Morgan Stanley (MS) 14 Jul 222022 Q2 Earnings call transcript

Good morning. Welcome to Morgan Stanley’s Second Quarter 2022 Earnings Call. On behalf of Morgan Stanley, I will begin the call with the following information and disclaimers. This call is being recorded.

During today’s presentation, we will refer to our earnings release and financial supplement, copies of which are available at morganstanley.com. forward-looking may are differ cause include and to materially. may that uncertainties actual presentation statements subject that risks Today’s results to measures Please statements earnings notices our that non-GAAP release. refer the appear regarding in to and forward-looking presentation our without or consent. may not This duplicated reproduced be James now Officer, the Chief turn will over to I and Chairman call Executive Gorman.

Thank us. Good everyone thank and morning, operator. you, you joining for

London, a doing differently this in the am York. New call little Sharon are in We I is time.

second a or any think what have logistical quarter backdrop. a challenging but just gaps we against more please if I two for we fine. So, understand, The very obviously be will a firm is delivered solid

portfolios of and attract margin countercyclicality by clients the And our diversification business to in to momentum many of environment aspect continued scale Management in saw assets Net the capitalized. opportunities businesses Vance we our as the Management Wealth and market parametric and Eaton of that billion, and of its the supported reach grow strategy, times, Wealth resilient, money improved while new The performance integrations firm’s from tax-related continued and its customized support and private said to, and expand deliver a of overall power the a in benefits Investment the stability. of rates. remaining of despite an the Our stable over proved benefited rising well new in difficult withdrawals clients, volatility business. and in equity important our of E*TRADE is have $XX reflecting we our alternatives, assets to decline strong PBT quarter, underscored a face markets, delivered sharp assets. Management

be our Finally, activity fixed in limited everybody strong across to knows income helps in and Banking. Investment materially counter what Institutional equity Securities, franchise

calling are Our two headwinds out. quarter worth results also reflected that notable this

plans. based First, related investments to we cash movement significant a deferred saw compensation in the

compensation Management, in offsetting $XXX drag are revenues on of quarter particularly exceeded impact While top line the the the investments expense, in Wealth on significant where they firm, marks substantially these million. revenues created the across

also SEC use of $XXX likely the the CFTC legal Secondly, million and regarding the by resolution industry-wide the This that unapproved of the the firm’s regulatory of personal investigations devices scrutiny. has employees’ quarter results the reflects requirements. of recordkeeping been and subject costs included

year. integration for have expenses Our done, in deals XX% excluding we down ROTCE, last was that the QX and XX.X%, from

and part achieved objective more demonstrate As helped quarter, I in in outset, challenging environment. our this balance and said at by resilience otherwise in cycle economic acquisition to the of the was a what difficult E*TRADE was a Vance Eaton

affirmed differentiated business Finally, stress our the test Fed further model.

capital us diversified provides growth as program. robust our well for as Our mix, return the support strong business our position, flexibility to future and invest capital

a As XX% price, such, to by our a earnings aligned $XX a of the that’s announced dividend program. billion from and And stock today’s we by has the quarterly and approximately this is stable current way, yield Investment increased buyback Wealth Management firm. priority the of leading dividend a multiyear dividend Having more X%.

annual flexibility buyback, the fixed than we wanted an more allows. With commitment

the valuations. Sharon. Given And capital the questions. take nature deploy believe always, your at to end, what it’s our additional this turn will especially be flexibility to over to the appealing call we to business have of attractive we will model, as I at now

second revenues good produced you The morning. the billion firm of Thank in and $XX.X quarter.

$X.XX EPS and our XX.X%. Our was ROTCE was

ROTCE our our was $X.XX Excluding XX.X%. EPS was integration-related and expenses,

in proved supportive This serve bank business. rising scale from the includes legal Management environment. prices, evolving its asset the a related recordkeeping reaffirm clients’ global franchise ratio, results backdrop benefited The the of integration-related in and needs was year-to-date a firm’s business efficiency benefits and firm’s rates. our stability million investment continues The product the model. Our challenging balanced to that Wealth of a Despite in matter $XXX dynamic excluding requirements XX%. against to Management integrated decline that the the discussed. expanded to Investment expenses, set James

we broader controls on the market in Given discretionary ensuring and support investment to balancing place and uncertainty growth. continued inflationary while the are environment, focused initiatives right spend are future

what to a As priority given is team, the market control our management address diligently we realities. can

efficiency We a will as we spend objective. to review as performance regard continue incremental critical

$X revenues of line $XXX dependent underwriting Results while strength M&A were of declined over bond with to the against a the Revenues investment power were pipeline volumes. our also corporate led to franchise against income confidence. strong from underwriting as Banking, businesses, $X billion volatility issuance activity. muted for was brokerage prior the the was challenging particularly navigated were demonstrates our prior balanced significantly prior year, year. the revenue... global Conversion Equity both $X.X the fixed backdrop were market Prime revenues strength million, largely backdrop. [Technical billion, backdrop. revenues underwriting, Investment Difficulty] Investment meaningfully $XXX The non-investment-grade volatile the clients compared volatile actions new as revenues $XXX reflecting Heightened Fixed Banking institutional completed of year on down down billion, business in delay fell the across clients solid. companies. Now market grade conditions to which markets. to volumes, revenue strategic and realize Advisory Equity equities the and income declined remains equity prior the Investment million. be versus lower will quarter year. to and of difficult from were led million, the issue reflecting revenues Banking exceptionally and

we continue. standby Please our Please as reconnect speakers.

