Northern Trust (NTRS) 19 Oct 222022 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Northern Trust Corporation Third Quarter 2022 Earnings Conference Call. At this time all participants are in listen-only-mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. to Childe, conference Director like speaker to now Jennifer today, of would hand over the your I Investor Relations. ahead. go Please

Thank and everyone, third conference Good Northern Victor. call. Corporation's earnings quarter welcome Trust XXXX you, to morning,

team. me and O'Grady, Chairman Mike our Briar Chief Officer; Rose and morning Controller; our Relations our our Lauren Tyler, from on Allnutt, our Jason and Joining this Financial are call CEO; Mark Investor Bette;

that our website Our quarterly earnings after available the on commentary are release rebroadcast both to accuracy Please website, continuing presentation, financial website the on our and on disclaims Northern webcast this earnings which we our the to of report call northerntrust.com. will third of our will this guide trends at which XXth. on harbor you authorized October This of is regarding call use made live is will accompanying quarter press this XXth call. our our today. presentation, find Trust being on northerntrust.com. apply in Also be on to only forward-looking available November through statements statement will Page any conference XX call safe call. today's review refer information provided The replay

session, us ask opportunity one again today. you queue limit and the as time During related today's enable joining us possible question-and-answer to move as and query to the through please people permits. follow-up. your for allow one question initial to This will questions many Thank as

the O'Grady. Let call me Mike to turn over

you, Jennifer. Thank

impact and cost a operating income elimination X% currency X% higher revenue the base, movements. equity inflationary interest impacts and third outflows more prior the Expense from quarter third to our significant environment. on markets, favorable equity software execute In across Compared in rates from reflected and return of compensation average grew quarter, equipment well call. lines. join generated to our fixed to the me and offset of was Let a everyone waivers growth headwind the common the and asset we flat, earnings our particularly welcoming we XX.X%. weaker than fee within and as unfavorable of EPS challenging continue through year, XXXX

New backlog alternatives, Management we new new reduced yet Asset outflows market positioned under actively Asset Servicing, well we uncertainty strength. the transition is continue And our within of closing, In and expanded and current was Wealth from macroeconomic yet of business haven't navigate continued been to cash activity to institutional clients onboarded tax-advantaged Management, management, in coming ETF that meaningfully to and and over engage and remain has win we position clients. markets continue a complex. equity mandates encouraging, in we existing our new to and with growth saw the weak quarters. a In assets and expected

over call business robust, on and from made the position new years. Jason. our turn and tightening past environment, remains we've growth begun be controls over realizing expense prudently pipeline strong. continues investments the In now Our slowing to focusing I'll to benefits a productivity also several our the we've capital

you, to you XXXX join welcoming quarter Mike earnings and me third call. and Thank Mike, Jennifer our in let

were of average on Page XX.X%. return common Let's morning, the third this continue the $XXX.X recall noted million financial that comparisons $X.XX, benefits expense settlement Results of fees, quarter, income in was category. year-over-year we results page. charge dive accounting an our the as for quarter of into equity Also to the a $XX within certain implemented on this will quarter reported Earnings on quarter and first million. the the starting net year, we employee reclassification for X. impact share pension which included This per

quarter, highlights financial sequential the X% review up and X revenue was comparison, Page In and up ago, was down the income was XX.X% and quarter. X%, was the increased equity of Year-over-year, were a from the while expenses flat. net Net X% income in up and the X%. on was average from also XX.X% Return year revenue prior to down for XX.X% flat. expenses quarter. common move Let's

$X.X interest the in down other starting and Trust, the results was impacted from and the X% investment ago income approximately from at more which noninterest fees, last X% year the representing XX% Looking other up and revenue, X. and with growth greater basis quarter. currency later, largest was I'll Page sequentially. of revenue declined on our unfavorable Net income, and discuss points. by revenue servicing down All in translation billion million detail, totaled XX% from were Year-over-year, component a prior from remaining sequentially. detail year X% year X% prior $XXX XXX

our Let's X. Page look components at and the of fees on trust investment

Asset Servicing unfavorable from quarter, decreased and custody Servicing, primarily totaled prior and volumes. Asset million, business. new and $XXX fund were administration due to fees and primarily fund unfavorable X% unfavorable and our year-over-year the Custody due to down lower unfavorable year administration transaction down business, translation fees and markets, and by down down fund currency For and sequentially, offset currency markets, partially translation X% fees $XXX decreased Custody X% million, were XX% administration Within sequentially. fees sequentially. year-over-year

driven previously year-over-year asset currency outflows unfavorable $XX from prior to lower sequentially, Servicing fees under primarily $XXX increased custody primarily Servicing waivers due quarter decreased Investment end, reclassification within year down the for Assets asset year-over-year translation. money were were markets fee management XX% primarily X% and fund and sequentially. Asset were market discussed, year-over-year and the clients and declines fees down accounting to sequentially. XX% trillion administration down and X% quarter management unfavorable management due up by offset by the markets. outflows. and unfavorable Investment million, at markets Investment sequential Asset and Both partially fees and and

