of copyrighted May not record or rebroadcast. without BNY.
Good morning and welcome to the 2025 second quarter earnings conference call hosted by bny.
At this time, all participants are in a listen-only mode.
Later, we will conduct a question and answer session.
Please note that this conference call and webcast will be recorded and will consist of copyrighted material.
Mary: I will now turn the call over to Mary. BNY Head of Investor Relations Good morning, everyone. Welcome to our second quarter earnings call. I'm here with Robin Vince, our Chief Executive Officer, and Dermot McDonogh, our Chief Financial Officer. We will reference the quarterly update presentation, which can be found on the Investor Relations page of our website at bny.com. And I'll 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 states. 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.
You may not record or rebroadcast these materials without bnys consent.
Speaker Change: I will now turn the call over to Marius Ms bny head of investor relations. Please go ahead.
Speaker Change: Thank you, operator.
Speaker Change: Our second quarter earnings column.
Robin Vince: I'm here with Robin Vince, our chief executive officer and dermat. McDonough, our Chief Financial Officer.
we will reference the quarterly update presentation which can be found on the investor relations page of our website at bny.com
Robin Vince: And I'll note that our remarks will contain forward-looking statements and non-gaap measures.
Robin Vince: actual results May differ materially from those projected in the forward-looking statements,
Mary: Forward-looking statements made on this call speak only as of today, July 15, 2025, and will not be updated.
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.
Robin Vince: With that, I will turn it over to Robin. Thanks, Marius. Good morning, everyone. Thank you for joining us.
Robin Vince: Forward-looking statements made on this call speak only, as of today, July 15th, 2025 and will not be updated with that. I will turn it over to Robin.
Robin Vince: Before Dermot takes you through the financials in greater detail, I'll start with a few summary remarks on our strong performance in the second quarter and a couple of reflections on the first half of the year. Stepping back for a moment, to look at the operating environment. We began the quarter in April with elevated market volatility, record U.S. equity trading activity, and increased treasury market volume. Through the quarter, we saw shifts in global policy with elevated risk from geopolitical tensions and conflicts, as well as uncertainty around trade, fiscal, and other policies. Periods of volatility and active markets give BNY the opportunity to deepen the connection with our clients, helping them grow while navigating an evolving business landscape.
Thanks Marius. Good morning everyone. Thank you for joining us.
The Ford Derma takes you through the financials in Greater detail. I'll start with a few summary remarks on our strong performance, in the second quarter, and a couple of Reflections on the first half of the year.
Stepping back for a moment to look at the operating environment.
Began the quarter in April with elevated Market, volatility record, us Equity, trading activity and increased treasury market volumes.
Robin Vince: Through the quarter, we saw shifts in global policy with elevated risk from geopolitical tensions. And conflicts, as well as uncertainty around trade fiscal and other policies.
Robin Vince: Our unique position as a financial services platforms company at the heart of the world's capital market. Combined with our diversified business model allowed us to once again demonstrate our resilience and commercial strength against this backdrop.
Robin Vince: Periods of volatility and active markets, give bny the opportunity to deepen the connection with our clients, helping them grow while navigating and evolving business landscape.
Our unique position as a financial services platforms company at the heart of the world's Capital markets.
Robin Vince: Combined with our Diversified business model allowed us to. Once again, demonstrate our resilience and Commercial strength against this backdrop.
Robin Vince: Turning to the results of the second quarter and referring to page 2 of the quarterly update presentation, BNY delivered a strong performance. Earnings per share of $1.93 were up 27% year over year on a reported basis and up 28% excluding notable items. total revenue was up 9% year over year and for the first time exceeded $5 billion in a quarter. In combination with expense growth of 4%, BNY generated another quarter of significant positive operating leverage, roughly 500 basis points on both a reported and operating basis. And in what is seasonally our strongest quarter, our pre-tax margin improved to 37%.
Turning to the results of the second quarter, and referring to page 2 of the quarterly update presentation.
Robin Vince: Bny delivered, a strong performance.
Robin Vince: Earnings per share of a dollar 93 cents were up 27% year-over-year on a reported basis and up 28% excluding notable items.
Robin Vince: Total revenue was up 9% year-over-year and for the first time, exceeded 5 billion in a quarter.
Robin Vince: In combination with expense growth of 4% bny generated, another quarter of significant positive operating leverage roughly 500 basis points on both a reported and operating basis.
Robin Vince: and our return on tangible common equity improved to $28 billion.
Robin Vince: and in what is seasonally, our strongest quarter, our pre-tax margin improved to 37%
Robin Vince: These are clear outputs from our multi-year transformation and robust indicators of BNY's potential.
And our return on tangible, common Equity improved to 28%.
Robin Vince: Turning to page three. Over the past few years, we have been laying the foundations for our future. In our January update, we outlined how BNY is well positioned to capture market beta and capitalize on evolving market trends as we work hard to generate alpha through the continued transformation of our company. We entered 2025 with good momentum. Midway through the year, we are seeing results from our consistent execution and continuous delivery that add to our confidence for the medium to long term. Our strategy is simple but powerful, to be more for our clients by running our company better, all powered by our culture.
Robin Vince: In our January update, we outlined how bny is well positioned to capture Market beta and capitalize on evolving market trends. As we work hard to generate Alpha through the continued transformation of our company.
Robin Vince: We entered 2025 with good momentum.
Robin Vince: Midway through the year. We are seeing results from our consistent execution and continuous delivery that add to our confidence for the medium to long-term.
Robin Vince: I'll briefly touch on each. First, how a commercial model enables BNY to be more for our clients. helping them achieve their goals using the full breadth and depth of our platforms. As we mark the model's one-year anniversary, early signs point to the growing effectiveness of our commercial organisation, with significant runway ahead. We achieved a second consecutive quarter of record sales. The number of multi-product relationships continues to grow, and we continue to broaden and deepen our engagement with clients. And for example, in June, we expanded our relationship with specialist active UK asset manager Lion Trust. In addition to utilizing our Data Vault and Middle Office operating capabilities, LionTrust is fully outsourcing its trading to our BuySide Trading Solutions team, which delivers 24-hour global trade execution and reaches 100 markets globally across all major asset classes.
Our strategy is simple, but powerful to be more for our clients, by running our company better all powered by our culture.
Robin Vince: I'll briefly touch on each.
Robin Vince: First, our commercial model enables bny to be more for our clients.
Robin Vince: Helping them achieve their goals, using the full breadth and depth of our platforms.
Robin Vince: As we Mark the models 1 year anniversary. Early signs points to the growing effectiveness of our commercial organization with significant Runway ahead.
Robin Vince: for example, in June we expanded our relationship with specialist active, UK asset manager, lion, Trust
Robin Vince: Another important way for us to be more for our clients is to deliver innovative solutions to the market that come from the powerful combination of capabilities we have at BNY. As I've said before, we're not just in the product sales business, we're in the solutions delivery business. BNY enjoys a suite of highly adjacent platforms that, when delivered together, create powerful solutions for clients. Our commercial model, combined with our platform's operating model, are intentionally designed to encourage more of this type of innovation. An example of this solutions mindset is our work to build the financial infrastructure of the future by bridging traditional and digital financial ecosystems to enable clients to unlock new capabilities securely and at scale.
In addition to utilizing our Data Vault and middle Office, operating capabilities, lion trust is fully Outsourcing its trading to our buy-side trading Solutions team, which delivers 24-hour, global trade execution and reaches, 100 markets globally, across all major asset classes.
Robin Vince: Another important way for us to be more for our clients is to deliver innovative solutions to the market that come from the powerful combination of capabilities. We have at bny.
Robin Vince: as I've said before, we're not just in the product sales business, we're in the solutions delivery business,
Robin Vince: Bny enjoys, a suite of Highly adjacent platforms, that when delivered together, create powerful solutions for clients.
Our commercial model combined with our platforms operating model. Our intentionally designed to encourage more of this type of innovation.
Robin Vince: Early and continuous investments in our digital assets platform have positioned us to meet increasing institutional interest and adoption. Last month, Societe Generale selected BNY to act as reserve custodian for their first USD stablecoin in Europe. And last week, Ripple announced that BNY will act as primary custodian of Ripple's USD stablecoin reserve. Today, BNY is a leader in servicing the growing stablecoin market, enabling companies to create and use stablecoins by providing wide-ranging services from issuance to ongoing operation. Our advancements in the digital assets ecosystem are just one example of continual innovation, but there are many others.
Robin Vince: an example of this solutions mindset is our work to build the financial infrastructure of the future by bridging traditional, and digital Financial ecosystems to enable, clients to unlock new, capabilities securely, and at scale,
Robin Vince: Early and continuous investments in our digital assets platform have positioned us to meet increasing institutional, interest and adoption.
Last month, selected bny to act as Reserve custodian for their first USD stablecoin in Europe.
Last week, Ripple announced that bny will act as primary custodian of Ripple's USD, stablecoin Reserves.
Robin Vince: Today bny is a leader in servicing. The growing stable coin Market enabling companies to create and use stable coins by providing wide, ranging services from issuance to ongoing operations.
Robin Vince: Flexible financing and global clearing, the integration of Collateral One into Liquidity Direct, FX Hedge Direct for private markets, agency lending in Saudi Arabia, depository receipts in Canada, to name just a few.
Our advancements in the digital assets. Ecosystem are just 1 example of continual Innovation but there are many others.
Robin Vince: This is an important theme for us. Not just periodic, higher profile product launches, but product level micro-innovations, week by week, month by month, that drive our organic growth.
Flexible financing in global clearing the integration of collateral 1 into liquidity. Direct FX hedge direct for private markets agency. Lending in Saudi Arabia depository receipts in Canada to name just a few
Robin Vince: This is an important theme for us, not just periodic higher profile product launches, but product level micro Innovations week by week month, by month that drive our organic growth.
Robin Vince: Next, on Running Our Company Better, with Purple. 2025 will be a milestone year for BNY's transition into our Platforms Operating Model, which realigns how we work and organise ourselves across the entire company. As a reminder, running our company better is not just about expenses, it's about better. Yes, we are driving efficiency, but we're also enabling commercial opportunities, enhancing client journeys, and accelerating speed to market. With more than half of our people at BNY working in the model today, we remain on track to complete our phased transition into the platform's operating model by this time next year.
Robin Vince: Next.
On running our company better with purpose.
Robin Vince: 2025 will be a milestone year for bnys transition into our platforms operating model which realigns how we work and organize ourselves across the entire company.
As a reminder, running our company better is not just about expenses. It's about better.
Yes, we are driving efficiency but we're also enabling commercial opportunities. Enhancing client Journeys and accelerating speed to Market.
Robin Vince: Already, we are starting to see the impact of this new way of working, enabling our people to launch more new solutions, deploy more code releases, and come together better than ever before to support our clients.
Robin Vince: With more than half of our people at bny, working in the model today, we remain on track to complete our phased transition into the platform's operating model by this time. Next year,
Already. We are starting to see the impact of this new way of working, enabling our people to launch more. New Solutions, deploy more code releases and come together better than ever before to support our clients.
Robin Vince: Finally, on culture. Culture is about generating a collective will to make our company achieve its full potential, harnessing the breadth of our talent to be there for clients and to help the company hum. This includes so many things. But one part of that enablement is our embrace of AI. It's an exciting moment for AI at BNY. Nearly all of our employees are using our multi-agentic enterprise AI platform ELISA. And we've started to introduce digital employees into our workforce. It's early days, but we are beginning to see the benefit of some of these agents and digital employees, and we expect that to accelerate in the quarters and years ahead.
Robin Vince: Finally, on culture.
Culture is about generating, a collective will to make our company achieve its full potential.
Harnessing, the breadth of our talent to be there for clients and to help the company whom.
This includes so many things but 1 part of that enablement is our Embrace of AI. It's an exciting moment for AI at bny. Nearly all of our employees are using our multi-agent Enterprise AI, platform Eliza. And we have started to introduce digital employees into our Workforce.
Robin Vince: To wrap up... Against the backdrop of a busy operating environment, our priorities are clear, and we remain relentlessly focused on execution. BNY is showing strong momentum, and we are determined to deliver further value for our clients, our shareholders, and our people. At this midpoint of the year, we are pleased to see the initial work of our multi-year transformation bearing fruit. I'd like to thank our teams around the world for delivering strong results and for their continued commitment to the work ahead. We have a lot of opportunity in front of us, but the strategy to unlock it is working.
Robin Vince: Its early days, but we are beginning to see the benefit of some of these agents and digital employees and we expect that to accelerate in the quarters and years ahead.
To wrap up.
Robin Vince: Operating environment. Our priorities are clear and we remain relentlessly focused on execution.
Robin Vince: Bny is showing strong momentum. And we are determined to deliver further value for our clients, our shareholders, and our people.
Robin Vince: At this midpoint of the year, we are pleased to see the initial work of our multi-year transformation bearing fruit.