gains of to including in compared contributed credit were – in by also reflected compensation declines million. versus prior the and a widening $XXX losses corporate $XXX decline. hedges year This the offset Notable declined the of revenues reflected loss cash-based million. Our loans held-for-sale in gains on spreads. Mark-to-market year prior the on deferred event to plans deferred-based

our a either as are of lending, XX% ISG ISG over commitments and grade loans to investment secured. or reminder, Turning

Our portfolio well. Group continues credit Institutional to Securities perform

below line pre-pandemic peak levels at with and ratio XX%. corporate quarter XX%, approximately funded approximately Our well the of on loans first in XXXX stands

by to in the of which performance We Management, was meaningfully movements million measures, were volatile Turning impacted backdrop. strong by quarter. billion. revenues revenues by $X.X reported Wealth reduced several DCP, the despite Results in $XXX

in Excluding DCP increased DCP, $X.X a record. expense. X% to The offset revenues a by the was decline the impact of new prior year reduction from in billion, compensation substantially

turbulent Excluding the business benefits to million. mix, the revenues including of $XXX XX.X%. were our robust franchise integration-related serves environment the $X.X and in of offerings. expenses, growth the of billion our the and banking evidence increased was margin resilience at PBT a as market of margin The Transactional strength

of a above high. reflect levels Excluding the transactional impact remained E*TRADE’s revenues year’s declined elevated client daily XX%. Lower last limited from activity of DCP, pre-acquisition trades new well issuance. and revenues moderation average Self-directed

double up $XXX the management year net year-to-date adviser-led yet recruiting $XX billion billion, channel, and lending assets stock and the positive $X Bank were remains modestly the driven quarter billion lending roughly were $X.X by asset outflows $XX and and vesting channel net quarter was driven of new balances clients quarters. X% in NNA now by realized of quarter in flow by versus flows assets were represent driven billion strong Asset plan events, representing quarters strong balanced. were adviser-led fee-based a bringing securities new mortgages. Total to assets. the that self-directed revenues generation XX% recent our Tax NNA fee-based assets existing rate. growth recent the inflows. annualized grew in second prior and Fee-based over in based billion of and

full in of bank average rate to income continued notably expect mix. rate-sensitive driven The was cash. savings rates interest deployment Deposits with to seasonal increased was line growth expectations. growth. in The by year to loan billion in with outflows This basis strong and tax driven account $X.X $XX billion. the and lending outflows Net year, decline points. was were of declined The up XX our deposit $XX and from continue We the by higher increase $XXX of quarter the rates deposits prior billion, billion. largely associated an

Looking is the a exit second forward. more going now ahead reasonable to quarter, NII rate

is materialize, While assumptions spread if of be NII quarters the million our towards the incremental of two and the to curve realized over hikes is upcoming $XXX not rate estimate weighted model certain, fourth forward we magnitude the quarter.

Turning market as by well strength with our liquidity billion. public to demonstrate challenging benefits our the and environment, alternative Against particularly led of our revenues private the $X.X Investment portfolio as Management, offering. were results funds Parametric customization solutions product mix, in diversified our

strong that were Management billion solutions, We Parametric a as with our a portfolio apparent strength was outflows Liquidity have portfolios. Wealth of benefits as AUM The various headwinds net of primarily the these business Total driver market by recurring environments. customized balance quarter. is billion. customized $X.X net $X.X of in Collaboration provides platforms alternatives $XX strategies were in that offset U.S. offerings. and efforts other demand equity well exceeded reflect of our in trillion. Long-term inflows in across wealth management partially particularly built

liquidity business invested past the rate from decade, have franchise has our positioned environment. in rising well benefit We in our current the which to

energy gains the of saw off related zero-bound. and fees by as income were lower and the The private particular partially in other Overall, higher revenue and with year on investment. were Vance our Performance-based AUM liquidity in million fee revenues came investments. billion. The portfolio public strength $X.X decline management a impact was We sector Asset of integration rates well. the markdowns offset in broad-based movements to $XXX quarter. with infrastructure Eaton driven continues prior and progress was alternative in DCP by versus our

seen businesses. in combined global distribution our We early our have success across leveraging

Turning to spot $X.X from quarter to declined assets trillion. prior the total the sheet, X% balance

basis prior XX of our the to was notably exposure market in CETX efficiently billion. result billion. a decline. as ratio XX.X%, amid from $XXX our securities unrealized businesses The standardized to quarter prior available-for-sale across was RWAs reflected portfolio RWAs OCI Our billion decreased increase $XX of $X.X the our of versus related Standardized reduction an up we losses points a quarter. manage

earned points ratio reduced should XX this quarter. While our be approximately basis the time, back in CETX it over by

was Our supplementary X.X%. ratio leverage

During $XX and year. model further authorization. plan durable we quarter, that multiyear our the buyback we business we announced $XX announced recent dividend last completed second our of reaffirmed billion increase most a a test repurchase and stress billion XX% results The

we both of business year half second Management. to Wealth values the will underlying on impact the revenue while and drivers. Lower predict, remains focused asset ahead, difficult are Looking Investment our in