XX% weaker and asset income fixed down were billion, unfavorable year-over-year and management markets under and X% were currency by for declines Assets Both $XXX.X down equity outflows, clients translation. sequentially. Asset driven Servicing

the to our year prior other Wealth business. servicing from investment down prior compared Moving X% $XXX.X X% and and Management were quarter. to million, fees Trust, the down

Within the primarily unfavorable elimination unfavorable impacts, regions the Within markets. regions, related year-over-year money fund Global primarily year-over-year unfavorable by was driven new the the of by waivers. mainly by lower markets. Family the decline Sequential were market within Office, partially and driven driven the partially by Sequentially, was unfavorable waivers decrease to by offset growth fee fee offset market was business, markets. declines

sequential down primarily by wealth Assets on and sequential year-over-year were unfavorable down under our year-over-year a X% Both the declines management driven clients markets. management $XXX for end, quarter and billion XX% at were basis.

Net in The was compared $XXX X. in grew prior from were and declined balances basis were up X%. earning quarter year average net the X%, prior mix XX%. due Page assets declined interest loan points to the was prior was the averaged sequential Average and to billion quarter, X% X% Average up year, versus assets were while $XXX.X billion up Earning higher is and The Moving rates $XXX interest down versus billion balance the The year. XX% was the in favorable up higher the margin $XX interest averaged deposits down the year. X%. quarter. year due average primarily increase from income interest year. XX interest sequential while and rates. million to On up ago were average X% loan a increase quarter basis quarter, quarter and Average a X.XX% prior XX to deposits the shift. primarily prior income points balances net from basis, prior sheet

year of up in X by software the million the On a Turning than higher to incentives prior The Outside costs currency lower charge amortization. to lower was Also The million XXX from impact higher accounting the inflationary higher offset part is expense costs, partially basis to the third-party of up up billion sequentially. driven from is prior translation. year-over-year compared and up by pension and year and $XX higher up compares Page up previously X% the employee by higher was driven primarily $XXX sequential and charges prior million current than was Occupancy translation. services partially translation. and other ago to in consulting quarter, growth is $XXX benefited was primarily as current the primarily similar the sequentially. growth X% benefits X% services increase was of The due settlement $X.X offset due currency year-over-year by costs. the a category. year-over-year higher expenses due year. expense. expense included growth of The to quarter increased is X% salary increase to up consulting X% and inflationary were The the operating by XX% million and continued and partially offset is a Equipment The expense to pressures which quarter's favorable million within increase ago approximately and primarily sequential million $X.X the X. This million fees. to X% due year currency due and prior basis, prior as points a advisory and Expenses sequential Compensation by in higher year-over-year expense to favorable quarter. amortization technical included increase primarily year software and quarter $XX.X driven was period well in to primarily in technical The software quarter. $X.X from salary expense, by the service sequentially. year in higher expense XX% expense mentioned $XX year technology, reclassification, due higher X% investments pressures, was expense prior compared X% down sequentially. by ago

X% $XX from miscellaneous sequential sequentially. to was year of expense due period. decline and million operating X% expenses was other The primarily in down the up current lower ago The X

X. Page Turning to

our Tier approach, from XX.X% Our capital quarter's prior under the common with remained strong X down of standardized ratio XX.X%. the ratios equity

current Accumulated was was up approximately securities unrealized a quarter at primary ratio factor Our $X.X ratios. of leverage other capital Tier loss X the with from billion income end the loss this the quarter. in portfolio the a on change totaling the An X.X% third was of prior comprehensive million. quarter's quarter in the in $XXX available-for-sale net X%, losses in increase in

$X.XX by a announced, per to increased quarter previously the or quarterly X% share. dividend third $X.XX share the common As in stock we

questions. During capital million to current returned common continues liquid and to value long-term a $XXX.X balance generating serve to end the strong of please $XXX.X line solid footing demonstrate Victor, to clients' million. needs. weather $X.X million our with and well on shareholders cash support remain to shareholders. uncertain communities dividends our of our to and the open approached that, the while of both through year and share and for the conditions economic We positioned importance quarter, the the repurchases clients And base we environment The of sheet

Thank you. from Stanley. question Morgan Graseck first of [Operator the Instructions] line comes Our Betsy from

Your line is open.

Hi, good morning...

Betsy. morning, Good

are How doing? you Hi.