Dermot McDonogh: And with that, over to you, Dermot. Thank you, Robin, and good morning, everyone. I'm starting with our consolidated financial results for the second quarter on page four of the presentation. Total revenue of $5 billion was up 9% year over year. Fee revenue is up 7%. That included 9% growth in investment services fees from our security services and market and wealth services segments driven by net new business, client activity and higher market values. Investment management and performance fees were flat. rose from higher market values and the impact of a weaker US dollar was offset by the mix of AUM flows and the adjustment for certain rebates that we discussed on our last earnings call.
I'd like to thank our teams around the world for delivering strong results and for their continued commitment to the work ahead. We have a lot of opportunity in front of us but the strategy to unlock it is working.
And with that over to you d.
Speaker Change: Thank you, Robin and good morning everyone.
Speaker Change: I'm starting with our Consolidated Financial results for the second quarter on page 4 of the presentation.
Speaker Change: Total revenue of 5 billion dollars was up 9% year-over-year.
Speaker Change: Revenue was up 7%.
That included 9% growth in Investment Services fees from our security services and market, and wealth Services. Segments driven by net new business, client activity and higher Market values
Speaker Change: Investment management and performance fees were flat.
Speaker Change: Growth from higher Market values and the impact of a weaker US dollar was offset by the mix of AUM, flows and the adjustment for certain rebates that we discussed on our last earnings call.
Dermot McDonogh: While not on the page, I will note that firm-wide AUCA of $55.8 trillion were up 13% year-over-year, reflecting client inflows, higher market values, and the impact of the weaker dollar. Assets under management of $2.1 trillion were up 3% year-over-year, reflecting higher market values and the impact of the weaker dollar, partially offset by cumulative net outflows. Foreign exchange revenue was up 16% year-over-year on the back of elevated volatility and higher volumes, partially offset by the impact of corporate treasury activity. Investment in other revenue was $184 million, including $35 million of net losses from investment security sales, partially offset by favourable sea capital and other investment results.
Speaker Change: While not on the page, I will note that firmwide auca of 55.8 trillion dollars were up, 13% year-over-year reflecting, client inflows, higher Market values, and the impact of the weaker dollar.
Speaker Change: At under management of 2.1 trillion dollars were up 3% year-over-year reflecting higher Market values and the impact of the weaker dollar partially offset by cumulative net. Outflows
Speaker Change: Foreign exchange Revenue was up 16% year-over-year on the back of elevated volatility and higher volumes. Partially offset by the impact of corporate treasury activity.
Speaker Change: Investment in other Revenue was 184 million, including 35 million of net losses from investment security, sales partially offset by favorable, sea capital and other Investments results.
Dermot McDonogh: Net interest income was up 17% year-over-year, driven by continued reinvestment of maturing investment securities at higher yields, as well as balance sheet growth, partially offset by changes in deposit makers. Provision for credit losses was a benefit of $17 million in the quarter driven by property-specific reserve releases in our commercial real estate portfolio. Expenses of $3.2 billion were up 4% year over year, both on a reported basis and excluding notable items. The variance, excluding notable items, reflects higher investments, employee merit increases, higher revenue-related expenses, and the unfavorable impact of the weaker dollar, partially offset by efficiency savings.
Net interest income was up 17% year-over-year driven by continued reinvestment of maturing investment Securities at higher yields, as well as balance sheet growth partially offset By changes in deposit. Mix,
Speaker Change: Provision for credit losses. Was a benefit of 17 million in the quarter driven by property specific Reserve releases in our commercial real estate portfolio.
Speaker Change: Expenses of 3.2 billion were up, 4% year-over-year both on a reported basis and excluding notable items.
Dermot McDonogh: Taken together, we reported earnings per share of $1.93 on a reported basis, up 27% year-over-year. Excluding the impact of notable items, earnings per share were $1.94, up 28% year-over-year. Our pre-tax margin was 37% and our return on tangible common equity was 28% in the quarter.
The variance excluding notable items reflects higher Investments, employee Merit increases higher Revenue, related expenses, and the unfavorable impact of the weaker dollar partially offset by efficiency savings.
Speaker Change: Taken together, we reported earnings per share of a 1.93 on a reported basis, up 27% year-over-year.
Speaker Change: In the impact of notable items earnings per share were $1.94 up 28% year-over-year.
Speaker Change: And was 37% and our return on tangible. Common Equity was 28% in the quarter.
Dermot McDonogh: Turning to Capital and Liquidity on page 5. At the end of June, the Federal Reserve released the results of its 2025 Bank Stress Test, which once again underscored BNY's resilient business model and our strong balance sheet. The results also confirmed that our stress capsule buffer remains unchanged at the regulatory floor of 2.5%. With regards to our second quarter results, our Tier 1 leverage ratio was 6.1%, down 17 basis points sequentially. Tier 1 capital increased by $689 million, primarily reflecting capital generated through earnings and a net increase in accumulated other comprehensive income, partially offset by capital returned through common stock repurchases and dividends.
Speaker Change: Turning to Capital and liquidity on page, 5.
Speaker Change: at the end of June, the Federal Reserve released, the results of its 2025 bank stress test, which once again, underscored B and y's resilient business model, and our strong balance sheet,
The results also confirmed that our stress Capital buffer remains unchanged at the regulatory floor of 2 and a half percent.
Speaker Change: With regards to our second quarter results, our Tier 1, leverage ratio was 6.1% down, 17 basis points, sequentially,
Tier 1, Capital increase by 689 million, primarily reflecting Capital generated through earnings and the net increase in accumulated, other comprehensive income partially offset by Capital returns through common stock, repurchases and dividends
Dermot McDonogh: Average assets increased primarily driven by deposit growth. Our CET1 ratio at the end of the quarter was 11.5%, unchanged from the prior quarter. Over the course of the second quarter, we returned approximately $1.2 billion of capital to our common shareholders, resulting in a 92% total payout ratio year to date. With regards to liquidity, the Consolidated Liquidity Coverage Ratio was 112%, down 4 percentage points sequentially, reflecting elevated deposit balances, which were largely non-operational in early parts of the quarter. The Consolidated Net Stable Funding Ratio is 131%, down 1 percentage point sequentially.
Average assets increased primarily driven by deposit growth.
Speaker Change: Our cet1 ratio at the end of the quarter was 11.5% unchanged from the prior quarter.
Over the course of the second quarter, we returned to 1.2 billion dollars of capital to our common shareholders. Resulting in a 92% total payout ratio year to date
Speaker Change: To Consolidated liquidity. Coverage ratio was 112% down 4 percentage Point sequentially, reflecting elevated deposit, balances, which were largely non-operational in early parts of the quarter.
Speaker Change: The Consolidated net stable funding ratio was 131% down, 1 percentage Point sequentially.
Dermot McDonogh: Next, Net Interest Income and Balance Sheet Trends on page 6. Consistent with the backdrop of elevated volatility and active trading in capital markets, we saw clients seek the strength of BNY's balance sheet and leverage our platforms for execution and settlement. Net interest income of $1.2 billion was up 17% year-over-year and up 4% quarter-over-quarter. Both the year-over-year and sequential increase primarily reflect continued reinvestment of maturing investment securities at higher yields, as well as balance sheet growth, partially offset by changes in deposit makers. Average deposit balances grew by 6% sequentially. Non-interest bearing deposits grew by 3% in the quarter and interest bearing deposits grew by 7%.
Next net, interest income and balance sheet Trends on Page 6.
Speaker Change: Consistent with the backdrop of elevated, volatility and active trading. In capital markets, we saw clients seek to be in Wise balance sheet and leverage our platforms for execution and settlement.
Net interest income of 1.2 billion was up 17% year-over-year and up 4%, quarter over quarter.
Speaker Change: Both the year-over-year and sequentially increase primarily reflect continued, reinvestment of maturing investment Securities at higher yields, as well as balance sheet growth, partially offset By changes in deposit. Mix,
Speaker Change: Averaged deposit balances grew by 6% sequentially.
Speaker Change: Non-interest-bearing deposits, grew by 3% in the quarter and interest-bearing deposits grew by 7%.
Dermot McDonogh: Accordingly, average interest earning assets increased by 6% sequentially. Cash and reverse repo balances increased by 9%. Investment securities balances increased by 4% and loans increased by 2%.
Speaker Change: Accordingly average interest earning assets increased by 6% sequentially.
Speaker Change: Cash and reverse repo, balances increased by 9%.
Investment Securities balances increased by 4% and Loans increased by 2%.
Dermot McDonogh: Turning to our business segments, starting on page seven. Security Services reported total revenue of $2.5 billion, up 10% year-over-year. Total investment services fees were up 10% year-over-year. In asset servicing, investment services fees grew by 7%, reflecting higher market values and client activity. And in issuer services, investment services fees were up 17%, driven by exceptionally strong client activity in our depository receipts business. In this segment, foreign exchange revenue was up 22% year over year on the back of elevated volatility and higher volumes. Net interest income for the segment was up 13% year-over-year. Segment expenses of $1.6 billion were up 4% year-over-year, driven by higher investments, employee merit increases, revenue-related expenses, and the unfavorable impact of the weaker dollar, partially offset by efficiency savings.
Speaker Change: Turning to our business segments, starting on page 7.
Speaker Change: Security Services, reported total revenue of 2.5 billion dollars up 10% year-over-year.
Speaker Change: To Investment Services fees. Were up 10% year-over-year.
Speaker Change: In asset servicing Investment Services, fees grew by 7% reflecting higher Market, values and client activity.
Speaker Change: And an issuer Services Investment Services fees were up. 17% driven by exceptionally strong client activity. In our depository receipts business.
Speaker Change: In this segment, foreign exchange Revenue was up 22% year-over-year on the back of elevated volatility and higher volumes.
Speaker Change: Net interest income for the segment was up. 13% year-over-year.
We're up 4% year-over-year driven by higher Investments employee Merit increases Revenue related expenses and the unfavorable impact of the weaker dollar partially offset by efficiency savings.
Dermot McDonogh: Security Services reported pre-tax income of $867 million, up 26% year-over-year, and a pre-tax margin of 35%.
Security Services, reported pre-tax income of 867, million up, 26% year-over-year and a pre-tax margin of 35%.
Dermot McDonogh: on to Marks and Wealth Services on page 8. In our Marks and Wealth Services segment, we report a total revenue of $1.7 billion, up 13% year over year. Total investment services fees were up 9% year-over-year. In Pershing, investment services fees were up 8%, reflecting client activity and higher market value. Net new assets were negative $10 billion in the quarter, reflecting the deconversion of a client that was acquired by a self-clearing competitor. In clearance and collateral management, investment services fees were up 14%, driven by broad-based growth in collateral balances and clearance volume. And in treasury services, investment services fees were up 3%, reflecting net new business.
Speaker Change: On to Market and wealth services on page 8.
Speaker Change: In our marks and wealth Services segment, we reported total revenue of 1.7 billion dollars up 13% year-over-year.
Speaker Change: To Investment Services fees. Were up 9% year-over-year.
In purging Investment Services, fees were up, 8% reflecting client activity and higher Market values.
Net, new assets were a -10 billion in the quarter reflecting the deconversion of a client that was acquired by a self-clearing competitor.
Speaker Change: In clearance and collateral management. Investment Services. Fees were up 14% driven by broad-based growth in collateral balances and clearance volumes.
Speaker Change: And in treasury Services Investment Services fees. Were up, 3% reflecting net new business.
Dermot McDonogh: Net interest income for the segment was up 21% year-over-year. Segment expenses of $897 million were up 8% year-over-year, driven by higher investment and litigation reserves, employee merit increases, and higher revenue-related expenses, partially offset by efficiency savings. Taken together, our Market & Wealth Services segment reported pre-tax income of $851 million, up 21% year-over-year, and a pre-tax margin of 49%.
Net interest income for the segment was up. 21%, year-over-year.
Speaker Change: We're up 8% year-over-year driven by higher Investments and litigation reserves employee merge increases and higher Revenue related expenses. Partially offset by efficiency savings.
Speaker Change: Taken together, our marks and wealth Services, segment reported pre-tax income of 851 million.
Speaker Change: Up 21% year-over-year and a pre-tax margin of 49%.
Dermot McDonogh: Turning to Investment and Wealth Management on page 9. Our Investment and Wealth Management segment reported total revenue of $801 million, down 2% year over year. Investment management fees were down 1% year-over-year, driven by the mix of AUM flows and the adjustment for certain rebates, partially offset by higher market values and the favourable impact of the weaker dollar. Segment expenses of $653 million were down 2% year-over-year, driven by lower revenue-related expenses and efficiency savings. Partially offset by higher severance expense and the unfavorable impact of the weaker dollar. Investment and Wealth Management reported pre-tax income of $148 million, down 1% year over year, and a pre-tax margin of 19%.