NII Management, rates in already driving the should results. supporting Wealth in strategies coming much healthy fund we see do Institutional The is Investment continue Securities in new our support across However, impact volatility diversification months performance rising to and will it know and how net What are higher, not will remain Management. we assets how business.

and we overall will clients while strong remains valuations environment. the that, current positions With assess remain close and competitive the for open to line our up However, our they we questions. now

will from Thank take question Autonomous. [Operator with We Christian Bolu you. first Instructions] our

James of backdrop? your longer in your for I think I James, targets Thank it are Maybe there you. put MS the backdrop? kind X macro of about start guess of some and backdrop, say that some macro Good it’s thinking almost unusually was time about does are but you in you ton morning then term macro, and So the afternoon, think curious noisy confusing Thanks. a headwinds. to years? very you positives how quarter the current ROE your just a lowest is for achieve the How how Morgan Sharon. good how pathway up and positioned front on on this Maybe Stanley

Thanks, Sure. Christian.

think it, one describe to would hit on use the be it the head, environment had I I to if word you complicated. –

occasion. Ukraine, historic of an invasion We Russian have the the obviously,

We low increases the have going with rate historically significant around rates very world.

We the tail got COVID. of have

got obviously actual have of inflation fears We inflation. and the

where the got change change days issues, at relations, just in They leadership a moment. ago, UK, etcetera, here country, have had We the China-U.S. complicated. chain supply political a so this yes, few enormous am I very

shape. is sector a it not in it is different And of stronger going think Morgan the system. ‘XX/XX. is it’s better in others, say important for the though, complicated. was but a particular, is financial This in reset time XXXX speak I went stress major much much frankly, into last type than are the banking through we to we in I Stanley won’t specifically

in U.S. largely Management to in be sort but form a this in the others, deep unlikely of stage, some our recession and in long we and many is in, I of handicap – at guessing a because it, head are recession while to We the have might almost again like are at frankly great of And it’s I, U.S. Wealth and yes, think to into least U.S. U.S. but tried the dramatic businesses, we entirely is yet region world. be the

think countries. out, reemerging the obviously and behind. rolls the Europe little war is bit of I little how And gas the gas of it’s on. COVID Asia It in of a right is then hardest fighting sort the a is so and on depends – and now pressure in some prices Ukraine, because because

at in Stanley, we’ve I together, wanted after, this Morgan hey, the been record of we look is but did consecutive for environment what lowest ROE this when do exactly difficult of couple all it’s So added to years, quarter. X years sort Yes, the a I think, decades. we most

it on I’m has a particularly ten-handle So okay ROE, the it. with when lower

our requirement. have CETX ratio – is We above basis points capital XXX

nearly XX%. Our ROTCE was

a including ago. unheard a quarter, we at few If you Those margins, without did XX% Management numbers it. margin, XX% were this years the look integration Wealth of

you add terms very it in uncertainty. fare well. I’m think But together, we future, capital the in talk the evidence we on. sure of our about so for environment, that and all And relatively that model, and of is confidence lots will business our complicated, So I frankly, of

– Sharon, still Okay. half that thinking RWA actually more a CETX for around second year. a think Thank looks grow James. some specifics buybacks the It like of are while. thinking did you’re how your I dollars little falling in the just been mean I buyback, declining. the Maybe, you, but quarter-over-quarter, of CETX falling about have was about

know, around the sort specifics don’t $XX $X.X to maintain take billion can buybacks of forward you exhaust long per going it you or how quarter buyback I anymore will announced? in billionish So that

year. X Well, multiyear than obviously more means

our is in just think So and the that but that broadly to perspective, prudent very buyback efficient we’ve capital most I more the about usage. been sort capital also around of and important the put thing

said that are one think and I always same. we’ve strategy. is They very much the capital that tied to

them specifically one, plan, about we points: think repurchase concept we complete buyback so old the we the and And authorization. about two multiyear think holistically. of a did When right, our

therefore, So in there addition tremendous ourselves is provide where such also had in And multiple to this the said, environment a announced new as with are, macroeconomic point an we we flexibility that, as factors authorization. that but James flexibility looking the think that around a purchase in both commitment continue the to evidenced shareholders, is And by – to the in those return the really dividend. to be is I plan. increase capital we’re for capital what one

we $XX. to we XXX stock that’s at a the I by an $X.XX. $XXX And And can just move want basis dividend capital add it buying this was I stock number. do your something. but important use was enormous buy some billion not to is share And access, flexibility. multiyear for flexibility year, with something, now, what of Listen, don’t in X trade really $XX, every at have reason. we’re we time like a of I retiring mean to I quarter-to-quarter and points that that you said it Obviously, of the ago. $XX going – worth way, months $XX a know or it couple morning, the important.