Really well.

little know, wanted want maybe inflation Thanks. to to some side. sure of in I little side? I kind look make quarter thinking did you're on on listen just professional rate impacting the as dig like pull areas in seeing managing being go feels there where you that anticipate services an how some persist? a how And bit base And investing. know about of this at we of it But understand very the I when change I the environment? in there's should inflationary a side, opportunity you're should bit. disciplined just results, and we're the is through expense the the you're to is we consulting this Or expense I back

question. focused let been the do, to with Sure. direct yes, address me a can and on And are answer expense Well, we growth. we've things to there to start

so meaningfully period, we predominantly, line. place, particularly even That's We we additional in expense That's ramped And in always controls. our we let internally have largest of announced controls, me up component within see largest mid-September, around expense hiring. some those this where - the obviously increases. but expense

see particularly and perspective. - have to are have will on - that going stop higher a we bar in other continue that to that That's areas we've and tamp investing in that same us a have bar opportunity we the important lead increases us had do the we in place. an at so seen time, around where we're that But from investments raise just try to say in to going expenses that and for not hiring investing technology know we growth we've down to not to the will where to And the take things expenses.

same some dollar got here, then the weighing at as And time, thinking the a impact through could excluded to Okay. we strong on Maybe the separately, the you international, think the this you've just we've got through nice know, growth how have that, and quarter? the help I'm exposure profile would us if looked of results Thanks. dollar results to certain you extent.

Sure. a very super level, a the company in currency Well, the natural perspective. at in from – high has hedge a

was quarter, the it XXX basis points on revenue so this side roughly, very both it, And call and the expense side. and impact XXX,

in, the side. dollar the expense but And it on revenue play does both and so the plays

more movements The assets other played something not well how the under plays we had, how on but deposit from impact downward move all about in currencies. both talk played level - even asset the in across typically custody, into you perspective. management think the in is that's aggregate in a under that even over symmetrical in about value $X.X billion is dollar won't had deposits and asset the as more we've about as That level And decline. detail, about in plays, think currency assets an movement people the as can of and it,

got I it. Okay. Thanks.

Sure.

next you. Thank one our question. moment And for

Our next of the from from Goldman Sachs. will come Alexander question Blostein line

open... is line Your

Alex. morning, Good

morning. guys. Good Hey,

catch my didn't Sorry, there. name

said came a little the guess, couple from in picked pronounced Barclays conference, with you XXX, like deposit of guys bit mix, sounds But one, a I substantially. outflows think last in think, bit declining around the more questions. in particular, lower. relative I at too to the little was noninterest-bearing a up heard of So we September you update I that obviously, sort

levels an stand of how deposits just well quarter and sort noninterest-bearing as update of the importantly, your interest-bearing, and but more the on where today also progressed, maybe ultimately the mix, sort any has So the as deposit of It there? updated to close piece kind pre-Covid of thoughts your the looks getting curious is the out? like get but thoughts where levels, could to trough on pretty noninterest-bearing

Sure.

they particularly and non-USD of - came in mentioned I actually earlier deposit all, what the we the really effect were given to relative the - predict to we where quarter quarter, landed on it's So actually think mentioned currency first they general. close so levels was they we they expectation, And the close. of as the where and our that I to and very pretty what that next averaged at I because in - where get difficult

hit mix - first. but so me And let

financial Just expect lot A rate are accounts, the that's you're sheet something quarter. use of but noninterest-bearing noninterest-bearing services at our exactly A they move off dropped a right, that zero, do to interest-bearing they during the gets done clients So often significantly in percentage balance did And - are of so rise to a levels. third there. think, already taken That's of certainly, They lot is question of your And additional the today? point, two we Alex, what bit your those deposits pre-COVID see part of say first has do see the we we to come won't then little kind movement place. at we we're about some that looking tend where down at in not it quarter. But point, have we accounts, happen. to of our high the the that the as would accounts this behaved point that. rates eligible lot at which ways of that, into quarter, this of in to opportunity - have to and very the the a anticipate. it things

that we more curve across is tightening short to against But end we're how kind cash the seasonality investment can other. tends in more a upward pressure. of put the higher to there's quarter, and so that There's the continues in fourth in downward expect XXX. and There's forces the that quarter is now each of dynamic. and the to in non-operational, two allocate to which but that. have run, interesting with being clients offset pressure they to continuing XXX pressure. board an What seen an at between look an upward of to quantitative we've the an One yield And happen working

it here. stronger from which it's is those flat best to is going of And so might see influences. you to call difficult guess one But have

XXX, other. but that And that against forces level, so there's moving each big XXX appreciating

Got to I speaking at earn I appreciate are guess market you portfolio, When color. for of X, securities the their look they're little closer to And think, that. about I cash. looking a yielding, probably it. a higher. bit extra yield Thanks I guys Northern on X.X% the and institutions rates little maybe

the I versus picking of but I guess, mix. in fixed the securities the to without AOCI already keeping a necessarily similar Now crystallizing attractive guess, to opportunity be I obviously, profile losses NIR of incremental down, the reprice sell geographically, But with losses, different changing and environment? floating running the lower-yielding any some your there. could through with portfolio of capital, in current of place. duration of guess the But the appetite kind overall up some an

Yeah.