Turning to investment and wealth management on page 9.
Speaker Change: Our investment in wealth management segment, reported total revenue of 801 million down 2% year-over-year.
Speaker Change: By the mix of AUM, flows and the adjustment for certain rebates, partially offset by higher Market values, and the favorable impact of the weaker dollar.
Speaker Change: Segment expenses of 653 million were down 2% year-over-year driven by lower Revenue related expenses and efficiency savings.
Speaker Change: Set by higher Severance expense and the unfavorable impact of the weaker dollar.
Investment in wealth management, reported pre-tax, income of 148 million down 1% year-over-year and a pre-tax margin of 19%.
Dermot McDonogh: As I described earlier, assets under management of $2.1 trillion were up 3% year over year. In the second quarter, we saw $17 billion of net outflows driven by index, multi-asset and equity strategies, partially offset by net inflows into cash and fixed income strategies. Wealth management client assets of $339 billion increased by 10% year over year, largely driven by higher market values.
Speaker Change: As I described earlier assets under management of 2.1 trillion dollars were up 3% year-over-year.
Speaker Change: In the second quarter, we saw 17 billion dollars of net. Outflows driven by index multi-asset and Equity strategies. Partially offset by net inflows into cash and fixed income strategies.
Wealth management client assets of 339, billion increased by 10%, year-over-year, largely driven by higher Market values.
Dermot McDonogh: Page 10 shows the results of the other section. For this segment, I'll just note that the sequential decrease in revenue primarily reflects the net losses from investment securities activity I mentioned earlier, while the sequential decrease in expenses reflects lower litigation reserves and severance.
Page, 10 shows the results of the other segments.
Speaker Change: For this segment. I'll just note that the sequential decrease in Revenue, primarily reflects the net losses from investment Securities activity. I mentioned earlier, while the sequential decrease in expenses, reflects lower litigation reserves and severance.
Dermot McDonogh: Turning to page 11, I'll close with a mid-year update of the financial outlook for 2025 that we provided on our earnings call in January. As you can see on the slide, BNY is entering the second half of the year with great momentum while we remain cognizant of the economic outlook amid elevated geopolitical and policy uncertainty. Based on where we sit today, looking out to the balance of the year, we now expect full year 2025 net interest income to be up high single digit percentage points year over year. And we continue to expect solid fee revenue growth in 2025, of course, market dependent.
Speaker Change: Turning to page 11. I'll close with a major update of the financial outlook for 2025 that we provided on our earnings call in January.
As you can see on the slide B and why is entering the second half of the year with great momentum, while we remain cognizant of the economic Outlook amid elevated geopolitical and policy uncertainty.
Speaker Change: Based on where we sit today, looking out to the balance of the year. We now expect full year 2025 net interest income to be up. High single-digit percentage points year-over-year
Speaker Change: And we continue to expect solid fee, Revenue, growth in 2025.
Dermot McDonogh: We now expect expenses excluding notable items for the year to be up approximately 3% year-over-year. We continue to expect our effective tax rate for the full year to be in the 22-23% range. Considering our 21% tax rate in the first half, that means approximately 23% for the second half of the year. and we continue to expect to return roughly 100% plus or minus of 2025 earnings through common dividends and buybacks over the course of the year. Following the release of the Federal Reserve's annual bank stress test, our Board of Directors declared a 13% increase of our quarterly common stock dividend, and we plan to continue repurchasing common shares under our existing share repurchase program.
Speaker Change: Of course, Market dependent.
Speaker Change: We now expect expenses, excluding notable items for the year to be up approximately 3%, year-over-year.
Speaker Change: We continue to expect our effective tax rate for the full year to be in the 22 to 23% range.
Considering our 21% tax rate in the first half, that means approximately 23% for the second half of the year.
Speaker Change: And we continue to expect to return roughly 100% plus or minus of 2025 earnings through common dividends, and BuyBacks over the course of the year.
Speaker Change: Following the release of the federal reserve's annual bank stress test, our board of directors, declared a 13% increase of our quarterly common stock dividend and we plan to continue repurchasing. Common shares under existing share repurchase program.
Dermot McDonogh: As always, we consider macroeconomic and interest rate environments, balance sheet growth, and many other factors with a conservative bias in managing the pace of our buyback.
As always, we consider macroeconomic and interest rate environments, balance sheet growth and many other factors with a conservative bias in managing the pace of our BuyBacks.
Dermot McDonogh: To wrap up, BNY posted very strong results in the second quarter, demonstrating the impact of consistent execution and delivery amid a complex, but yet for BNY, constructive operating environment. The momentum of our multi-year transformation continues to build and progress to date gives us incremental confidence in BNY's great potential for the medium and long term.
Speaker Change: To wrap up bny posted very strong results in the second quarter.
Demonstrating the impact of consistent execution and delivery.
Speaker Change: Amid a complex. But yet for B and Y constructive operating environment.
Operator: With that, operator, can you please open the line for Q&A? if you would like to ask a question. Press star 1 on your telephone keypad.
Speaker Change: The momentum of our multi-year transformation continues to build and progress to date. Gives us incremental confidence in bwise. Great potential for the medium and long term.
Speaker Change: With that, operator, can you please open the line for Q&A?
Ebrahim Poonawala: As a reminder, we One Related Follower We'll take our first question. Poonawala with Bank of America. Thanks. Good morning. Morning, Ebrahim.
If you would like to ask a question, please press star 1 on your telephone keypad now.
Speaker Change: As a reminder, we ask that you, please limit yourself to 1 question and 1 related. Follow-up question?
Ibraham puno: We'll take our first question from Ibraham puno, Walla with Bank of America.
Please go ahead.
Ibraham puno: Thanks, good morning.
Robin Vince: Maybe, Robin, for you...
Ibraham puno: Morning.
Robin Vince: So the call in terms of the transformation efforts, digital assets, AI, just sounds like significant runway on all things organic, but address for us how you're thinking about capital deployment relative to where the stock's trading at today. And I'm sure this is not news to you in terms of news around BNY pursuing a merger with a competitor, your interview in Barron.
Um, maybe Robin uh for you.
Speaker Change: So the call in terms of the transformation efforts digital assets AI just sounds like significant runway on all things organic but um, exist for us. How you are thinking about Capital deployment, uh, relative to where the stocks trading at today, and I'm sure this is not news to you in terms of news around being
Robin Vince: So give us a sense of when we think about capital deployment as shareholders, how should we think what the priority is outside of funding the business, be it buybacks versus M&A. Sure. So look, you know, the beginning point of what you said is actually the most important thing. We have got strong momentum. We really see the pathway to be able to generate value over the medium and long term. Obviously, you're seeing some of the early signs of that, and we're pleased with it. And that is our biggest focus, because at the end of the day, at the top of the capital waterfall is that ability to invest in the business.
Speaker Change: Why pursuing a merger with a competitor? You're interviewing bars. So give us a sense of when we think about Capital deployment as shareholders. How should we think what the priority is outside of funding the business? Be it BuyBacks versus m&a. Thanks.
Robin Vince: Now, look, is that we're a pretty capital light business. You can see it in the 28% ROTCE that we generated in the quarter. We're pleased with that. That's another sign of the transition and transformation of the company towards this more platforms orientation, because that is the sort of feature that you'd expect of a company in terms of the direction of travel that we've got going. Now, in terms of the sort of the inorganic stuff, look, our broad approach hasn't changed, which is M&A done well can be a powerful tool in the toolkit. It's not our custom to comment on any specific rumor or speculation.
Robin Vince: But I think we demonstrated last year with the Archer acquisition that we've got the ability to make M&A work for us in a sensible way. Having said that, I just really want to underscore this point. It's a very high bar for us for M&A, especially a larger transaction. It would have to make a ton of sense. We'd need to have a lot of conviction and execution. We're focused on ongoing alignment with our strategic priorities, strong cultural fit matters. And of course, the financials really have to work. And our M&A story is a two-sided story as well, because you saw that last year, we bought Archer, but we sold our Corporate Trust Canada business.
Speaker Change: In the 28% rotce that we generated in the quarter, we're pleased with that. That's another sign of the transition and transformation of the company towards this more platforms orientation. Because that is the sort of feature that you'd expect uh, of a company, uh, in terms of the direction of travel that we've got going. Now, in terms of the, uh, of the sort of the inorganic stuff, look how broad approach hasn't changed which is m&a done. Well, can be a powerful tool in the toolkit. Uh, it's not our custom to comment on any specific rumor or speculation, but I think we demonstrated last year with the Archer acquisition that we've got the ability to, uh, make make m&a work for us in a sensible way. Having said that, I just really want to underscore this point.
Robin Vince: So the punchline I'll leave you with is we are focused on our organic growth. That is working. We are beginning the process of a multi-year journey on that. And we're going to be open because we should be open to sensible things inorganically if they make sense. But I'll underline again, if they make sense. That's very clear.
Speaker Change: It's a very high bar for us for m&a especially a larger transaction it would have to make a ton of sense. We'd need to have a lot of conviction and execution, uh we're focused on ongoing alignment with our strategic priorities, strong cultural, fit matters. And of course, the financials really have to work and our m&a story is a 2-sided story as well because you saw that last year we bought Archer but we sold our corporate trust Canada business. So the punchline I'll leave you with is we are focused on our organic growth that is working. We are beginning the process of a multi
Your journey on that. And we're going to be open because we should be open.
To sensible things inorganically if they make sense but our underlying again if they make sense.
Ebrahim Poonawala: Thank you. And I guess maybe just following up on that, you referenced the 27% ROTC this quarter, I get it's a seasonally strong quarter.
Robin Vince: But as we think about again, relative to new investors trying to put money to work in the stock, if structurally based on all the work you've done so far over the last few years, and where things are going, Is it safe for investors, shareholders, the state to assume that this is becoming a high 20s or C institution, which should then support a very different multiple than we've been used to for the last several years? Thanks. So look, I'll blend sort of two things together here. One is the broader medium-term targets as we think about them.
That's very clear. Thank you. And I guess maybe just following up on that you, uh, reference the 27% ROTC this quarter. I get it's a seasonally strong quarter. But as we think about again relative to new investors, trying to put money to work in. The stock is structurally based on all the work, you've done so far over the last few years and where things are going
Robin Vince: We have not put a ceiling on any of our medium-term targets. We viewed them as milestones on a longer journey. At the time that we first communicated them, people understandably thought about them as ambitious based on where we had been in the past, but we are on a journey here and we are making important steps forward. And so on ROTC specifically, we don't see a ceiling on that number because as a more platforms-oriented company, remember NII is only 25% of our revenues, view that as broadly a proxy for the balance sheet, which means three quarters of our business is largely a pretty capital light business that's driving forward in terms of fee growth.
Uh, is it safe for investors shareholders? The street to assume that this is becoming a high 20.0 C institution, which should then support a, a very different multiple than we've been used to, for the last, uh, several years. Thanks. So, so look, I I'll blend sort of 2 things together. Here 1 is the broader medium-term targets as we think about them. Uh, we have not put a ceiling on any of our medium-term targets. We viewed them as Milestones on a longer Journey, uh, at the time that we first communicated them, you know, people understandably thought about them. As ambitious based on where we had been in the past. But we are on a journey here and we are making important steps forward. And so, uh, on our OTC specifically, we don't see a sealing on that number, uh, because as a more,
Speaker Change: Platforms oriented company. Remember, knee is only 25% of our revenues view that, as broadly, a proxy for the balance sheet, which means 3/4 of our business is largely a pretty Capital light business.
Robin Vince: And so I would just look generally at our medium-term targets and I would throw ROTC, your question, into that as well and say we have a lot of ambition. We think we're relatively early in our journey and we're absolutely going to be moving the bar higher on ourselves, which frankly we do every single day in terms of how we run the company.
That's driving forward in terms of fee growth. And so I I would just look generally at our medium-term targets and I would throw our OTC your question into that as well. And say, we have a lot of ambition, we think we're relatively early, in our journey and we're absolutely going to be moving the hard uh, the bar higher on ourselves, which frankly, we do every single day in terms of how we run the company.
Ebrahim Poonawala: Perfect. Thank you, Robin. Thanks.
Robin Vince: Perfect, thank you, Robin.
Speaker Change: Thanks.
Ken Usdin: We'll move to our next question. Autonomous Your line is now open. Hey, good morning, everyone.
we'll move to our next question from Ken with autonomous research, your line is now open
Ken Usdin: I wanted to ask about just the evolution of, as the year goes on, of just overall top-of-the-house performance, because obviously you're taking up your NII guy, but NII has only 25% of revenue. And while the cost guide is up, I think it maybe misses the point that on the fee side, your guide is only just for year over year. And here we are plus 6% in the second quarter and plus 7% for the year to date. So I'm just wondering on the fee side, are fees better than your original expectations too? And is that informing as much as the NII upside, you know, the slight drip up on the overall cost guide as the total is coming in better?