bed. a return there we out of we’re virtuous bought of plus – great we’re sort without net, So shareholders of dividend, if is X% averaging shares back getting a outstanding getting about buying circle, back X%

resilience a is of capital this a, b, So of, our statement position; of model. our and, confidence the business

you. Thank

from our Evercore. Schorr take with will We question next Glenn

their and a have of you across that lots big targets sorry, deficiency buffers higher you convo capital Hi, broaden the of have – GSIB look higher the thanks. GSIBs, out. all the and access Maybe the don’t coming to have. lots GSIBs, on just follow-on lots it buyback When I’m

in buyback the that is the So being dynamic cheap I great. I other maybe excess day, with the that share capital any any to get that ones it, works Are at parts just position? or of using on how stock business curious ponder like safe like of one there options rainy am only you grow

excess discipline major sort great – work nothing position. built a question. Glenn, way, two acquisitions. we is of did hard Not it’s the of, decade Well, We’ve and frankly, capital this along a ultimate the through for

and recall, And it quarter. Eaton you So two the we up we’re deals is Vance. West, this $X.XXX course, long Solium the year, the a XX%. a We’ve so wasn’t The this year and change Mesa year, taken quarter. E*TRADE our incremental dividend. It using dividend. was Last majors, on and doubled $X.XX small of we it took ones, another dividend ago,

we’ve So that. used on

the the banking. invested out banking few invested obviously, management interested that’s the and the We’re the internationally, doing retirement And and Eaton terrible last everywhere, particularly going Vance I of We’ve in to the last investing in we’re capability, we’re workplace Funds in space. next be the but building Parametric has more around investing we’re and expanding been in in the few XX months. our not We’ve calendar mean, years, taking wealth the bank digital program. space. asset then business – months, the not that,

So haven’t money. dividend. I do a don’t just with still what problem is it’s not saying, capital the a I we like thing And special know to done fan think don’t something their giving we I’m a and that’s shareholders just – of. excess with only personally

Here, take you it.

in a the have X% and stock do we’ve spent, of retired. we we got the So dividend At beginning do yield, business, when X like what dollars trading. year the smart to is our you x around the buybacks for and with check; a check; shares flexibility investing money: give it every with

we’re that. like X I shares. returning Now

you Our accounts with what cash you, gave usually I’m in any And impact I than In What is gatherer position noticeable are Management, to and alternative sitting that, words, curious, largest clients. they Has it is on money they market follow-up assets. of this products going doing you’re the on wealth it? types into on thirdly, to? all other cash? coming Thank appreciate color which the brought new are thank they you. Cool. James. are. new channel? opportunity Wealth then higher Sharon, A of that

Sure.

no Let me start with the opportunity. in change last. No,

forward their clients, I think for to about we right as to our alternative – relationship that both based the actually FAs, with managers through on create work educate educate use closely channels. think educate to go and different very we continue all clients FAs, continue products and education

all what do see I that up terms lot a ends they you at recent is money, quarters cash the fee-based system the over that that think accounts. In into asset are into deployed come So these doing is does are as time, net fact what new various they over. first of moving cash types look when then with the brought that then of we fee-based aggregated of money assets right? often And into over

and just channel noting previous had I low adviser-led big repeating think XXs that that seen move which are fee-based those and years. those we those from now XXs, somewhat it’s worth XX% in our assets, of a assets is

terms at self-directed the over seen XX% sitting course quarter of the the levels the half of this the and types we terms were around of we’ve of XX% at first channel. the to cash In advice-based of around what products, very with end of specifically fourth different in year

We’re around XX%. now

and/or by as seen the down but basis. coming in I increase. deploy to and levels engagement that somewhat I pandemic is bit course, other engagement metrics is and it’s end from you what cash. at still most there, just our – a pre higher asset the could a transactional And equity observing reflective waiting can we in where that, the be want because are a to bit, – about where some I still thought DART that don’t the isn’t values people think, a see are down were in the levels But coming Of to asset coming of we than think down that just values transactional, there that’s and it’s pause, suggest that markets certain of of there we’ve

are seeking are So and their people advice people are FAs. active, they from engaged,

you. Thank

Chubak Steve We will take Research. next with our Wolfe question from

good Hi, morning.

follow-up you out the offset the noted seasonality, side, guidance, myopic wanted that lots the and on deposit speak a So betas could question you tax cash for sorting ask I outlook, pretty you focus And growth recognizing and just sorting laid volatility? deposit given some guidance as on to assuming had side? maybe explicit laid on you’re quarter the to what from the some growth NII deposit prepared deposit out, you that given was trajectory the higher remarks, loan this of and market Sharon the in on hoping cash already crosscurrents

your of all I behavior at mix to quarter, has conversation, that have the think is cash that question at rate noted and call are of NII be it of aggregate, informed it, very various that assets what through weighted then end composition last is with Specific sorting, deposits. types XX, in and quarter. to just just important also noted right? we the cycle, is we the between last this does products behavior deposit into the weighted continue I There it the Deposit and beta this that very reiterate also you one to really have. you NNA we build will by because just with movements do the and beta, and new we’ve as forecast, again to beta an said, which cash of, around how we as piece do hike of had but the

behavior as gone larger over obviously that deposit helps again, the with we to that as in lot A explain though, higher cycle. see It So we And said, we we beta, is around deposit have up be, to And accumulated will seen over moving by that I into those a deposit into on accounts with we’ve And see hike accounts, that right? based time. account balances is mix. might the we how saw I which the what larger composition other levels smaller course, forecast, informed last of rate beta. not might also do levels. have those inflows said, accounts on again, very account now just time. are that deposit of have increased So where lot embedded smaller has

color, as the market cadence speak I on the more I on And a If the follow-up us mean number, volatility maybe floor is the X% organic tax should could earlier was trajecting also pronounced of Sharon. we helpful just hoping the elevated to And certainly course volatility, reasonable over an this growth, as of on growth? seasonality, to considering impressive organic Very discussion from was the view a growth persists, which, April flows result. you give how a just quarter? organic June, sense to just the to market