I So the XXX% you lot. at we are of the taking a important to be yield, know the markets higher appreciate impact over an of I that talk for dynamic and that that reinvesting should about economics lower know, the loss, everyone the equal. telling efficiency time, is just it this amount that relatively you of think And

is though, component, do second that the to that. their, other may reasons there be Now

- be might yield the is that might looking have significantly. you a going view curve You to to change

to by want that. other handle might You ratios doing

the short long-term it's of not NII about the and the or the just what NIM portfolio yielding, as care to not not realize higher And the it, value is the easy so that do We in run. just as but securities trade beneficial. - not it's invest take say rate. loss, say quick at it's of wouldn't a it's to that just the we

Thanks, Right, guys. fair enough.

Thanks, You Alex. bet.

one for question. moment next Thank you our

line Wells from comes Mayo Fargo. question Mike of next from Our

line Your is open.

Mike. morning, Good

Difficulty] two had [Technical I

Yeah.

a question, I sure in and - sure lot background, answer to of answer the your want i wan me I'm right. to make getting that – static Let we make

can clarify want try You to line... your you any - way and

better? any that Is

Dramatically.

forward Good. it, Mike. Go

for my iPod. much So

So predicted XXXX, are you the know, fee look, And good. the Jason, are waivers, toward of elimination correctly tailwinds levels yoiu NIM going done? back those

just you I are still guess, much uninstalled hand, the isn't other have the from why higher On business. so clear tailwinds some you really or delays, that's the which business, winning

markets. other now. from Or to lower have continue? in stock the the mostly is going that the numbers headwinds hand, On you the Is that

and tailwinds with the negative reason because got So if you had and still you that can those And operating the leverage. tailwinds you help question. the headwinds I is me ask

hostess are Or you have it's So you expenses? revenues just a model? business your faster can grow than

Yeah.

So couple in there. things of a

XXX. Let on me And One, quarter don't and a is was movement. but hit no. The look all we to just them, and ask in just I rates, clarify done? within the month bit the at get still try above certainly me have it is fact, them. upward of then tiny at answer we September

And be got be so into will this so - higher, but betas at level. that we XXX%. - point, and much And even won't

And that earlier, is Alex's securities portfolio get And these dynamic so we that just repricing, third time, question an is the but it as takes at higher reinvest we'll of rates. incremental then opportunity lift. the to have

yet. So not done

just sure make and we lined everything we not think And chunky. up pipeline the in longer those business onboarded And clients take in very made markets, are want big Second, volatility Asset just Servicing that to - they're is one to of the the opportunities come properly. of that taken have the just longer. on some the in is particular, category has in that

confident - to market not it - - smaller. we much revenue of numbers average, and leverage, expense lift and so in you're plus about a operating the growth just bit market the we little significantly growth environment it growth. the It's then get expense happening is And stock is about onboarded than - to this is macro talk environment, one usually, and through. what's - just the but it's match are can this dominating both that right, higher but coming we're dynamic, on it's And category

this false I've typical. dominated been are leverage. operating have to doesn't it's all false that the - It a our year, year the they And not so the There model. we fee change is cannot are operating understand factor, negatives where we just in leverage. macro those in financial And saying long-term are numbers positives by

size And on onboarded sense category, us to and some timing? one you some can the give that not of degree

a long sure - make some of just sense which Yeah, that, - timing, meaningfully is back - coming pipeline- of away, us clients to what sizing everything been scheduling it's give business a aggregate higher play. the half on the And tell can is you properly. it's is way more a sure then tend very 'XX up very of closely that of with making than higher but that the I high. working perspective, it's don't servicing can but what a and is that pipeline from it's And and one actually we give that's I lined also historically. in than meaningfully this to And asset we're outside stuff you it not activity number has the is that funded, that seems tell will

Okay. you. Thank

you, bet. You Mike. Thank

for Thank you. One next question. moment

next Our Ken the from Usdin will from line Jefferies. question of come

open. Your is line

Ken. morning, Good

also there business? environment? markets terms Hey, try growth morning, growth over, holdback you assets type moving, in updates at bringing from all of on is there? same if coming - of the Can just could a of any where to the in just Wealth terms Follow about given Jason. customers And you is separate that side. And organic the over talk organic up

but they servicing asset not the as business feel funded business. that history the you Wealth relative Yeah. to - but well, one they really strong Wealth business organic higher still the the don't - as year. is And there of was Actually, the is different. the not business, first - journey - doing I'm the The asked half very is is growth glad because the

have what the very market those rates of client historically. been are Now both they and with win are they attractive, will tell in consistent channels are their you, very importantly,

equity lower, less capital their less for just it's And are put so is Wealth, markets and about money motion. activity, view just markets in it's

wealth line so And been organic year-to-date, historical levels. growth in in with has

strong, half higher frankly, First than normal.