Speaker Change: Hey, good morning everyone. Um
Speaker Change: I wanted to ask about just um the evolution of as the year goes on of just overall top of the House Performance because obviously you're taking up your knee guy but knee is only 25% of revenues and and while the cost guide is up, I think that maybe misses the point. That on the fee side your guide is only just for year-over-year and here we are plus 6% in the in the second quarter and plus 7% for the year to date. So I'm just wondering on the fee, side are fees better than your original expectations too and is that informing, as much as the knee upside, you know, the, the, the slight trip up on the overall cost guide.
As as the total is, is coming in better.
Dermot McDonogh: Hey, Ken, I'll start with that. Look, the way I kind of think about the firm is I start with overall positive operating leverage. And I guess a key message I would leave you there both on operating and reported basis, I think it was roughly 500 basis points of operating leverage.
Speaker Change: Hey, can can I I'll uh I'll start with that. Um, look the way I kind of think about the firm is I start with
Dermot McDonogh: And so since Robin took over as CEO, we've kind of made the positive operating leverage our North Star. And so consistently delivering that to the market has been our kind of kind of the core strategy around how we think about the financials. So you have three components to that. You've got fees, you've got NII, and you've got expenses. And you'll see from the financials, yeah, revenue up 9%, expenses up 4%, you know, delivering that positive operating leverage within the revenue, you've got fees, you've got NII, really solid performance on NII, which gives us comfort around for the balance of the year, giving a higher guide to kind of high single digits.
And so since Robin took over as CEO, we've kind of made the positive operating leverage, our Northstar and so consistently delivering that to the market has been our kind of kind of the core strategy around how we think about the financials. So you have 3 components to that. You've got fees, you've got knee and you've got expenses and you'll see from the financials. Yeah, Revenue up, 9% expenses up 4%, you know, delivering that positive operating leverage within the revenue. You've got fees, you've got nii really solid uh, performance on knee, which gives us Comfort around for the balance of the year.
Dermot McDonogh: And on the revenue side, I think the strength in fees really underscores the commercial model that we launched about a year ago, two consecutive quarters of kind of record sales. Notwithstanding that, the second quarter is a seasonally strong quarter. So we would expect strong sales. But that was on the back of a Q1. And we see going into Q3, although it is a kind of seasonally slower quarter for us given the vacations, etc., we see kind of strong momentum continuing.
Dermot McDonogh: So you see a picture on page three of the mid-year update where we kind of show you a little pictorial about how we think about organic growth. And we have high conviction around that beginning to build and grow.
Robin Vince: And Ken, let me just build on a couple of things that Dermot said. So first of all, yes, it was a constructive environment in the second quarter. But I'll bring you back to our comments in January when we talked about the various different things that drive our business. We've intentionally been repositioning the company gradually to be able to take advantage of more different types of environments. So I think the punchline is, while there are always amazing environments that you could have for a business or potentially environments which just don't have any element of being particularly constructive, we think we're broadening out the probabilities of any given environment actually working reasonably well for us because equity markets up, fixed income markets up, equity volumes up, fixed income volumes up, transaction volumes and GDP up, issuance up, asset management activity, wealth management activity.
Speaker Change: Giving a higher guide to, to kind of high single digits. And on the revenue side, I think the strength in in fees really underscores, uh, the commercial model that we launched in about a year ago to consecutive quarters of kind of record sales, notwithstanding that the second quarter is a seasonally strong quarter. So we would expect some strong fee, uh, strong sales but that was on the back of a q1 and we see going into Q3 although it is a kind of seasonally slower quarter for us given the vacations, Etc. Um, we see kind of strong momentum continuing so you see a picture uh, on page 3 of the mid-year update, where we kind of kind of show you a little pictorial about how we think about organic growth. And we have high conviction around that beginning to build and grow
Robin Vince: There are a lot of cylinders in this particular engine. And so the second quarter was constructive, but we have been positioning the company to be able to take advantage of more and more environment as constructive. And I think that plus the point that Dermot made around our commercial model is allowing us to grind organic growth higher. So we want to take advantage of the beta. We want to be able to participate in whatever the quarter happens to bring. But this constant focus on alpha generation in terms of how we're running the company and positioning the company is an important part of the story.
Speaker Change: And Ken. Let me just build on a couple of things that dermat said. So. So first of all, yes, it was a constructive environment in the second quarter, but I'll bring you back to our comments in January. When we talked about, uh, the various different things that drive our business, we've intentionally been repositioning. The company gradually, to be able to take advantage of more different types of environments. So, I think the punchline is, well, there are always amazing environments that you could have for a business or potentially environments, which just don't have any element of being, particularly constructive. We think we're broadening out the probabilities of Any Given environment. Actually working reasonably well for us because Equity markets up fixed income, markets up, Equity volumes up, fixed income, volumes up, transaction, volumes in, GDP up issuance up Asset Management activity, wealth management activity. There are a lot of cylinders in this particular engine. And so the second quarter was con
Ken Usdin: And we do think that this is a starting to see that. But again, the early innings point that Dermot and I have made many times before, there's a lot of runway here in our estimation. So that's great color. And I do like that upper right chart on.
Speaker Change: Constructive, but we have been positioning the company to be able to take advantage of more and more environment as constructive. And I think that plus the point that dermat made around, our commercial model is allowing us to grind organic growth higher. So we want to take advantage of the beta. We want to be able to participate in whatever the quarter happens to bring. But this constant focus on Alpha generation in terms of how we're running the company and positioning the company is an
Speaker Change: Important part of the story and we do think that this is a quarter where you're starting to see that. But again, the early Innings point that dermat and I have made many times before, there's a lot of Runway here in our in our estimation,
Ken Usdin: Just one thing on the environment then, you've talked previously about just the stickiness of deposits and obviously that's informing the better-than-expected NII outlook. Does anything change in the environment to that point? Because I think Robin will bring back in your point about like, you know, tools in the kit and arsenal to just continue to add deposits, but maybe you could just help us understand the environmental side a little bit. Thank you. So I think point number one here that I would make, Ken, is as a matter of strategy, we don't really lead with deposits. So when you see deposits being a little bit higher, the mix of IB and IB a little bit higher, it really speaks to the breadth and the depth of the franchise and doing more with clients and doing more with clients attracts deposits.
Speaker Change: Understood that's very color and I do like that upper right chart on page 3. Um, just 1 thing on the environment. Then can you, you've talked previously about just the stickiness of deposits and obviously, that's informing the better than expected. Nii Outlook. Does anything change in the environment to that point because I think Robin will bring back in your point about like, you know, tools in the kit and Arsenal to just continue to add deposits, but maybe you can just help us understand the environmental side a little bit. Thank you.
Ken Usdin: And specifically around second quarter in our corporate trust business, we had higher levels of activity and we were able to kind of help clients with unique specific situations that attracted deposits into the system, particularly on the NIB side. And that was able for us to kind of have a good NII print this quarter. And when we look out for the balance of the year and run our various scenarios, we really have reduced the tails with respect to interest rates sensitivity. And that was really on the back of a ton of work done towards the back end of last year when the Fed made the pivot after Jackson Hole around the forward rate curve.
So I I think Point number 1 here that I would make Ken is as a as a matter of strategy we don't really lead with deposits. So when you see deposits being a little bit higher, the mix of IB and IB a little bit higher, it really speaks to the breadth and the depth of the franchise, and doing more with clients. And doing more of our clients, I kind of attracts deposits and specifically around second quarter in our quarter in our corporate trust business, we had higher levels of activity and we were able to kind of help clients with unique specific situations that attracted deposits into the into into the system particularly on the nib side and that was able to for us to kind of have have a good uh knee print this quarter. And when we look out for the balance of
Ken Usdin: And so that gives us now a lot of confidence to be able to kind of provide that higher NII growth against what is a constructive backdrop for us.
Speaker Change: Thanks very much, guys.
Glenn Schorr: Our next question comes from Glenn Schorr with Evercore ISD. Your line is now open. Hi, thanks very much. With so much going well, forgive me, I'm going to pick on the one area that So fees down a little bit, flows out, margins. You know, in that 19 range, so. Despite the Good Market. So the question is, if we step back a little bit.
Our next question comes from Glenn Shore with evercore isi.
Speaker Change: Your line is now open.
Speaker Change: Hi. Thanks very much.
Dermot McDonogh: Can we talk a little bit about what investments you're making?
Dermot McDonogh: Unknown Executive, Alexander Blostein, Dermot McDonogh, Marius Merz, Jean Weng, David Smith, Thanks for the question, Glenn. I would say investment number one was Robin appointing Jose as the leader of that business, and he started last September. And you can see, you know, between the first quarter where we had a margin of 8% to this quarter where we're about 19%, you can see that step up in margin, and you can see Jose is beginning to work the opportunity and making some decisions to right size it from an efficiency standpoint. And I'm very pleased with what Jose has done.
Speaker Change: Um, with so much going, well, forgive me. I'm going to pick on the 1 area, that wasn't as good as everything else and Investment Management. So, fees down a little bit flows out, margins down, you know, in that 19 range. So, despite the good markets. So, the question is, if we step back a little bit and we talked about, can we talk a little bit about what investments you're making, um, to improve the business and like, what's high on your to-do list to help, you know, drive better performance as we move forward and Investment Management. Thanks.
Dermot McDonogh: What I also think he's doing very, very effectively, and look, both Robin and myself will have talked about this on prior quarters, the one BNY approach in terms of de-siloing the firm, you kind of have to go that extra mile as it relates to our investment and wealth management strategy and bringing the boutiques closer to the firm. And I think Jose sees a lot of opportunity for us to cross sell within the firm, both within our asset servicing business and within our purging business. So bringing the strength of our manufacturing capabilities to our purging clients and our asset servicing clients is a kind of a key forward strategy that we can see we can do well at, and also bringing in leadership and product development.
Speaker Change: Thanks for the question, Glen, I I would say uh, investment 1. Number 1 was uh Robin appointing uh Jose as the leader of that business and he started, uh, last September and you can see, you know, between, uh, the first quarter where we had a margin of 8% to this quarter where we're about, 19% you, you can see that step open margin and you can see Jose is beginning to work the opportunity and making some decisions to right size it from an efficiency standpoint. And um, I'm very pleased with what Jose has done. Um, what what I also think he's doing very very effectively
Dermot McDonogh: So I think you're going to see more positive stories coming from this particular segment. But as with all transformations, it takes a little bit time and Jose is getting that time to make the decisions that he needs to.
Robin Vince: And Glenn, let me just build on one particular point that Dermot just made. You know, one of Jose's early observations about the business was we have a terrific, to use Dermot's term, manufacturing base. If you look under the hood of our $2.1 trillion of AUM, you have some real market-leading franchises. We have Insight, which is number one in its market. That's a trillion dollars of it right there. You have Walter Scott, which is a terrific long-only, long-dated equity manager. You have a terrific business in the form of Dreyfus as money markets. And we have in Mellon, a direct indexer that's capable of being able to create product that our asset servicing clients are very interested in.
Speaker Change: And look both Robin and myself will have talked about this on prior quarters, the 1 B and Y approach. In terms of desilo the firm, you kind of have to go that extra mile as it relates to our investment and wealth management strategy, and bringing the boutiques closer to the firm. And I think Jose C is a lot of opportunity for us to cross sell within the firm both within our asset servicing business and within our Persian business. So bringing the strength of our manufacturing capabilities, to our purging clients and our asset. Servicing clients is a kind of a, a key forward, uh, strategy that we can see we can do well at and also bringing in leadership and product development. So I think you're going to see more positive stories coming from this particular segment. But as with all transformations, it takes a little bit time and Jose is getting that time to make the decisions that he needs to and Glenn. Let me just build on 1 particular point that Derma just made, you know, 1 of Jose's early,
Speaker Change: um, observations about the business was we have a terrific to use dermat term manufacturing base. Uh, if you look under the hood of our 2.1 trillion dollars of AUM, you have some real Market leading franchises, we have Insight which is number 1 in its Market. That's a trillion dollars of it right there. You have Walter Scott, which is terrific long-only, long dated, uh, Equity manager. You have a terrific business in the form of dreifuerst as money markets. And we have a
Robin Vince: Obviously, it also has a lot of relevance for the $3 trillion of wealth distribution that we have in Pershing. So if you think about the manufacturing base, let's give ourselves a check that we have a pretty good set of businesses that are actually performing pretty well. On the distribution, if we didn't have BNY, then you could look at asset management and you could say that there's a lot of parallels with other mid-sized to large asset managers, and the question of distribution would be on everybody's lips. But one of Jose's observations was, wow, this investment manager at BNY is one of the reasons why I joined BNY, because there's all of this distribution potential, but we just haven't fully unlocked it.