– obviously second is you cadence you’ve in different the second a first seen going X months than month had not you’ve the mean outflow to the right, tax mix, seen quarter more I a – season. the – in Well, you’re because

two change of the gives numbers. So those in that you kind

in see a continue we think and you you a seen about basis have – you’re think is from that is to if comes continue. going what have that I development flow-based – lot a workplace, just

continue have people forward. As to their exercised move options, they

So there of are types offsets. various

we single-digit forward, floor, acquisition look, the what’s of that was too of think very We said important said historically, which range, were low where to don’t look we expect in high. terms before have in be as is the that E*TRADE. I we we XX%

say still it well it’s you middle it – positioned. still feel that out, pan Exactly that you how we – can look does range. is kind I still will of healthy, that to gave and what we’re So

you currents. begin and it they they pipeline healthy. away why? are channel there As is And those other it, come bring immediately, mind in FA recruiting through called be be could specifically their will think – to Because be for held relates indicators seeking a event often you so when I over, are advice-led cross actually in about that might tactically, what are this to assets remains the volatility in think into those recruits example, into environment. more – they we that quicker to recruiting. they be see with – market that When were as – And to bear anecdotally channel,

Thank you.

from next Dan our question with take will Fannon We Jefferies.

Thanks. working some off follow-up the Good morning. side. Management your on have you the against fee of Wanted you outlook, and money coming but in you obviously, beta products, Investment have, fee on fee to higher market waivers

mix and longer-term? think client about do think you business behavior in forward, how the that going about you rate fee as So

great – just a changed. sure a Q What come business. that also in out haven’t am themselves. fee the But has actual is you see It’s specifically question. will sense, I rates themselves the give this you the disclosure changed flows of to what will the the for changes mix

is waivers higher So an quarters decrease In seeing now those what balances. in waivers like as accounts, you’ve have year fees. of we some over a things we million in we’re we’ve can which, equity an floor. last of we’ve We for fee liquidity, flow continued the seen of zero-bound went that seen over came of rates moved as of the increase have numbers. stand zero-bound. that the guidance could example, that course two fee previous is disclosed, We But not and positive off since the guidance, be higher – those away that course as because off expected given see to had $XXX the you see to that incremental into behind the

balance I I see in also obviously, though, that Institutional some with to money I will products. worked partners help this the to business we’ve bank as across question, time And case, what into relationships before. think, put in a is investment in we’ve the help you find the bring those things of and It’s to deposits for right. is investment is liquidity where into could the those balance relationships the integrated is where time a example, this Securities, important market testament balances, think, rate said change, is, of amount forge

Great. Thank you. revenues or follow-up, given where bit And we’re then in a challenged are just more as uncertain. a the backdrop

you cutting have in on of non-comp started highlighted quantify growth think back decisions any think around about levels of half and being year, proactively and a spend and changes? and area that you or there you expense, is focused you as or but lack the efficient, to about this flexibility way back As to make being the thereof

our that point ex X%, the ratio includes James I at quarter. this first highlight to is would mentioned that that So and is the legal that charge efficiency integration, you

shown decision-making holistically think we have about way to we very Resources, expense our So process. about strategic and demonstrate around very discipline similar I base, think part it think to we and continues our the of capital.

are something can and we flight. been with second we was be thinking new by into need that quarter, that we’ve came all on. work to that the eyes near-term walked in things. we all might to the projects that do continue we changing, we same not – in certainly in look been that making there geopolitical information, macro individual as the by we investment and as get so, flight, that, – to expenses balancing, we environment that coming that and it’s grow a So and by certain are are the side. a seeing we hard margin? on as efficiently, potential together witnessed growth that we about the need product to be our are And on product, It’s say were investment, in continue we understand are project that the invest the I’d said, keeping project is a relates events took and we ensure look investment, horizon, has delayed from, but also front business doing how As sure right it controls to the aware where James to in had longer-term as place the we We always

you. Thank

We with will America. Poonawala our question Ebrahim from take of next Bank

Hi, good morning.