Second but consistent fewer fewer in what with the money half importantly, IPOs, but in has down, been events, looks it historically. is their win is market their motion is lighter, sense liquidity rate

Alex's And Okay. to just I follow-up if question. then could ask one

room is NIM, there's size on the of the to more go challenge decline overcoming the balance if So sheet. magnitude that the in

how growth your So of in I going specific result? you're guidance, being out NII to to continue terms is sight? know able of far line but not give post the third quarter

the No, start rates And I XX% flatten - you're in way we - they're mean, quarter. to just are the framing right. it's anticipating this quarter, It's - our coming anticipating algorithm we're out. this betas going of coming to we're is that betas

so securities the getting flattening effect as effectively. portfolio repricing just is the but benefits lag the we're and a higher, go benefit And out, a positive still are of rates that to

the assets, that but volumes pressure an less loans. talked when securities as of the Now more all and money market the on where increasing, ignore were the we but well. as yield that just on can't fact NII. a puts is, lot impact matter said, down, And importance it the rates about which NIM, volume has portfolio we on That's on are real levels coming

got I it. Right.

you. Thank Okay.

you. Thank

question. Thank moment One you. for next

Hawken UBS. line Our of next from question from the Brennan comes

open. is Your line

Brennan. Morning,

glad my I'm said said when morning, because good line cut you Jason, out my Hey, you name.

XXX, the plug And end the that that some is and that seeing on seeing kind deposits here deposit we one, to pressure? been far. the gap case like clarify, to funding - to seeing so think love Number quick expect ask securities if the as that's extent assuming to you've range continue to enough. about of down deposits wholesale if what just XXX is we line predict. said, AFS under cannot in I'd to going to Okay. remain quarter-to-date, should pressure line to the grow that come side, continued that's question right? up hard you're the Should that, you the do But we a

that And that's no the what on there in don't right - sheet, that, act that's rates as we positive strategic that the mechanism on it, it carry short are good in decent. use fulfillment - happening. news and positive there's a initiative and you're carry use the Yeah, think does we what's but to balance a run the mechanism, depending last is there's on fulfillment there's - the

as but use balance way a need it to and We more than sheet the push to it helps So lever fulfillment just it effectively use to. mechanism. as NII, we we don't a

Okay. Right.

So need that's do makes to impact when up does then And is peak - on you base customer more decline? I'm last the the guessing Have because - extent the you That hiking at a deposits, stand Is total about that magnitude spoke What nonoperating retraced fair? of of nonoperating that think the interest-bearing. sense. we output we we side? that plug. a we you of sort the to the in to that's demanding And rate kind driving that what's the where for the where versus and non-op betas. shifting were don't from cycle. noninterest-bearing beta have I'm guessing nonoperating of

for It about is, another there's is. sure. within there, which little layer a Yeah, we've talked actually it And bit.

continue the where more detail for rate to highest asking But on area we of investing the other shortest the to So therefore, anticipation. it's there's sensitivity and nonfinancial. highest or it's do the And the least it. on nonoperational, the also good of And it's the yielding side have nonoperational us it. even frankly, runoff financial have find not where the there's and within the financial areas area we and amount

- be the continues far. higher And level so runoff it that component so to - of that right, in volume you're is and terms

the a quarter. numbers, the at - in look the there's even I at. if So areas declines that It's on as well. is said, single it's basis percentage it highest decline the categories single all we across look And other this

even might it, not so the the saying, down, was X% base looking that and investment at portfolio, might securities more their but been have I much to that zero yield in looking active now looking at as very call and - within have And operational at to talk options fixed different I'll with And look XX%. flat base they're treasury curve at an to income but to client that's or - advisers. they do ladder

different so at very play. And dynamics

color. Thanks Okay. right. All for the

you. You bet. Thank

the next you. Bank. come Brian will And Thank our of moment for Bedell Deutsche line next from question from One question.

open. Your line is

Good morning, Brian.

morning. Good Great.