In melon, a direct indexer, that's capable of being able to create product that are asset servicing. Clients are very interested. In obviously it also has a lot of relevance for the 3 million dollars of, uh, wealth distribution that we have in persing. So if you think about the manufacturing base, let's give ourselves a check that we have a pretty good set of businesses that are actually performing pretty well on the distribution.
Robin Vince: So then what sits in the middle? And that's the word that Dermot used, product. If you take a metaphor for this for a second, imagine that you were a Coke or a Pepsi and you were making a beverage and you had to concentrate and you have all of this terrific distribution because you can sell in restaurants, you can sell in grocery stores, you can sell in a corner store as well. But in the middle of that is a critical point of product, which is are you taking the manufacturing base that you have and making cans when you want to in the corner store?
If we didn't have bny, then you could look at asset management. And you could say that a lot of parallels, with other midsize to large asset managers. And the question of distribution would be on everybody's lips. But 1 of Jose's observations was wow. This investment manager is at bny, is the 1 of the reasons why I joined bny because there's all of this distribution potential but we just haven't fully unlocked it. Okay. So then what sits in the middle and that's the word that Derma used product where if you, if you take it a metaphor for this for a second,
Robin Vince: Because if you put bottles of concentrate in a corner store, it's not going to help you. But when you're delivering to a large fast food outlet, there you want to be able to deliver the concentrate. Can's not as useful. So this piece in the middle, this product shaping that leverages the manufacturing base with an eye to the distribution channels that you have available to you is critical. And I think we haven't done as good a job on that as we could.
Speaker Change: Imagine that you were a Coke or a Pepsi and you were making, uh, a beverage and you had the concentrate and you have all of this terrific distribution because you can sell in restaurants, you can sell in grocery stores, you can sell in in the corner, uh, store as well. But in the middle of, that is a critical point of product, which is, are you taking the manufacturing base that you have and making cans when you want to sell it in the corner store?
Speaker Change: Because if you put bottles of concentrate in a corner store, it's not going to help you. But when you're delivering to a large Fast Food Outlet there, you want to be able to deliver the concentrate cans. Not as useful.
Glenn Schorr: And so that's a very big focus Thanks for all that. Maybe I could do a tiny follow-up on the previous question. forgive me if you said it, but the fee revenue, we're up 5% for the first half and the guide is still quote, up on the year. Markets are higher, despite this conversation we just had on investment management, it feels like deliberately conservative, which I'm cool with. I just, I'm just curious on how we square the up five for the first half markets are trending. Well, your momentum's good. Why wouldn't the fee outlook? I know I asked you that last quarter.
Speaker Change: We could. And so that's a very big Focus for us and we think that when you take all of those things together, we think there's an interesting pathway here.
Speaker Change: Thanks for all that. Um, maybe I could do a tiny follow-up on the previous question. Um,
Speaker Change: forgive me if you said it, but the fee, Revenue, we're up 5% for the first half and the guide is still quote up. On the year markets are higher. Despite this conversation, we just had our investment management, it feels like deliberately conservative, which I'm cool with. I just, I'm just curious on how we Square the up 5 for the first half markets are trending. Well, your momentum's good. Why wouldn't the fee Outlook be better?
I know. I asked you that last quarter and the outperform.
Dermot McDonogh: So the way I would answer it, it's like there are a lot of factors that go into the fee, a lot of external factors that we don't necessarily control, very market dependent. We kind of go back to the foundational building blocks of the platform operating model and the commercial model, which is, you know, it's still only a year old, but it is working. You can see it. We have higher conviction about our ability to drive organic fee growth from here. But you know, and we've changed a lot over the last three years, Glen, about the transparency of our numbers and how we give you a lot more than we did three years ago.
So, the way I would answer it, is it it? It's like there are, there are a lot of factors that go into into the fee. A lot of external factors that we don't necessarily control very Market dependence,
Speaker Change: We we kind of go back to the foundational. Building blocks of the platform operating model and the commercial model which is you know it's still only a year old but it it is working. You can see it.
Betsy Graseck: So I think as we get more conviction and as we get more kind of sales telemetry around us, we'll give you more guidance as we feel comfortable. But for now, I think the momentum is there, the upper trajectory is there, but we're not ready to yet guide on specifics around fees. and third quarter is usually a seasonally slower quarter and Q2 is a seasonally strong quarter so it's important to be balanced in that as well. Better now, thanks for all. Thanks.
Speaker Change: We have higher conviction about our ability to drive organic sea growth from here. But you know, and we've changed a lot over the last 3 years. Learn about the transparency of our numbers and how we give you a lot more than we did 3 years ago. So I think as we get more conviction and as we get more kind of sales Telemetry around it, we'll give you more guidance as we feel comfortable. But for now, I think the momentum is there. Uh the opportunity is there but we're not ready to yet guide on specifics around fees.
Speaker Change: And third quarter is usually a seasonally slower quarter and Q2 is a seasonally strong quarter. So it's important to be balanced in that as well.
Speaker Change: Fair enough. Thanks for all that.
Thanks Glenn.
Betsy Graseck: We'll move to our next question. Graseck with Morgan Stanley. Please go ahead.
Betsy Graseck: Hi, good morning, Robin. Good morning, Dermot. Morning, Betsy.
Speaker Change: We'll move to our next question from Betsy graczyk with Morgan Stanley. Please go ahead.
Betsy Graseck: I wanted to dig in a little bit on the AI commentary that you had, Robin. And starting off, you know, the operating leverage is just so strong, almost double what ConsenSys had baked in for you and really terrific results here. I wanted to understand your comments on AI as it relates to forward look, because you indicated that nearly all your employees are using the ELISA, you know, AI platform. And you're starting to, you're beginning to see the benefit of this. I mean, is it the benefit from AI at a level that we can see in these operating leverage results?
Hi, good morning Robin. Good morning dermit. Um, good morning bet. I wanted to dig. I wanted to dig in a little bit on the AI commentary that you had Robin and starting off, you know, the operating Leverage is just so strong. Um, almost double what consensus had baked in for you and, and really, um, terrific results. Here, I wanted to understand your comments on AI as it relates to the forward. Look because you indicated that nearly all your employees are using the Eliza
Speaker Change: you know, AI platform and
Speaker Change: you're starting to, you're beginning to see the benefit of this. I mean, is it?
Betsy Graseck: And maybe you could help us understand, is this more revenues or expenses? Sure. Well, thanks for your comments about positive operating leverage. As Dermot and I both said over time, Betsy, that is a great North Star. And going back to Glenn's question at the end there, you know, one of the reasons why we've been always a little reluctant to guide on all of the elements underneath the hood of positive operating leverage is we recognize the composition in any quarter or any year could be a little different. And we don't want to create ceilings for ourselves.
Speaker Change: The benefit from AI at a level that we can see in these operating leverage results.
Speaker Change: Um, and maybe you could help us understand, is this more revenues or expenses?
Betsy Graseck: We are extremely hungry for positive operating leverage and we see a ton of pathway. And when you go under the hood, one of the reasons why over the past three years, we've really focused on showing you all the inputs to what we're doing is because we recognize that the timing of exactly when each of these strategies starts to really hit varies a little bit. And so, we've got several things driving the positive operating leverage. We've got a commercial engine which is starting to now make a meaningful contribution. Output evidence, you can see it in the record sales quarters that we had in the first and second quarter.
Speaker Change: Sure. Um well thanks for your comments about positive operating Leverage is dumb, it and I both said over time Betsy that, that is a great North Star and going back to to Glenn's question at the end. Uh there, you know, 1 of the reasons why we've been always a little reluctant to guide on all of the elements. Underneath the hood of positive operating Leverage is we recognize the composition in any quarter or any year, could be a little different and we don't want to create ceilings for ourselves. We are extremely hungry for positive operating leverage, and we see a ton of pathway. And when you, when you go under the hood, 1 of the reasons why over the past 3 years, we've really focused on showing you all the inputs to what we're doing is because we recognize that the timing of exactly when each of these strategies starts to to really hit, uh, varies a little bit. And so we've got several things driving the positive operating leverage. We've got a commercial engine which is starting to now make a meaningful contribution output evidence. You can
Betsy Graseck: The platform's operating model, we knew there would be a longer lead time to that. We started work on it three years ago and now it's starting to come into its own, but it's still very early days because only less than 10% of our people have been in the model for at least a year. And as we indicated in our prepared remarks, we see the actual value really starting to shine through in platform's operating model after we've had people in the model for about that period of time. So, that is still to come, little bit of it now, most of it 26, 27, 28 and beyond.
Speaker Change: See it in the record sales quarters that we had in the first and second quarter, the platforms operating model, we knew there would be a longer lead time to that we started work on it, 3 years ago. And now it's starting to come into its own, but it's still very early days because only less than 10% of our people have been in the model for at least a year. And as we indicated
Betsy Graseck: The next layer is the heart of your question, which is AI. We view AI as a top line story and an expense story because what we're really doing is we're unlocking capacity in the company. And we want to then be able to use that capacity to do other higher value things. That's why we've been encouraging all of our people to participate in AI because we view our AI solutions, which we've put on the page three, again, demonstrating the inputs today, and then we'll show you the outputs over time. We see those as being able to be very helpful as to will be our digital employees is essentially companions and leverage for our people to be able to go faster and create capacity for themselves that they can reinvest in doing new things, pushing forward with clients, more time in the day, all of the above.
Speaker Change: Really doing is, we're unlocking capacity in the company and we want to then be able to use that capacity to do other higher value things.
Betsy Graseck: So, our excitement about AI is a very medium to long-term excitement, but we've invested heavily early on in the psychology of it in the company so that we have AI for everyone, everywhere, for everything. And that's really how we think about AI. So, it's early days. There's not a ton in the P&L right now, to your point, with net investment, but we are starting to see the early signs of what we think will be an acceleration 26, 27, 28, 29, beyond. Thank you.
Speaker Change: That's why we've been encouraging all of our people to participate in AI because we view our AI Solutions, which we put on the page 3 again, demonstrating the inputs today and then we'll show you the outputs over time. We see those as being able to be very helpful. As 2 will be our digital employees as essentially Companions and leverage for our people, to be able to go faster and create capacity for themselves that they can re they can reinvest in doing new things pushing forward with clients more time in the day, all of the above. So the, the our excitement about AI is a very medium to long-term excitement, but we've invested heavily early on in the psychology of it, in the company so that we have ai for everyone everywhere, for every single. And that's really how we think about AI. So, it's early days, there's not a ton in the p&l
Speaker Change: Right now to your point with net investment, but we are starting to see the early signs of what we think will be an acceleration. 26 27/28 29 Beyond.
Speaker Change: Thank you.
Mike Mayo: We'll take our next question from Mike Mayo with Wells Fargo Security. Hi.
Speaker Change: We'll take our next question from Mike Mayo with Wells Fargo security.
Mike Mayo: No good deed goes unpunished. I know you talked about organic growth. You could make that one of your punchlines, Mike. I know you've trademarked the world's worst oligopoly, but that one you could put in trademark as well. And BNY, not your parents' bank. I'm the first to say you've optimized much better than I had expected these last two years and you have these very high returns, but the organic growth, and you do it correctly, X markets, X currency, X deals, whether it's 2% or 3% is still not great in the scheme of. the overall world.
Mike Mayo: Hi. Uh no good deed goes unpunished. I know you talked about organic growth. You could you could make that you could make that 1. If your punchlines Mike you could. I know you've trademarked the world's worst oligopoly, but that 1 you could put you could put in trademark as well and and B Andy not your parents Bank.
Mike Mayo: And I know you want that growth to be better. And I know you said you had record sales, but it's the growth is still the growth. It hasn't changed that much at an organic level.
Mike Mayo: Look, I, I I'm the first to say, you've optimized a much better than I had expected these last 2 years. Um, and um, but, you know, and you have these very high returns, but the organic growth and you you do it. Correctly X markets, X, currency X deals, whether it's 2% or 3%, um, is still not great in the scheme of, you know,
Mike Mayo: And, and I know you guys have thought about this, but, you know, the degree you sacrifice the, the high, very high returns to reinvest for better growth than what the company's had for the past five, 10, 20 years. Right. And so I, where do you stand in that of maybe having lower returns or maybe, you know, not raising your return targets and reinvesting more for growth and where should that organic of Sure. So, several things here, Mike. So, one of the reasons why we put that chart, the top right corner of page three, was to illustrate the fact that organic growth has been growing.
Mike Mayo: The overall world and um I know you want that growth to be better and I know you said you had record sales but it's the growth is still the growth. It hasn't changed that much at an organic level. And and I know you guys have thought about this but you know, the degree sacrificed the the high very high returns to reinvest for better growth than what the companies had till the past 5 10, 20 years, right? And so I, where do you stand in that trade-off of maybe having lower returns or maybe you know, not raising your return targets and reinvesting more for growth, and where should that organic, uh,
Mike Mayo: Growth, B, and your, your perfect world the way you define it.
