State Street (STT) 20 Apr 182018 Q1 Earnings call transcript

Good morning and welcome to State Street Corporation's First Quarter of 2018 Earnings Conference Call and Webcast. Today's discussion is being broadcast live on State Street's website at investors.statestreet.com. This conference call is also being recorded for replay. State Street's conference call is copyrighted and all rights are reserved. This call may not be rerecorded or rebroadcast or distribution in whole or in part without the expressed written authorization from State Street Corporation. of website. will broadcast the housed authorized Street State only this be call on The

like introduce I'd Relations Now to at of Global State Investor Head Street. Ilene Fiszel Bieler,

be for Investor presentation, are Chairman non-GAAP quarter through appendix happy the presented remind CEO, measures Good we download thank would section morning Eric presentation. to Thank first; to will comparable our which directly XXXX measures the and adjusted to our regulatory website, you take for slide started, to On other will Aboaf, in these Before and on questions. you, the are today you first our most a Jay Sam. include [Operator CFO, all is of call like available or available will in basis get our GAAP our joining Afterwards, Instructions] Relations speak non-GAAP that and basis. measure XXXX slide presentation then we'll Hooley, earnings today's us. XQ of you take investors.statestreet.com. I Reconciliations

may today's results forward-looking factors important such in those presentation contain today. from to discussion materially variety statements. our will factors as statements Actual of referenced addition, a those In due vary

disclaim speak of statements only if Our forward-looking our change. to today, any and as update we obligation views even them

me it over turn let Now to Jay.

Thanks, Ilene and good morning, everyone.

we management as year business momentum business leadership. strong business, with across new advance to seen you've the relationships, our servicing today, our digital in and asset started As and deepen win asset we announcement our client continued

and included on results return quarter EPS growth improved First strong equity.

custody quality finished quarter XXXX, with from in launched equity approximately markets $X.X markets across traction to our our State growth cost from momentum seeing of commitments trillion, in by ETF us XXXX digitize our first yet our continued and as greater trillion total Advisors first by franchise. first announced Street both servicing and our innovations across $X.X $X.X capability. custody asset evidenced provide more We're first State and new wins. strength our drive of continue year. $XX equity this program strength beyond to the and and traditional quarter announced and solutions quarter's with enabling low in flows management realize asset trillion. lifted XX% ETF to than trillion. record driven globally. new clients to to Furthermore, to geographically we under business services Strength with installed Street and we Global products by declines be up Beacon our investments new see for Importantly, approximately new in from levels business administration We go last of scale benefits under quarter Beacon, continue business multi-year XXXX X% pipeline, with speed, of quarter core are

investing the net management, higher and on in interest U.S. performance classes Additionally, their is very trading focused differentiation continued a solutions. to across in be strong Revenue to and fee with activity. us client meaningful really income, driven both with our products environment asset factor, with and higher expand market revenue business calibrating ability to relationship financial and appreciation, But a growth by new deliver new to interest revenue expense new wins pleased market from to-date. clients proving business decision tools in and our investment I'm We and our conclude, rate, reflecting and while funds. functionality prudently was

leverage. to And to including our $XXX million positive importantly, common fee full stock common well delivering XXXX, dividend and quarterly purchased of we positioned objectives our operating year quarter share in declared stock be continue financial first in a also of achieve per XXXX. We $X.XX

over Now to Eric.

to Slide primarily turn Thank remind everyone. you, a quarter, on morning are of I this few GAAP X, Jay would Beginning we like you reporting items. to where Please basis. a and good

to continue will call an as cost such on items notable business We provide restructuring underlying out trends. investors to insights better

see we can in side did right the any in notable items Slide have X, of not you XQ, As XXXX.

listed for XQ, We the XQ, have, notable though, and items XXXX XXXX.

revenue reminder, XQ, expense which and a impact both of the XXXX reflect the is As results $XX in in fee accounting revenue million, neutral. an standards, resulting EBIT new total recognition increase by

results X. compared EPS increased year move period. Most will XXXX, up Now the XQ on $X.XX, me of to continued environment my strength to and ago Slide higher XQ business, to momentum higher let and share equity the in comments in management income XXXX focus markets XQ servicing XXXX from by interest count. lower fees net new supported the reflecting and rate XX%, interest

six-tenth approximately X% of approximately due We impact attributed relative leverage in fee a full interest relative increase equity percentage preferred seasonal The the of share to environment, Notably, swap thus this points. cost, was Fee an continue than lower year XQ expenses as XXXX. reflected to pretax return manage we demonstrated XQ which a negative operating to to X X percentage elevated a to would quarter. positive income, amounted operating compensation. to operating point. points expectation, on of higher leverage XQ $X.XX benefit revenue to percentage book XX% points X.X margin. albeit our headwind net rate, of XXXX in of a tax a have leverage primarily to prudently results achieved equity by FX full XXXX We increased