beta you'd the that deposit an first, one to, level that incremental an Just be on quarter. as in clarification mentioned, opposed Jason. you correct? at just say, the that That's XX% beta of Is absolute fourth

make to understand. sure I want I

as rate the that's changes think about changes. that's experiencing yes, the - we're incremental on beta we those that So incremental

wanted On I Yeah, just expenses. September. yeah. you And seasonality some of guess then because the cost yeah. that the just in on one in I question place initiated mentioned that's you the to you maybe controls clarify, expectations that incremental, have what around

how think So in of typical we recurring equipment that? is example, outside we more short term, we should with that of also that pension or services of as then should the software, usually about you're done really think for the and lift sort that And see. - seasonal just kind charges,

talk expenses. on Sure. is and I'll hit the also And Lauren accounting the first can pension settlement one issues. just then on here

higher. that is depreciation mentioned So - on we've expenses, in the

at fourth a importance - from of looking we're one a similar line be quarter. perspective. our where into high even that then correlated expense consulting in that doing to then the so lift - from said, and we're lift and on particular, just a you we're equipment but similar talked also pension actions technology, well But we're third doubt, we'll is what taking particularly very software we'll talk hard had a for do item. we despite that perspective. with to of point now, to handling but and as expenses quarter. comes of within into depreciation base software, what we've want in M&A bar instances the an amortization With hard to looking that, That in another see it's investing very doing, we're us And we're quarter is second... of and about make going part that Lauren, anything areas from we're key sure is that right fourth at and the And without in anticipating in critical very this the baked to equipment what that that And on

Sure.

So pension that It the quarter. whether this of expense expect to will that predict XXXX. something going think in we our as but to see have to fourth expect see mechanism that's The year current settlement the about that accounting we lower, pension, is we that recur would is fact in that in triggered the we quarter. of rate difficult definitely forward to into accounting fourth run mean would expect see the we does

Okay.

if And in I Great. just on could Okay. squeeze more there one expenses.

client? onboarding and we terms larger assignments expenses that the also complex more the may typically, or half asset advance in this that in of first they're the of onboarding in of advance clients, expect - In see now you of particularly you of of dynamic the Is next we that, servicing. if see similar year either

we've say would I Mike. already is that. experienced some This of

has are some Jason mentioned, number it's transitions of these longer taking reasons. of a for just So

the take right think that you those too, asset longer proportion pipeline at of for just the to transition to high it's side, owners. on tend of is now look servicing mandates I asset and than in asset it, a if managers part

some so expenses then to in that of - it. the that point been And those at as in, it been as And with go into already of out, kind transition we've the normalizes start you work doing have and rate. incurring

the for color. so Yeah, much perfect. Thanks

. you Thank

from from or Glenn next Our come Schorr Evercore ISI. question line from

is line open. Your

Good Glenn. morning,

Hello there.

a a market. in in guess I of microcosm you're So we issue have of bit the the inflation some way,

up expense question the my side is dollars. and half XX XX that's on count like the comp So up is, head expense

gave? going fair other probably assume like away it that a be with for is going the comp more we while, be careful could but overall. to me dollars higher take level forward, that on for is benefits In employee can't us comp market words, you just and So fears just this of to you

true think in I general. Glenn, Yes, that's

Just with differentiate as that, ourselves. for also period us on for look know, I where of inflation time or to we expand we've we say ways least, gone best the look through here tremendous the at talent. competition would that's you to one a but that And

new to make attracting that to sure best talent talent as important very also it's and So retaining we were well. us the

which that invest going the we've was question that's care partners, the growth very yes, a had run looking taking added additional to as technology, a of of be we rate very that say, comp appropriate forward. so invest part, we've our happens is of employees then And as then in And us. at of that We're rate for in The resiliency. but that what increase Jason competitive something forward. part invest the And would is mentioned, in I going carefully, front. in need we number clients, on other to

we going that sense, on have so critical that, that sure focused only head appropriate. for growth we're roles all making it really, is rate to So of very be makes adding forward really just count

up. that fees off you're like alone - of or you are way plenty markets as does there. on your to, fee that go fallen work on ceilings and fees any they as it way not year. protection not question a don't markets down, question such fee forward? hear My XX% drop markets maybe the would that whereas might I going as Do just lot used imply would much clients this would reverse markets when in One we caps scale the have going have up have either like is,

based, within a are of asset thoughts are couple even contracts flat. lot components the of a them that So of the there. One,

- are on don't see basis. there's charged move for rates you increases the that, as are secondly, in of so decreases certain XXX% volume the and a same And transactions that certain magnitude. fee there per the unit outside And

layer that that ways the uncorrelated a assets. And adds so of doesn't in and - level of many that's in to itself

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but at XXX% And work, line without trust the with a doubt, fees move market dynamics in so different with markets. won't

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could, So cash? that now are talk that I all confirm b, what wonder about clients doing if and that; you with a,

Sure.

take they by might clients perspective, to their - the are. be about got as movements an and general, saying, moving more moving existing investing combined, - option not to I you an say, might asset think if will our that extreme. be about wealth They sets between the just So they've the will And asset for might allocation funds differently, and institutional change of class. market money and providers. in options may deposits about be what wealth approach and from think from different think - those more a tend class a the clients a they market, and thinking they're often it's them change the

flatter. just place be might been actually a deposits to look at that. so And better They've

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all Okay. that. Thank you for

Sure.

our One next moment question. for

Markets. from Gerard question comes from next Cassidy Capital Our RBC line

Your line open. is

Morning, Gerard.

would a Jason. it custody your year-over-year how between you Can this deeper deposit of market any touched that the Good the already issues. conditions breaks on And fixed assets out to income Digging lastly, just the with into about administration dollar remarks. prepared decline have on decline? there and left? a morning, versus it you may share customers You the lot that little in equity? were contributed also, discussed And then

Sure.