Robin Vince: I hear your point about three versus two, but three is still 50% more than two, and significantly up from where it has been in the past. But a few other points to note. Our growth in the past generally has been quite subject to markets. And so we are very happy to take advantage of constructive backdrops. And as I answered in a prior question, we're trying to position the company to take advantage of more types of backdrops so that we can be less handed our results by the market conditions and more in charge of our own destiny.
Mike Mayo: Sure. Um so so several things here, Mike. So 1 of the reasons why we put that chart the top right corner of page 3 was to illustrate the fact that organic growth has been growing. I I hear your point about 3 versus 2, but 3 is still 50% more than 2 uh and significantly up from where it has been in the past but a few other points to note.
Robin Vince: That's a very deliberate strategy, and we feel like we're making some progress on that. So that's sort of the next observation. The next thing under the hood is what are the prerequisites for the real type of organic growth that you're talking about? You've challenged us on, understandably and rightly so, over the course of the past two or three years. And this is where we really feel like we've set the table for the future. And to your point about how we think about investing versus harvesting, we've been very clear on this. We are taking a decade view of the transformation of BNY, and we're pleased where we are close to three years in.
Mike Mayo: Our growth in the past generally has been quite subject to markets and so we are very happy to take advantage of constructive backdrops. And as I answered in a prior question we're trying to position the company to take advantage of more types of backdrops so that we can, we can be less uh, handed our results by the market conditions and More in charge of our own destiny. That's a very deliberate strategy and we feel like we're making some progress on that. So, that's sort of observ the next observation. The next thing under the hood is what are the prerequisites for the real type of organic growth that you're talking about that? You've challenged us on understandably and rightly so over the course of the past 2 or 3 years. And this is where we really feel like we've set the table for the future and, and to your point about
Robin Vince: But we are far from done because much of what we have done has actually been investing for the future. And we're in the very early stages of seeing that being harvested. We talked about the commercial model. We talked about the platform's operating model. We talked about AI, which is part of the growth story as well as it is on the expenses. But let me just come back to the key elements of what we've got. We've got a diversified set of platforms that is, yes, helping us to be more diversified in different environments. But it is also allowing us to better position to capitalize on these market trends and to generate alpha because it's less one business going to market it by itself.
Robin Vince: It's more what's the synergy between the component parts. You know, a client who custodies with us. who also does treasury clearing with us, who also does collateral management with us, is going to be able to get better outcomes over time because of the fact that all of those things can just be book entry for us within our ecosystem. That allows us to move to 24-hour. That allows us to think and embrace digital assets maybe in a different way than somebody else can. And you're starting to see the early signs of these platforms coming together to show something where the sum is more than the individual parts.
Mike Mayo: More Diversified in different environments but it is also allowing us to better position to capitalize on these market trends and to generate Alpha because it's less 1 business going to Market it by by itself. It's more, what's the Synergy between the component parts? You know, a client who custodis with us?
Robin Vince: And that's what our commercial model is actually about. So we're investing in these micro-innovations, the bigger things, the synergies between the platforms. We've positioned people behind this. We've positioned culture behind this and organizing the company behind this.
Robin Vince: And we think it is starting to show, but we absolutely agree with you that there should be a lot more gas in the tank.
Dermot McDonogh: Hey, Mike, I would add just a couple of more points as well. One is, you know, you ask the question sometimes about negative pricing. We just, we haven't seen it this quarter, which really kind of goes to the efficiency point about us being able to reduce our cost to serve, which is able to help us drive the organic growth because we're able to compete more effectively to win our share of business. So that would be point number one. Point number two, to Robin's point about the commercial model, now we're in the early stages of a product model, which is joining with the commercial model, and that's been led by Carolyn Weinberg, where she's able to see in between the seams of our various businesses to create new products that clients want.
Mike Mayo: Who also does treasury clearing with us. Who also does collateral management with us is going to be able to get better outcomes over time because of the fact that all of those things can just be book entry for us within our ecosystem, that allows us to move to 24 hours that allows us to think and embrace digital assets maybe in a different way than somebody else can. And and you're starting to see the early signs of these platforms coming together, to show something where the sum is, is, is more than the individual parts. And that's what our commercial model is actually about. So, we're investing in these micro Innovations, the bigger things, the synergies between the platforms. We've positioned people behind this. We position culture behind this, and we're organizing the company behind this. And we think it is starting to show, but we absolutely agree with you. That there should be more a lot more gas in the tank here.
Hey Mike. I was at just a couple of more points as well.
um, 1 is, you know, you you asked the question, sometimes about negative pricing
Dermot McDonogh: So lots of opportunity to come there. And the third point I would make is when you look at the firm overall and you have to think about the enterprise, it's a 37% pre-tax margin, diversified business model. And so when you look at IWM, which is now hovering around the 19%, it's upside from here for the enterprise as we resume that path towards 25%, which is going to further fuel organic growth at the enterprise level.
Mike Mayo: We just we haven't seen at this quarter, which really kind of goes to the efficiency point about us being able to reduce our cost to serve, which is able to help us drive the organic growth, because we're able to compete more effectively to win our share of, uh, of business. So that would be Point number. 1 Point, number 2, to Robin's points about the commercial model. Now, we're in the early stages of a, of a product model, which is joining with the commercial model and that's been led by Caroline Weinberg where she's able to see in between the seams of our various businesses to create new products that clients want. So lots of opportunity to come there. And the third point I would make is when you look at the firm overall and you have to think about the Enterprise it's a 37% pre-tax margin Diversified business model and so when you look at iwm which is now hovering around the 19%
Mike Mayo: It's upside from here for the Enterprise as we resume that path towards 25% which is going to further fuel organic growth at the Enterprise level.
Mike Mayo: And I guess just one more follow up on the talk about acquisitions. And I heard you, it can be a powerful tool if it makes sense. The Art of What's Possible, since you are talking about being a different type. Not your parents, BNY, because you are more diverse in terms of your offering. What's the realm of possibility for acquisition? Clearly, traditional trust, you know. Businesses or sub-businesses are always possible. Going back to the merger, the big merger, but what other areas would you consider maybe buying? So it's an important question, Mike, again, you know, our primary focus is on driving the growth, but there are really different pathways on this thing.
Speaker Change: And I guess just 1 more follow-up on the, uh, talk about Acquisitions that. I heard you. It's a, it's can be a powerful tool. If it makes sense, you're not going to do anything stupid. I I hear you. Um but as you Broad,
The art of what's possible. Uh, since you are talking about being a different type of not not your parents uh uh being why uh, because you are more diverse in terms of your offerings, what's the realm of possibility, for acquisition? Clearly traditional Trust.
You know, businesses or sub. Businesses are always possible. Um going back to the the merger, the big merger. But what other areas would you consider maybe buying?
Robin Vince: So two or three years ago, we said there's absolutely no way that we're going to make any acquisitions. Then we sort of warmed up to the idea of capability buys, which is how I would frame Archer. And that really does check the box of helping us to go faster, to de-risk because we could buy versus having to build ourselves. And we're seeing the early signs of that output, great client feedback, the integrations being going well, new client wins as a result of it. So I still think that that is the most likely path for us when it comes to M&A, helping us to go faster.
Speaker Change: So uh it's it's it's an important question Mike again, you know focus, our primary focus is on driving the growth. Uh and and but there are really different pathways on this thing. So we you know 2 or 3 years ago we said there's absolutely no way that we're going to make make any Acquisitions. Then we we sort of warmed up to the idea of capability buys which is how I would frame Archer and that really does check the box of helping us to go faster to de-risk because we could buy versus having to build ourselves. And and we're seeing the early signs of that output, great client feedback. The integration is being going well, new client wins as a result of it. So I I still think that that is the most likely
Robin Vince: And I'm going to guess, but it doesn't have to be this way, that those types of things are generally more likely to be in the bits of the business, which are a little bit more platform like. Although it's interesting that Archer was a buy once, use across the firm type of acquisition. So that's our expectation for the primary focus. Because the bar for larger transactions is super high, we'd have to have a lot of conviction in the execution of something like that because clearly they could be quite complicated. And there you could make a case elsewhere in some of the other segments that maybe there would be the opportunity to have even more scale.
Speaker Change: Path for us when it comes to m&a. Helping us to go faster and I'm going to guess but it doesn't have to be this way that those types of things are generally more likely to be in the bits of the business which are a little bit more platform. Like although it's interesting that Archer was a buy once used across the firm type of acquisition. So so that's our that's our expectation.
Robin Vince: Because if you're a scale player and you've got a platform's operating model like organization, the thesis would be that you could bolt on more activity onto your existing chassis and there would be a lot of scalability associated with that. So that's a fine thesis and something that we certainly keep in mind as well. But as now we have close to two thirds of the company in platform like businesses, either in MWS or in our issuer services business, you know, when you look at MWS alone, it's a forty nine percent margin. You know, we've got we've got choices in this space, but we're not going to let those choices get distracting for us.
Speaker Change: Primary focus because the bar for larger transactions is super high. We'd have to have a lot of conviction in the execution of something like that because clearly they could be quite complicated. And there you could you could make a case uh, elsewhere in some of the other segments that maybe there would be the opportunity to have even more scale because if you're a scale player and you've got a platform that's operating model like organization, the thesis would be that you could bolt on more.
Associated with that. So that's a fine thesis and something that we certainly keep in mind, uh, as well. But you know, as now we have
Speaker Change: Close to 2/3 of the of the company in platform, like businesses.
Robin Vince: We are focused on building our company to your favorite term, the organic way, and then we'll just be opportunistic and disciplined on external related stuff. Message heard.
Speaker Change: Either in mws or in our issuer, services business. You know, when you look at the mws alone, it's a 49% margin, you know, we, we we've got, we've got choices in this space but we're not going to let those choices get distracting for us. We are focused on building our company to your favorite term. The organic way. Uh, and then we'll just be opportunistic and disciplined on external related stuff.
Mike Mayo: Thank you.
Message her. Thank you.
Alexander Blostein: We'll take our next question from Alex Blostein with Goldberg. Your line is now open. Thank you. Good morning for the question. Thank you. Busy morning.
Speaker Change: We'll take our next question from Alex blastin. With Goldman Sachs
Speaker Change: Your line is now open.
Robin Vince: So I had a couple of questions for you guys around the new business opportunities. I know you mentioned a couple of things around the digital assets and just kind of tokenized environment, which obviously continues to be quite dynamic. I was hoping you could build on that a little more. Obviously, there's a lot of, you know, debates in the financial services industry today, perhaps more so on this topic than in the past in terms of what's a risk versus what's an opportunity. So when you think about where BNY sits in that realm, where do you see both risk to, you know, the existing businesses and some of the new revenue opportunities that could come out of that?
Robin Vince: Sure. Thanks, Alex. NetNet, we see these advancements providing more opportunities than risks, but you're right, there are things on both sides of the ledger. If you just go back and just think about industries and big changes in technology that happen over time, they create disruption. And what disruption does is it allows for a little bit of a reorganization sometimes of the ecosystem. And it's our observation that companies that have a lot of forward thinking innovation that push forward that take advantage of that as opposed to sticking their heads in the sand tend to be tend to be winners.
Alex: Thank you. Good morning for the question. Uh thank you. Um busy morning. Um so I had a couple of questions for you guys around the new business opportunities. Um, I know you mentioned a couple of things around the the digital assets and just kind of tokenize environment which obviously continues to be quite Dynamic. Um, was hoping you could build on that a little more. Um obviously there's a lot of you know, debates in the financial services industry today. Uh perhaps more. So on this topic and in the past, in terms of what what's a risk versus what's an opportunity? So, when you think about where bny sits in that in that realm, um, where do you see, uh, both risk to, you know, the existing businesses and some of the new Revenue opportunities that could come out of this
Robin Vince: Now, we have many specific valuable attributes that help us make us a great partner to these digital assets firms. And that's one of the reasons why we've been so engaged in this space for several years, because initially, it had been about providing our traditional banking services to those digital asset companies, we serve many of them with our traditional banking services, then it's been about helping with the on ramps off ramps between that traditional banking world and the on chain world. And in the future, we think it's also going to be about more activity on chain, we are live with Bitcoin custody today, we do it natively.