Just Securities the more follow-up one on Institutional business.

talked hung bunch market you one, saw around about functioning? the market you the So just of quarter. hear share the capital plumbing which a et is have. love Would clearly during opportunities, around your in deals, health of, to the We thoughts cetera, how headlines

more there on that the up opportunity driver the And growth realize how the side? quarter. there? was So already are holding side, Prime Brokerage strong on just this clients is franchise I institutional of how the is a big given

your hear So to would love thoughts?

of – said, other necessary this we’re functioning, of position seen not stress not a basically, – in James capital market the – cycles. kind we’ve The terms as same from in in is the of

still functioning seeing markets. We’re

that of to the balance see we terms You made of pandemic, that in balances XX% can up balances being ISG I across even XX%. seen those funded points versus the at the some just portfolio have in funded

of they than that are sheet period came So also of that into a see rates and much better certainly the think in perspective good I worth it noting because institutions course good from this last an is say year. environmental from in you have before a a that perspective, in that corporate many place. I position from perspective in spot they low balance a saw issue the we’re did a over you would

underwriting Of course, That difficult it’s come market. you where that clear more results. days to are in to see the very as there is

course, that corporations, of a advantage days and and to as taking it’s balance, perspective, are etcetera, functioning. of institutions where So green But do the provide both seeing are think that just they single that, having and not is the every from open, able that the same to I you screen market market day. is thing

As we it been very balanced that have to Brokerage, in business. relates Prime

we we are relationships clients. the for a this business. And continue look sense suited well with environment that makes that think to to in tremendous been in that both effectively I for partner have we leader

on that see side. You the balance

mix side. that you revenue And the on the also that us. see see to You matters

equities so perspective, decade that we more have now. business focused And the a over very holistically for on from been

And on Thanks income. fixed just that. the for

Like to your up does So, at or you ago. peers, maybe, sense all side and or it years few actually a income the James right-sized share the constraints given appreciate areas make Sharon, like fixed could capital where business that pick you the on in no? lean revisit

you always is pick environment there an share. opportunities to Listen, up where and try can

think down that. I RWAs the this I billion an as overly drive CETX our be up by ratio excess read is time We like to I don’t world, are like opened in Obviously, a RWAs, uncertain We fact you into brought $XX bit the this up actually we where have as aggressive personally. quarter. is. capital. I with. you of

and so. team the institutional appropriately think very equities were I fixed income both prudent in and

I So, call to or points trigger $XXX easy another, know, is don’t competitors if to now. million, points is another some in a $XXX I the trigger me for right SCB listen, the our of basis had have. on option generate XX very revenue. million that basis That XX the like we that haven’t

$XXX the be a trying were open, business doing, the know has fixed consistently billion gained they million not but materially between don’t they to game have million, back now. the gone of phenomenal are we will quarter eyes what in win And income from They we a half So, wide done and that’s is XXXX. $X There right $XXX – listen, job. – I share. billion, are we have doing, a somewhere $X.XX

XX% lower business, or great I those share we up stable are from leadership. think around in X% days,

greedy. we will but yes, we are be So, going be opportunistic, not to

you. Thank

question from Brennan We Hawken will next take our with UBS.

on for wanted follow-up beta, on of questions. side morning. balance but questions about deposit things. rather taking Good I the Steve’s my Thanks talk to

maybe – from So, about the level so potential there be quarter. just bit, that tax further that you attribution seeking. be, driven a think how you or both of sweep do that Could billion but by you could some Sharon, declined about sense yield a think kind this can also and yield about have by we deposit – down break that $XX it loss deposits little seeking? deposit much I what payments, was further brokerage would referenced set

Yes.

conclusions. a little difficult draw one those I bit think be quarter I kind I to would think of the better that mean –

differently, know come is have I think well, down think way Brennan, beta little the which we I why the is some received it, you I your of about would didn’t E*TRADE. bit questions are, had a because

balances where position you an beta average And lower those have over so weighted time. should in should that’s be a

answer terms more underlying also the my into little the head higher much as line way what saw in of level. So, account expectations. in of balances to is, built bit I That’s It’s with very into remarks, we our a we the where increase built think said the best I crux in the your built have kind also in we on question And behavior deposit forecast. directly is into we expected. It’s have the model. said, seen

lower, And – of just so in accumulated time predictability. why cash it you excess there with likely terms some But working that Why, have of that in higher where beta them you yields to is because is was balances. some has the at that sitting higher, beta position. periods of and were then do was

of to seeking higher And so leave payments. some higher-yielding that begins balanced out amount

of rather answer more of little So, question you I in think think quarter’s directly, perspective on construct behavior. that can terms just from one what’s to the at look balance bit the help going give a than I

Sure.

we fair. SBL That’s billion growth. book, And Okay. flagged the loan of you Thank you. about the think $XX then when continued

it the much. expecting are half back little about be by than more So, a half that, to what the you in loan seems not first growth like you in half of but saw

some those reduction these talk how to it slowing you going maybe pay-down, would so an it and growth LTVs maybe of makes just have getting slow. is is or be that what book seen manage or from Can just there – SBL because SBL of LTV of you whether need sense, about choppy loan that in potential is going some reflect high, to some So environments? and SBL and some also and there in some market – the to not the perspective we LTVs are mechanically

Yes.

LTVs the managed. okay. well it’s are very No, So,

Okay. I all. trying remember am just to it

very of you as why book. all, much line the we always line very would couple like within are the that LTV and where at said range a range, would that we it obviously, the And down. have have of I XX% a from are perspective, are of last well-managed historical with expect, And low-XX% value is over underlying very uptick you any for reason – has we been given from historical range, we the from as in sort years. been expect, But gone actually basis, So, in we much, in years. the a or is that

forward and what’s what directly just a think you see here are looking Now mortgage are. perspective, to we seeing, slowing I that rates might relates as given where is it important some obviously from

as Now, the down, in the engagement lower why or values. asset you SBLs with interest would not product might much just come have

but using we environment calls with is very to an be of oh, broadly, is issues market is just product in relationship this from seen So, the a I management now. issue, from engagement that rather haven’t of, a the don’t look at rather it perspective in that there operational where terms portfolio side, right a different etcetera, well-managed more lot the

have the values conversations You those down. as might much not asset with coming

very practical to So, that answer the a gave. question you

you. Thank

question next will Fargo Mayo We take with our Wells Mike from Securities.