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us fee to couple customer second, asking of a a meaning basis percentage differently. are your Very a as price, maybe custody. good. points revenues revenue And your assets question little with of you of then the under Can percentage share what you rate charge variable

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you give should tool set a that good so from. to And work

Yeah, it you. Thank does.

Sure.

Thank you. moment question. for One next our

Juneja Our from come from the of will next question JPMorgan. line Vivek

open. is Your line

Thanks, taking Capital. here. couple questions morning. ,my of A Thanks for questions.

rates to that back keep terms gap your What that high for your stay of wanted you've disappeared Mike, always really What a Gap in is are thinking, especially while? CETX XX.X%. versus you is moment. peers to gap? has plan the a to for bring down trying if Your

So you changed, Vivek, that. What changed. has our say that as right impact with the objective there. rates, I of on to And know, you're as AOCI on hasn't capital would

And result time to ratio so some over time, of continue is range will, the AOCI. and you capital, we've the if that that that's for just to plan, period. be lower a it's part range as will of had in in allow accrete capital back to that the our now, into Right

Okay.

do the balance term plans the try and it? to sheet in shrink or near anything anything no about to So

Yes.

are across returns no fact capital specific activities, So it do we around plans of look we we activity them - are of very the and Jason that's about a those the the I the that is others. than but size but that sheet getting of do say would right return. that's some for earlier and closely get the amount in deployed risk-weighted of talked balance more positive all there at proxy that, because Vivek, assets being then

sheet never to just it be we've was balance expand to if in low-returning the going so activities. looked And

that of and same this environment, [ph] dollar every in be RBA will is precious. the So

due run rate down Got Is that got? focus were temporary just expenses that back? it. Jason, Or of cost at you've you a this miscellaneous Different operating to lower expenses. question, sustainable given it the little comes one. detailed sort lower is mentioned and other

line There's within a going that lot of different factors item.

it's say nothing There's we'd just We to call but to there's that. predict. a this to difficult the big trend so moves, at And out ithin we - one call out point. try difficult any that tend

may. if I one, last One Okay.

seeing you You is and which seeing there? mentioned products are how outflows much Investment Management

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Okay. you. Thank

welcome. Your're

you. for moment Thank question. next One

UBS. follow-up a Hawken have from from of We Brennan the line

Brennan Q open. Hawken up. Thanks is line - my follow Your for taking

Yes. that this And of it briefly and asking or touched deposits Mark. mix if has could Brennan. some exactly. the is Jason. I Michael FX about currency Brennan O'Grady seen updated before, But we've the on Mark do Yes, there? you You give us deposits this whether A you deposits, currency before Current - shift mix - you moves deposit.... not USD or Jennifer, caused of Q get were Yes, the Hawken an

Yes..

is XX% current it's the little over quarter, U.S. in So bit a

then around little seen X% it's out kind is have So among deposits, dollar, as XX%. down what the And the then get though significant even a down. change more the pounds, But spread than and rest not of more bit come volumes X% is to we've from then XX% still And remaining so, a you a you bit than is Aussie or total go for also before, X% little XX%. right which as to X% euro.

it we give action it. timing magnitude guys be some those expenses, as try about you to spoke actions us some diminish And to would think should taking those what help be? Got of pressure. earlier actions then as of kind the to on and or possible on expecting to Is some what expenses goes, color far the go inflationary potential Okay.

early of levels hit mid-September. on timing. internally perspective, And we controls started and that I'll higher from announced it's these - in

in already we're going that enough approach give pivot we bringing investment appropriate looking on into just we're work and this fourth have think more -- early be to next - levels two perspective, for been components And from process with so want too - ensure very ability making And -quarter where the the higher - I this certainly, bar also something are at a to communicate we be follow our what to from about planning but growth, to is we emphasize, we're a around we seeing that. extent address that year. that it to in. And we that controls is inflation increase we on level maximize is that are a Those taken to that perspective, well not magnitude of noteworthy year's that coming point. from growth - XXXX. again, in investment. productivity going we've to And this the we're aggressively. And still an It's we're make impact the increases. numbers of quarter a on this And sure there beneficial of that significant and to about things so And that five got around to heightening sure a hard and change we to from in some to at. it's wanted do spend

the Okay. - it as the this not think that stopping inflation challenging and it, framing given said about of whatnot, environment. But But to was best addressing is you're course. about investment, just you the

think inflationary So should could recent offset about help pressure you this we to saw the of that some this year.