Sure. Um, thanks Alex. Uh, net net. We see these advancements. Providing more opportunities than risks, but you're right there are things on both sides of the Ledger. If you just go back and just think about Industries and big changes in technology that happen over over time. They create disruption and what disruption does is it allows for a little bit of a reorganization sometimes of the ecosystem. And it's our observation that companies that have a lot of uh Forward Thinking Innovation, the push forward that take advantage of that as opposed to sticking their heads in the sand. Uh, tend to be tend to be winners. Now, we have many, uh, specific valuable attributes that help us make, uh, make us a great partner to these digital assets firms. And that's 1 of the reasons why we've been so engaged in the space for several years because initially, it had been about providing our traditional banking services to those digital asset companies. We serve
Robin Vince: And we can help clients, there's more stuff in the world, we want to be we're in the business of looking after stuff as one of our businesses. And we're happy to do that. But we're also in the payments business. Again, there's synergy between our platforms. We're also in the issuer services, corporate trustee, business, their synergy, we're in the nav business, that's relevant, synergy, distribution, business, relevant money market fund business relevant. And so when you we can do a lot of different things with a trusted brand that actually helps them to feel to feel good. So look, stable coins, particularly, it's obviously one of the topics of the day.
Speaker Change: Many of them with our traditional banking services, then it's been about helping with the on-ramps off-ramps between that traditional banking world and the on-chain world. And in the future we think it's also going to be about more activity on chain. We are live with Bitcoin custody today, we do it natively and we can help clients. There's more stuff in the world. We want to we're in the business of looking after stuff as 1 of our businesses. And we're happy to
Speaker Change: To do that. But we're also in the payments business. Again, there's Synergy between our platforms, we're also in the issuer services, corporate trustee, uh, business. They're Synergy, we're in the nav business, that's relevant, Synergy distribution, business relevant money market fund business relevant. And so when you take all of these things together,
Dermot McDonogh: And we're very active in that space. And that's the reason why we mentioned a couple of those recent examples, but there are many more in in our prepared remarks. But Alex, what I would say is don't lose also, that's all great stuff, but don't lose sight. of our core businesses that are market leading. that are growing share because the market is growing. So growing the pie with existing clients in our core businesses is also happening and very important. Yeah, that's all airfare.
Speaker Change: We're a terrific partner for, for some of these clients because we can do a lot of different things with a trusted brand that actually, uh, helps them to feel, uh, to feel good. So, look, stable coins. Particularly, it's obviously 1 of the topics of the day, uh, and we're very active in that space. And that's the reason why we mentioned a couple of those recent examples, but there are many more, uh, in uh, in our prepared remarks. But Alex, what I would say, is don't lose. Also, that's all great stuff, but don't lose sight.
Speaker Change: Of our core businesses that are Market leading.
That are growing share because the market is growing. So growing the pie with existing clients in our core, businesses is also happening and very important.
Dermot McDonogh: Dermot, one for you on just the balance sheet dynamic and deposits. You know, I know you mentioned you guys don't lead with deposits, that'll make sense. But when we look at the trajectory for the deposit base of the last couple of quarters, obviously much more stable, and nice to see the non-interest bearing deposits improving here as well. So as you look out into the back half, and ultimately, you know, where we are in July, maybe give us a sense where non-interest deposits in particular sit. And as we think about the forward, which businesses tend to drive those for you guys as we sort of think about the trajectory.
Speaker Change: Yep, that's all they're Fair. Um, government wants for you on, uh, just the balance sheet, Dynamic and deposits. Um, you know, I know you mentioned you guys don't lead with the deposits that all that, all, make sense. Uh, but when we look at the trajectory for the deposit based of the last couple of quarters, obviously much more stable and nice to see the non-interest bearing deposits and proven here as well. So
Dermot McDonogh: So it was a strong quarter. I expect the balances to moderate into Q3. You might remember Q3 of last year was a strong quarter for us in terms of NII. So Q3 is a tough comp and deposits we expect to moderate at the seasonal slowdown. And so the diversity of the NIB across the franchise is particularly pleasing, but corporate trust is a highlight. And because of the breadth and the depth and the market shares that we have in that business, we do attract a lot of cash into the system by virtue of increased client activity.
You look out into the back half and ultimately, you know, where we are in July, maybe. Give us a sense where not interest deposits in particular sit. And as we think about the forward, which businesses tend to drive those for you guys, as we sort of, think about the trajectory Beyond 25.
Dermot McDonogh: So corporate trust in Q2 was a notable highlight particularly around escrows as a result of increased M&A activity. So but I would expect that to moderate a little bit in Q3 and pick up again in Q4. But overall, I feel pretty convicted around the high mid single digits NII growth for the year. Alrighty, thank you so much.
Speaker Change: Q3 you, you might remember Q3 of last year was a strong quarter for us in terms of knee. Um, so Q3 is a tough comp. Um, so and deposits. We expect to to moderate at the seasonal slowdown. And so, the, the the the diversity of the nib across the franchise is, is particularly pleasing, but corporate trust is a highlight. And because of the, the breadth and the depth and the market shares that we have in that business, we do attract a lot of cash into the system, by virtue of increased client activity. So a corporate trust in Q2 was, uh, was a notable highlight particularly around, um, escros as a result of increased m&a activity. So, but I would expect that to moderate a little bit in Q3 and pick up again in Q4. But overall, I feel pretty, pretty pretty, uh, pretty convicted around the high.
Mid single digits. Nii growth for the year.
Speaker Change: All righty. Thank you so much.
Operator: As a reminder, if you would like to join the queue, you may press star 1 on your telephone keypad now.
Brian Bedell: We'll take our next question from Brian Bedell with Deutsche Welle. Oh, great. Thanks.
As a reminder, if you would like to join the team, you may press star 1 on your telephone keypad. Now we'll take our next question from Brian videll with Deutsche Bank.
Dermot McDonogh: Good morning, folks. Maybe two separate questions on the platform's operating model. So, first one, maybe for you, Dermot, focusing on the cost reduction element as we have another 50% to migrate over the next, call it, 12 months. And I know, obviously, expense guidance went up a little bit, which makes complete sense given the stronger revenue growth environment and also the dynamic budgeting aspect that you've talked about. But on the cost reduction side from that conversion on the platform's operating model, how should we think about framing that as a positive contributor to the expense story for the rest of this year?
Brian videll: Oh great, uh, thanks, uh, good morning, folks. Um, um, maybe 2 separate questions on the platforms operating model. So first 1, um, maybe for for you dermit. Um, focusing on the cost reduction element. Um, as we've, you know, we have another 50% to migrate over the next, um, call it 12 months. Um, and I know obviously expense guidance went up a little bit, which makes complete sense given the, you know, stronger Revenue, growth environment and, and also, the dynamic budgeting aspect that you've talked about. But, um, on the cost reduction side from uh, that conversion on the platforms operating model. And how, how should we think about framing that as a, you know, as a positive contributor to the expense story um, for the rest of this year in 26?
Dermot McDonogh: So I do go back to a little bit, Brian, what Robin said earlier about, you know, 50% of the people are in the model. We've done three waves over the last 15 months. The maturity level between wave one and wave three is quite stark. And what the wave one businesses that went into the model are doing now in terms of 1BNY, connectivity, automation, you know, dynamic innovation, having an entrepreneurial spirit within their own businesses, it gives me a great sense of pride to actually see it day in, day out. And while your question led with the cost reduction, we really think about it internally, about running the company better and creating capacity.
Speaker Change: So I I do go back to a little bit Brian. What Robin said earlier about you know 50% of the people are in the model. We we've done 3 waves over the last 15 months.
Speaker Change: Um, the maturity level between wave 1 and Wave 3 is quite Stark. And what the wave 1 business is that went into the model are doing now, in terms of 1 B and Y connectivity automation, you know, dynamic, uh, Innovation having an entrepreneurial Spirit within their own businesses. It's it's gives me a great sense of Pride, to actually see it day in day out, and
Dermot McDonogh: And we either deploy that capacity into new investments, new opportunities, or we let it flow through to positive operating leverage. And you can see in Q2 of this year, we kind of gave you gave the market 500 basis points of positive operating leverage. And the platform operating model was a contributor to that. So with 50% of the firm in the model and 10% in about 15 months, I would expect the maturity of this to kind of give us a benefit for the next few years. And so it's not for another two years where I would say the firm will be reasonably mature in the model.
Dermot McDonogh: And it's creating its own flywheel of momentum and innovation. And when you overlay that with the maturity of the commercial model, and you overlay that again with what Caroline is doing on the product side. you're going to see the North Star of positive operating leverage be delivered for the foreseeable future. It's all about running the company better and I don't talk internally about expenses or cost reduction. Great.
Speaker Change: While you your question, LED with the cross reduction, we really think of about it. Internally about running the company better and creating capacity and we either deploy that capacity into new Investments, New Opportunities or we let it flow through to positive operating leverage. And you can see, in Q2 of this year, we kind of gave you gave the market 500 basis, points of positive, operating leverage, and the platform. Operating model was a continued was a, was a contributor to that. So with 50% of uh, the firm in the model and 10% in it about 15 months, I would expect the maturity of this to kind of give us a benefit for the next few years. And so it's not for another 2 years where I would say at the firm will be reasonably mature in the model and it's creating its own flywheel of momentum and Innovation. And when you overlay that with the maturity of the commercial model and you overlay that again with what Caroline is doing on,
Caroline Weinberg: The product side.
Caroline Weinberg: You're going to see uh the Northstar of pod positive operating leverage be delivered for the for the foreseeable future. So I don't like it's all about running the company better and I don't talk internally about expenses or cost reduction.
Robin Vince: And then maybe just also a following question on the platforms operating model. As you think about M&A, maybe just your thoughts around how much the operating model, you know, the platforms operating model, you know, kind of informs your decision about what type of M&A to do. Is it a major or a primary factor in bringing on businesses that you think can fit into that model and therefore you can scale them in organically?
Robin Vince: And then I guess is it even possible to do large scale M&A and, you know, integrate that into this platform or do you see, you know, too many disparities with other, you know, large providers that would make? Yeah, it's an important question. So look, broadly, in the platforms operating model, Dermot touched on the fact that it's a two-sided thing, because we're very much looking for it to drive revenue. This interlock between platforms operating model and the commercial model is super important, because by having defined our products and client platforms in the way that we have, and then by layering over that a new go-to-market approach with our commercial model, that's just allowing us to go faster, collaborate more across the platforms, create more solutions, and really create a lot of empowerment to our teams to go and listen to clients, invent new stuff, provide more solutions to them.
Robin Vince: And of course, that and just running the company better, more broadly, as Dermot mentioned, those are the reasons why we are doing this. Now, it has a nice byproduct, which is it organizes ourselves in a way where our chassis is super well organized and very strong, and we clearly see the benefits of that across the board as we continue to go through the model. And so I think what that will result in is when we talk about some type of bolt-on acquisition, and almost irrespective of its size, if it's sort of adding to us in something that we broadly do today, or something that essentially speeds us forward in something that we do today, we're able to add it with really out having to take on all of the expenses associated with us, because it sort of becomes a bolt-on to a chassis that we have.
Yeah, it's it's an important question. Um, so look, broadly on the platforms operating model dermat touched on the fact that it's a 2-sided thing because we're very much looking for it to, to drive Revenue. This interlock between platforms operating model and the commercial model is super important because by having defined our products and client Platforms in the way that we have and then by layering over that a new go to market approach with our commercial model that's just allowing us to go faster. Collaborate more across the platforms create more, uh, Solutions and really create a lot of empowerment to our teams to, to go and and and and listen to clients invent new stuff, provide more solutions to them. And and of course that and just running the company. Uh, better more broadly. As dermat mentioned those are the reasons why we are doing this? Now, it has a nice byproduct, which is it organizes ourselves in a way where our shaft
See is super well organized and very strong. And we clearly see the benefits of that across the board as we continue to go through the model. And so, I think what that will result in is when we talk about some type of bolt-on acquisition and almost irrespective of its size if it's sort of adding to us in something that we broadly do today or something that essentially speeds us forward.
Robin Vince: You could see that with Archer as a good example, which is they are able to do more of what they want to do because they're able to tap in to the additional parts of BNY. The client onboarding capabilities that our client onboarding platform provides to Archer in its acquisition of new clients allows them to go faster. The fact that we've been able to wrap our technology and our AI around that is going to allow them to do more things. And so there's a real economy. You're able to actually achieve an economy of scale and actually add scale to a scale business or go faster in a business where you're adding a capability, where sometimes that's a theoretical conversation, because you look at something and you say, oh, well, you're pretty scaled.
In something that we do today, we were able to add it with really out having to take on all of the expenses associated with us because it sort of becomes a bolt-on to a chassis that we have. You could see that with archer as a good example, which is they are able to do more of what they want to do. Because they're able to tap in to the right additional parts of bny the client onboarding capabilities.
Robin Vince: You could just add more stuff and it'll scale. But that's not true if you're adding a complicated back end and you're trying to smash two incompatible things together.