Hi.

does Thanks. that economic looking that. the growth, target? from about forecast? year. portfolio? just a Just easy start a it you what’s loans. to a follow-up tough loan make that on are make to are provisions year, on billion loans It’s the loan have how the last loan get And target those loss perhaps are rates given sometimes. But new looks still of the growth like new $XX thinking at Kind you for wealth with back in We of of level the paid tripled to risk it the losses growth already sense It’s always note

Yes.

is, that just the loan on brought come obviously, wouldn’t expectations a to is. the people call more mean terms quarter-over-quarter of the projection understand the I basis growth expectation – an in the it’s NII as has what down. target it point was Brennan, that think target. help I of by To I

that. are that’s all So, pull we did some in we reflecting and see forward,

low. still at vary both provisions provisions across look a relative is various even Institutional they to franchise other – institutions, you quite and Securities As basis on the our themselves,

the based complicated in scenario. on as know, you life know, also and you concept, a concept. And drives In of the that, is what as between terms – CECL idea all quantitative a is both of it it qualitative it’s loan

a have what We we about, And very the expectations, For in said are us, we in GDP what’s are also consistent consistent we important are factors recession that’s outlook. disclosed probabilities range. have in expecting we macroeconomic really Q, as at that is see look And publicly. the the that did our in XX-XX on very going the talked most we with with around the degradation the that GDP.

any did this quarter? you so have CECL extra provisions And

No.

We are right where – we we feel appropriately now. reserved for are

you. Thank

Cassidy next Capital will from Gerard our RBC question Markets. with We take

good little Thank there? asset unvested the you. bringing Can else us in you Good there some Sharon, that workplace year-over-year a growth guys down, is values declined it color? XX%. had channel, The about or a basis, of you something the participants up market it Was just number on conditions give morning. was in primarily XX%.

themselves point the you a question those just No, value good are the and draw the value holders – just have of assets it’s a those gone It’s distinction. that great have. down

a engaging wellness is, fact Now to with an especially we their clients what to financial these I and the opportunity the opportunity model do is, in continue mandate, with use financial we we increase would say people a that provide different potential and tool, specifically that to environments, seen this just participants. kind in of the advice-driven individuals. advice an some wellness as just in continue actually the in we participants to do discuss continue with terms explain of educate in declines – see difficult to is financial What environment obviously, – of as it And have us increase we environment number in lot for and time has as of those in – those portfolio. terms we of what a

versus Very the new stable a more company in company might traditional a skew those good. start-up And does to tech-orientated plans? companies – that be more or assets industrial do

Skew, types see it’s as different say the sector the I you be would that companies. we And side. but as companies technology see asset values that would tech mandates, you there – there balance there of that just a those is declined, can portion, other is side on a win not in of of good on are

We wellness offering. especially understand that are financial winning institutions, as people mandates across different better

Thank you.

Deutsche question with our next will take Bank. O’Connor Matt We from

before, more detail. Good Slide morning. losses. allowance it here, XX had Maybe the credit details on have relevant Appreciate good you the but for all and now,

total does ACL, go? guesstimate you had in $X.X a to kind moderate where recession of If that billion that of

very I difficult think answer. that to a is question

of I think there size and what it can can comes think the – makes scenario that extension rate dependent you growth then the on you is sense. see actually rise obviously, look sense, and where GDP economic goes, is, the of the about the from makes The and some at that duration expectation.

Wealth way Okay. Management, as but Obviously, a loss go? high much you – lot think could how Any which it in of going double the or have to frame, just loans it content, does any way are triple? is to to would not generically frame

would… I Yes,

you mean about think would say I – would don’t what know you it is it I do I why to right. as relates COVID,

from You COVID perspective. about where a were can we think

quarter The talk a we Xx let’s was think are provisions where perspective. about were from you COVID specifically. almost when so XX%. It that this And ISG

Okay. That’s helpful.

point I just traditional percentage is would Wealth of – These consumer very ACL out X.X. banking Management the that would loans are from loans. piece, just out different point kinds sorry. that I

going for at major part to move. are a major, you see not So, of least just that

book. small mean conservatively business what kind business might big who – that recession recession don’t project. I I market, We For business. on. this be and we a be, of But just the knows long manage can’t and kind of think others, you traditional have so a just – it’s how it we might don’t have middle loan