Is it's rate right Or the higher? like stopping about go further sort and like to containing it to So about growth it bringing that it? of is think pressure the continuing right? way from down more

thing It's we frame encourage to to a - both. for and you good It's it's - back go us if it. we're

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should where you'd franchise. ensure is we're cyber make regulatory as a going risk we to need there So that what's of each -- the is middle third of is driven. one regulatory risk opportunities foundational second there those, around And that piece infrastructure are cyber. the that to the say, client everything doing where do And one layer to we're but we sure are we is in be

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Thanks ups. for my follow taking

for thanks No, helpful. encouraging that's the framework. Hopefully,

question. for next more One

come line Brown Mike of question the next Our KBW. from from

some the saw saw the related to we business. volatility we I market, just headlines ask wanted about that your to processing about for some in gilt challenges

the be had impact your there And will some around context for there? any the there You related to financial business? volatility situation and specifically

Yes.

investment by And been significant strategies utilize some that U.K. given number volatility have the a we base a meaningful those So we the market, and of that have that that. And both gilt Mike, very those amount just of likewise, clients background strategies. client a volumes you've on provide in largely there liability-driven pensions and pension front. and managers that also are has of there meaningful clients affected

be we've in So the and have everything of that's it that the to been it to middle that. been have presented in as Needless for marketplace challenges able and to in has say, I work more continued players And through. required up not may handle to volumes has of that volume doing volatility all prepared our they we uncertain way some that away. are would back although could here the expectation say is again gone down its still that the come volatility of and pick that recently,

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accretes the and assume be capital? for dependent is just it here maybe any buybacks would how on just framework the that buybacks helpful. on muted probably Or about thoughts thinking fair AOCI relatively the So to be will back into

Yes.

cumulative care -- we've well right to you largely basis, a strong got We positions, think a it we on that's a very high amount. -- our billion that it so relative we've on I basis. as strong levels. think an basis capital about $X it obviously, with much about and got CETX billion got but AOCI, aggregate And

capital also making about levels, a, a toward stay the good but -- say, want. we're feel bias relatively we so our sure we we where have And I'd

Thank you.

our moment next for question. One

of line a We Markets. have RBC Cassidy Gerard the Capital from from follow-up

line is Your open.

and - quarter Jason, you XX% pointed to beta not at approach beta cycle two rates normal the mentioned, normal is last higher XXX%.? to just Can the similar, another upcoming will to should that -- does say, question. or that points, if go the for the say, compare I point, incremental follow-up parts basis the is XX quick what let's this a you out. incrementally, second, to on XX% continue How tightening XXX you

getting got -- the look what gets currency territory point? highly we where change. like. non-USD conversations as not differently, points were this so can there's And it. which differently. and out And also sure. basis here, the terms betas its important. rate dynamic that negative been within Fed. the the in to it each and as Each very cycle. second this our more the is in relative dynamic differently. of what to level don't from But come from levels got a deposits, in the to USD, on as of were it higher imagine part non-USD behaves at bit betas of And too, of second, to linear wealth, to It's to for They behave you've cycles, impact off XXX above, historically, at currencies, rates. play from has deposits depending ] you in little another where as high also your differently. hike behave our in X even even cycle and it that we've another mix the well. question, to behaves seems wealth much. does negative dynamics they but -- is benefit And So clients most they of then completely of are, demanding dynamic not own XXX% prior were of have the -- and the and then the some It do And flatten does also really alternatives seen up those very then

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assume Is as than are sheet you're Very risk for to then, accounts. Mike, up U.K. not customers the you primarily just over it safe to rather follow those any you on or answer And or underwriting that London with balance LDI the that gave agent guys acting good. pension products?

Correct.

either provider, asset or asset for for LDI And our the we're we you're not an the client. that's will, So are product the U.K. you pension servicer on if right, manager management side. the LDI

we're acting them. yes, for so And as agent

gilts tremendous cash -- and of around of sales with moving there's a part with a collateral Now movement amount as of bonds of that.

And so a because go-between as act we of that. will

case. put the if of handle And will, the doing so multiples add what increases the have and about, what everything That's that that which been in the as of just can I We've of that sure talked we offering create And that part volumes those. you normal would them. which to normally temporary can resources additional can exposures, I have we that would make for is is all with case. to volatility be we

time. been So position it. it's continue go, some for And to trying that's to this predict really again, can't going on but prepared our for where I we're to be

you. Thank Speaker X Sure.

Q&A Jennifer our back any the closing over today. turn to Childe concludes for remarks. to for call like I'd That

again and forward Thanks, look speaking we with for today. joining thanks, us And soon. you everyone, to very Victor,

participating. for you Thank

You day.+ now a disconnect. may Everyone, have great