Caroline Weinberg: That our client onboarding platform provides to Archer in its acquisition of new clients, allows them to go faster. The fact that we've able been able to wrap our technology and our AI around that is going to allow them to do more things. And so there's a real economy you you're able to actually achieve an economy of scale and actually uh add scale to a scale business or go faster in a business where you're adding a capability. Whereas sometimes that's a theoretical conversation because you look at something and you say, oh well you could just you're pretty scaled, you could just add more stuff and it'll scale but that's not true. If you're adding a complicated back end,
Robin Vince: I think that was a lesson that this company learned 20 years ago with the acquisition between or the merger between Mellon and BNY. That was not consolidated properly. So the punchline is the platform's operating model allows us to have a clarity of chassis that I think actually will allow for higher quality integrations in the future if ever we choose to do one.
Caroline Weinberg: And you're not trying to smash to incompatible things together and I think that was a lesson that this company learned 20 years ago, with the acquisition between or the merger between melon and B. And why that was not Consolidated properly. So the punch line is the platforms operating model allows us to have a Clarity of chassis that I think actually will allow for higher quality Integrations in the future if ever we choose to do 1.
Robin Vince: That's a great color. Thank you.
Yep. Um, that's a great color. Thank you.
David Smith: We'll take our next question from David Smith, The Truth Secures.
Speaker Change: We'll take our next question from David Smith with truist security.
David Smith: Good morning. So you're pretty clear that, you know, you see further upside on returns and margin from here, even with the strong results you've had in this quarter in the first half. Are there areas right now that you feel like you're over earning? Or would you say that, you know, you're looking to hold or improve profitability across the firm from these levels right now? I would say. It's a good question, David. How I would answer that is. We're trying to get better every day in every business and a mindset I adopt with everybody that I work with and talk to is one percent improvement every day, be better, run the company better, always be humble.
David Smith: Good morning. Um, so you're pretty clear that, you know, you see further upside on returns and margin uh, from here, even with the strong results you've had in, in this Courtyard, in the first half,
Speaker Change: Are there areas right now that you feel like you're over earning or would you say that? You know, you're looking to hold or improve profitability across the firm, uh, from these levels right now,
I would say, um,
Speaker Change: it's a good question, David. How I would answer that is
we're trying to get better every day in every business and a mindset. I adopt with everybody that I work with and talk to is,
Robin Vince: It's all about the client. And if you keep the client happy, you're going to win more business. And that really is, I think, our secret sauce. I talked to a couple of people this week who've been at the firm last a long time. And I said, what's the difference between BNY today and BNY 10 years ago? And in a word, it was about client centricity. And so we're very focused on putting the client at the heart of everything that we do. And so I wouldn't say that any one business, we feel like we've reached max potential because we've invested in a lot.
Speaker Change: 1% Improvement every day, be better. Run the company better always be humble.
Speaker Change: It's all about the client, and if you keep the client happy, you're going to win more business. And that really is, I think, our secret sauce, I talked to a couple of people this week, who've been at the firm last a long time. And I said, what's the difference between B and why today? And B and Y 10 years ago and in a word it was about client centricity and so we're very focused.
Dermot McDonogh: If you kind of take corporate trust two or three years ago, that was a high performing business from a margin standpoint, but had been neglected for a long time with respect to investment because the margin was good. But now we've kind of decided to invest in the business and we're growing share. We're doing it at a higher margin than we did before. We're using AI. We have better employee NPS scores. So all in the round, the strategy is working when you look at the three strategic pillars for that particular business. If you looked at it objectively three years ago, you would say nothing to do there.
Robin Vince: And we felt like there was a lot to do and we're making great progress. David, let me add a couple of things because your question is one of these things that we debate quite a bit internally as a team and it goes back actually to the very earliest days of us re-underwriting our strategy. At the time, you might remember us saying this, we looked back over the industry for instance on annual operating leverage and we say, what does great look like? What are the two best performers in the prior decade from 2012 to 2022 on positive operating leverage and what actually is that number?
Because the margin was good but now we've kind of decided to invest in the business and we're growing share. Um we're doing it at a higher margin than we did before we're using AI we uh have better employee NPS scores so all in the round the strategy is working when you look at the 3 straight pillars for that particular business, if you looked at it as objectively 3 years ago you would say nothing to do there and we felt like there was a lot to do and we're making great progress.
Robin Vince: The answer was, well, it was 150 basis points of positive operating leverage on average over the course of that decade. We said, okay, well, we think we can be best in class. We think we've got the businesses to do it. Let's shoot for that. Lo and behold, we've sort of blown that out of the water in 2023 and 2024 and also in the first half of 2025. It begs the question to ourselves about are we over-earning? How does the environment fit into this? Then we realized of course, well, we keep talking about being a platforms operating company.
Robin Vince: We have these great set of businesses. We don't actually think the banks are our pure comp. We think that there's also a comp out there with other platforms companies and other financial services platforms company who don't happen to exist in bank form. When you start to look at the world through those lenses, suddenly ROTC, you can see a pathway to bigger numbers and you can see a pathway to bigger numbers on margin. We look at those types of comps and we say, okay, let us not be satisfied with what we originally thought of as maybe the way that we think about positive operating leverage.
David. Let me add a couple of things because this your question go is some 1 of these things that we debate quite a bit internally as a team and it goes back actually to the very earliest days of of us re-entering our strategy at the time. You might remember us saying this? We looked back over the industry, for instance, on annual operating leverage and we say, what does great look like what are the what are the 2, best performers in the prior decade from 2012 to 2022, on positive, operating leverage, and what actually is that number? And the answer was, well, it was 150 basis points of positive operating leverage on average over the course of that decade. So we said, okay, well, we think we can be Best in Class, we think we've got the businesses to do it. Let's shoot for that. And you know, lo and behold we've sort of blown that out of the water in 2023 and 2024 and also in the first half of of, of 20205. So it begs the question to ourselves about are we over earning? How does the environment fit into this? And then we realized, of course. Well, we keep talking about being a platforms, operating company,
Robin Vince: It's okay to push harder. Having said that, we constantly want to be able to invest. To Dermot's point, we're not going to let a pursuit of positive operating leverage cause us somehow to under-invest in the business. We are investing with a decade view first and foremost. I think it does go to one of the earlier questions and your point also about are then ceilings. I'm sure there will be, but we're not allowing ourselves including not being lulled into a sense of security by achieving our medium term outlooks and targets. We're not allowing ourselves to think about any ceilings across the business.
Speaker Change: If we have these great set of businesses, we don't actually think the banks are our Pure comp. We think that there's also a comp out there with other platforms companies and other Financial Services platforms company who don't happen to exist in Bank form. And so, when you start to look at the world through those lenses, suddenly rotce you can see a pathway to bigger numbers and you can see a pathway to bigger numbers on margin and we look at those types of comps. And we say, okay, let us not be satisfied with what we originally thought of, as, maybe the way that we think about positive operating leverage. It's okay to push harder. Having said that,
Speaker Change: We're constantly want to be able to invest. And so, to dermitts point, we're not going to let a pursuit of positive operating leverage cause us somehow to under invest in the business, we are investing with a decade view, first and foremost, but I think it does go to 1 of the earlier questions, and your point. Also about are then sealings, so I'm sure there will be, but we're not allowing ourselves, including not being lulled into a sense of security by achieving our medium-term, uh, outlooks and targets. We're not allowing ourselves to think about any sealings across the business.
Robin Vince: So just to push you a little bit on that, you know, if you're not putting any any ceilings or, you know, capping yourself on growth on expenses in order to achieve positive operating leverage. Why not invest a little bit more than just 3% expense growth, given the strong backdrop you're seeing and strong performance you've shown so far in the first half? It's a good push and we do challenge ourselves on that question. I think, you know, if you were in our sort of weekly syncs on these types of topics internally, you'd hear Dermot on a regular basis going out to the various different businesses and platforms and say, tell me what you need to invest.
Speaker Change: so just to push you a little bit on that, you know, if you're not putting any any ceilings or, you know, capping yourself on grow on expenses in order to achieve positive operating Leverage
Speaker Change: You know, why not invest a little bit more than just 3% expense growth. Um, you know, given the strong backdrop you're seeing and strong performance, you've shown so far the first half,
Robin Vince: Do you need more investment and more expense allocation in order to be able to help you to go faster? And so that is a constant push that we are giving to the businesses. Now, having said that, we are mindful of the fact that some of what we do is also dictated by the environment, maybe less and less over time, but it's clearly is still a meaningful backdrop for us. And so we are naturally a little bit conservative in terms of how we think about the year going into it. Because if, for instance, we'd had a much, much tougher backdrop, which would not have been impossible in the quarter when you think about what was happening in April and all of the sort of uncertainties that were in April, we wouldn't have felt comfortable necessarily if we'd had a more negative environment growing our expense guide.
No, it's it's a good push and we do challenge ourselves on that question. I think, you know you if you were in our, our sort of weekly syncs on these types of topics internally, you'd hear dermit on a regular basis, going out to the various different businesses and platforms and say, tell me what you need to invest. Uh, do you need more investment and more uh, expense allocation in order to be able to help you to go faster. And so that is a constant push that we are giving to the businesses. Now having said that we are mindful of the fact that some of what we do is also dictated by the environment, maybe less and less over time, but it's clearly is still a meaningful backdrop for us. And so we are naturally a little bit conservative in terms of how we think about the year going into it. Because if for instance, we'd had a much much tougher backdrop which would not have been impossible in the quarter when you think about what was happening in April.
Robin Vince: So there's a certain amount of agility as opposed to going into the year, assuming everything's going to be perfect, betting on a big expense number and then getting disappointed. That's the old version of BNY Mellon. That's not the BNY of today. Financial discipline is a very important skill and muscle memory that we've developed over the last few years and we'd like to think that you have given us some credibility for that. It's not our desire to lose that. So financial discipline is very important.
Speaker Change: Uh and all of the sort of uncertainties that were in April, we wouldn't have felt comfortable necessarily if we'd had a more negative environment growing our expense guide so there's there's a certain amount of agility as opposed to going into the year assuming, everything's going to be perfect betting on a big expense number, and then getting disappointed. That's the old version of bny Mellon. That's not the B Andy of today.
Speaker Change: Financial discipline is a very important skill and muscle memory that we've developed over the last few years. And we like to think that you have given us some credibility for that. It's not our desire to Lo to lose that. So Financial discipline is very important to us.
Robin Vince: All right, thank you.
Speaker Change: All right. Thank you.
Robin Vince: Thanks.
Rajiv Bhatia: And our final question comes from the line of Rajiv Bhatia with Morningstar. Your line is now open. Great, good morning. Yeah, just want to follow up on your remark that you're not seeing negative pricing. Should I interpret that as pricing being flat year over year? And is that on a consolidated basis? Are you seeing the pricing environment differ by LOB?
David Smith: Thanks, David and Darren.
David Smith: Star.
David Smith: Your line is now open.
Speaker Change: Great. Good morning. Yeah, just want to follow up on your remark that you're not seeing negative pricing. Should I interpret that as pricing being flat year over year and is that on a Consolidated basis? So are you seeing the pricing environment differ by LOB?
Dermot McDonogh: So I would, it's broadly flat across the firm and significantly improved from three years ago where I would say it was a headwind a few years ago. And I think as a result of all the strategies and the real initiatives that we talked to you about and that we've talked about today, I would say repricing, if I was to give you a stat, is roughly down about 80% from where it was three years ago. And so overall at the enterprise level, it's flat to slightly positive this year so far. And does it differ by, like, LLB?
Speaker Change: Um, so I would it's broadly flat across the firm and significantly improved from 3 years ago where I would say it was a headwind a few years ago and I think as a result of all the strategies and that we've initiatives that we talked to you about. And that we've talked about today, um, I would say we pricing, if I was to give you a stat, is roughly down about 80% from where it was 3 years ago. And so overall, at the Enterprise level, it's flat to slightly positive this year so far
And there's a difference by like lb.
Dermot McDonogh: Not really, no. There's no standout really by LOB. I would say it's broadly consistent.
Um, not really, no, not, there's no standout, really by laabh. I would say. It's broadly consistent.
Operator: Thank you.
Speaker Change: Thank you.
Robin Vince: And with that, that does conclude our question and answer session for today.
Robin Vince: I would now like to hand the call back over to Robin for any additional or closing. Thank you, Operator. And thanks, everybody, for your time today. We appreciate your interest in BNY. If you have any follow-up questions, please reach out to Marius and the IR team. Be well, and enjoy the rest of the summer.
Speaker Change: And with that that does conclude our question and answer session for today.
Robin Vince: I would now like to hand the call back over to Robin for any additional or closing remarks.
Robin Vince: Thank you, operator. And thanks everybody for your time today. We appreciate your interest in bny. If you have any follow-up questions, please reach out to Marius and the IR team be well and enjoy the rest of the summer.
Operator: Thank you.
Operator: Conference and webcast. A replay of this conference call and webcast will be available on the BNY Investors website. Thank you for your time today.
Speaker Change: You, this does conclude.
Have a great day.
Speaker Change: And webcast will be available on the bny investor relations website at 2:00 p.m. eastern time today. Have a great day.