DCP the revenue clarification you And firm, then please? total the impact, what’s and Wealth, million revenue firm-wide but helpful. just $XXX in the mentioned expense impact question, for a That’s

why business which number. It’s is call we the don’t out line, non-material per

we The very to revenue be and Wealth, in clear, at just new called a fee-based it was growth, environment. the quarter, a reason XX% out growth money year-over-year, great actually margins growth, in had same Wealth difficult

was almost out million the it expense kind the number, comp even little thought bit not it we of DCP So, $XXX that top a number line the comes though quite. on took off dollar-for-dollar, the of party raining

it. We call accounting of called big – it’s Ordinarily, a we we make why out. It’s issue. it issue. an that’s not DCP. So, deal out business a don’t wouldn’t of It’s kind

you often be retail all going we just in were, is not are very, and Hence, we how would was in to out. well, So, behaving business now behaving it. given how short business was thought the about right interested on that growth. it stable, not the we want what they and investor panic that saw answer But excited call

Thank you.

next our Global. take from Jim will Mitchell question Seaport We with

what us or more Maybe is Hey. little that if a were continue? kind that – give deliberate just actions clarity was the can actions, specifically somewhat morning. can if that more market-driven? and some of decline, those you a RWA on on deliberate Good And reduction,

from and that approach obviously It efficient the answer of I way this environment. the would uncertainty, think Yes. well. that it efficient and around does a said, and very both and prudent business it make and is I it. But do declines very where very given the there RWAs. with to when thoughtful it’s with was same the is perspective we I as thoughtful a being of And use as way – There a flexible sense think are about expenses, had uses all was about market

those taken that when RWA it’s thinking the things were into about both of account decline. So,

capital We as I big point ratios are our sacrosanct. a These Listen, an us. here. to for make regard deal want important

a capital We bunch that and be doing, We like to are going have in low-XXs. up back are We we spent for can exactly environment $XX a buy billion now. excess in decade having to building the them. this hopefully, we

demonstrating we sure discipline ourselves making in tough flexibility, give a So, environment. that

Ted part in their think and things driving will that so that did And down. control it’s as But market, a number best the as outside try the and by of driven I something job can. should volatility ISG this phenomenal obviously, is we we and team in in control.

follow-up talked peers. down mix? some a probably your victory still time changing of there period is over is your business But down James, your to the you that, year to happened I slightly. relative of in push mix This about SCB hoping over losses do and Right. that change the given think a your DFAS as what think would to see have Maybe on you time room come

test the were XX.X, up, surprisingly. demanding environment. as was not at came But stress XX.X. we that, and notwithstanding versus number, out incredibly materially we PPNR was also in I the think The still Look Absolutely. up this increased at dividend losses

Federal The from are model, keep growth in these business argument not we an have adviser time point asset number of getting compensation we moving. stress. treat business, are to capital-friendly. of adviser Reserve buffer during a things, been put business, that long financial is argument – We we very the compensation but they I management an very on the won’t variable. away of the which growth Yes, And time change with in for financial view a SCB it have going the about workplace a just have different retirement that all Then way, is the say how in that focused us. argued let’s frankly the obviously

strongly. push to of are down. argument when believe has it that continuing not will So, revenues yet we that it expense does, seen down way, come Fed our free comes The up When capital. bunch that another but we

you. Thank

question our Wells with We from will Mike Mayo Securities. take next Fargo

down. have about your management? moves and I But uncertain, B plan recession-like to headcount, resource take lever But were on difficult too some was about variable is it’s time comes the aggressive you to revenues it risk that a when to pull it’s in to And the your at go do not what the scenario terms point Hi. to projects. you James, XX-XX But plan a more much delaying allocation, environment, recession. yourself market prepare kind more time share. for for extra talked and being? resource talked to of down, push maybe Sharon said you you revenues, it on comp variable mean expenses said of or

not. No, it’s

RWAs a are Management And right integration sheet, significant think more as of didn’t felt strong about guess managing, is as the much just reflecting overwhelmingly there in it This phase I Committee don’t we quasi are And B., last U.S. have ex I thought margins. are to The growth and are for, it’s We managing spoke revenue and said was environment. somewhere in think the the I the a We to in in downside Management significant. we risk sort I this magnitude plan stressed I environment. I we the I mean I Committee significant met definitely the want We in September, but had business, a market. business Wealth of more feeling was X% really it, balance the produced harm between XX% to a Management now. we

we started at pulling So, back, Mike, that point.

very handle clear is. growth a got growth have on that and headcount where We

also have a We got of lot obligations. regulatory

have continue got to crisis we buying back we We mean XX%. are if fulfill be But we increase to sort now, that’s right the all. mode do. not banks in I – were, definitely billion dividend a all of $XX what in at wouldn’t the as

will hand, sheet be On other very the measured. balance growth

revenue, all lot with think and necessarily a us, I as going well, and back will have to are coming I stuff the the having big doing company share very like think of we when projects prioritization of pick it. going review banks around a a Sharon us have firm of systematic as billion to pretty do this we on, $XX we And in on up we the move by not we forward. to of also choices articulated

a call not A I will, it would if we you but of B, minus, plan a in. mindset plan So, that’s are sort

career, aggressive the of lot deteriorated, U.S., weapon, environment, things ultimate seen a the much lot obviously the more a a of However, a crises, And if position. recessions, is my and particularly damage in of things we really get I in done if then worse, have lot which have we to take comp.

conference are call. you Thank concludes gentlemen, questions you. further and There at time. Thank participating. for this this today’s no Ladies

disconnect. now may You