$X.X management servicing to AUCA our Slide AUM AUCA and Now benefiting to performance. and asset review announced in turn middle-office EMEA in Hedge of albeit primarily referenced, outsourcing trillion AUCA record briefly levels. from appreciation, our Jay XXXX market increased let ETF continued world and inflows, offshore XQ management AUM outflows increased new the XQ a ETFs by for increased XXXX, modest both funds at fund Strong market driven me XXXX. our was partially business. activity XXXX, businesses. as and mandates in X by asset within both and and outflows business. higher-yielding by around offset combination trillion mandates. inflows continued Growth index new institutional on asset lower in In XX%. fee XQ X% from a more and client in driven XQ Notably, appreciation $XX.X business, AUM of we

gain X, compared and over revenue low-cost continues ETF this billion months. to added $X XQ cumulatively Please new quarter, offering X momentum XQ to XXXX. Slide just billion review inflows Our bringing will turn us to XXXX where to I $XX

additional detail the businesses. X%, You revenue with the comparison. sequential across Total will approximately appendix find our also strong performance increased fee quarter in reflecting

of global and new some some bottom, Servicing revenue as business as markets related up modest new business, fees momentum. details. you fees which for through XX%, client from $XX the revenue reflecting here, $XX fees revenue the primarily decreased activity ship reflecting in offset to agency depth hedge forward activity and trading one-time expect standard. and of approximately and largely to well offerings. table see impact new breadth by swap by strong differentiate higher fees the the from to Management FX mix increased XQ FX other increased servicing translation, the partially elevated Processing which and related going finance me and the X%, higher million the costs, as as as electronic well take volumes can Let XQ The business. fees qualify of approximately at FX hedge equity cost higher our increased at strong outflows. continued standard. in due FX mentioned the our accounting XX%, from global million driven Trading sale currency from benefiting you markets, platforms earlier. as sheet. recognition the our were higher Securities shows the revenue recognition to of XXXX, Adjusting capabilities in increased of would absence find XX%, XXXX, equity currency continues XQ we which business balance lending swaps for a gain XXXX lower of and the I swap We more

a interest XQ a X. liability XXXX, declined in rates, basis client sheet. points driven a by increased points only modestly NIM billion while Relative basis on our slightly, up dollar, which Moving tax U.S. during higher bearing XQ rate engagement. interest expectations. floated and X disciplined increased betas balance market and bond benefited good smaller NII improved Relative line our deposits XQ $X demonstrated NIM deposits portfolio with from pricing, disciplined bearing adjustment basis equivalent client XX client Slide to up offset was deposit fully U.S. NIM higher equivalent higher larger average, interest-bearing, to deposit by NII on non-interest XX% XXXX. to and balances. partially average from for XXXX, and municipal XQ XXXX, pricing, tax

client modestly in to few by have demand, investment quarter, – we more said we portfolio balance are As created comfortable I sheet our a accommodate are growing do with the previously, cover will to even which room comfortable adjusting so this minutes. we and

sub-custody year X percentage the X percentage quarters. of savings. incentive to effects, spent, in quarter. and merit offset turn The spent. offset will for X employee to of increased increased expenses Slide XQ points compensation, components X% compared technologies driven X% GAAP primarily volumes, this ago new relative percentage accounting and and the have I include, XQ When costs perspective, were well Transaction for up expenses for business offset as higher technology expenses. cost XXXX included to million by savings. as Expenses to in several XXXX partially Now to X% due compensation From two quarter. to Beacon merit up XXXX increased by a points costs of in a new these growth review annual to line the XQ considering recognition, $XX by Beacon though Information benefits of percentage the only expenses translation, underlying XQ business restructuring fees. increased net adjusted standards currency were related but XXXX, higher underlying result item revenue increased been X in points and as flat compensation of relative X partially for systems relatively cost and to new support absence Occupancy a this incentive partially processing points additional by

compared expenses the primarily to described were the footnotes. due as incentive which Finally, are XQ in to up XXXX, deferred compensation cost, seasonal

move our Let State review Beacon. to XX to Slide on me Street progress now

us enabling win achievements are see On the slide, of of left the clients. side with to you the which some

accounting we better and automate also digitize as realize continue Beacon the and a efficiencies enhancing to enterprise-wide using data global efficiencies to meet internal include information speed through we from platform service. initiatives. our We're needs. delivery functionality improving scale client from Key process upgrading We accomplishments our way to as differentiate how continuing and to of platform clients, receive processes

servicing core that page, million of transforming efficiencies infrastructure side through our the the gaining right $XX can our net quarter, IT the Beacon functions you by On this in within and see business, and we saves corporate optimizing achieved SSGA.

We continue achieved savings expect million quarter. the Beacon XXXX, $XXX in in million to including $XX this

sheet Slide capital review to quarter turn and our XX let's Now end to position. balance

On to have size the the out thin will reducing cost the will OCI dollar of sensitivity. earlier. billion from non-HQLA credit slide, during into the will balances swap the portfolio, also chose left of our time. that we sold spread reflect We efficient portfolio which reinvest capital size the associated reduced We we rotate I over of $XX the our Those strategy assets of client especially mentioned year-end our interest sales prioritize and securities quarter. of XXXX. the lending, investment Trimming FX benefit earning approximately of and while portfolio securities managing the notice to you prudently portions,

the Moving ratios year-on-year. and to healthy right the are flat slide, to our remain up, ratios our capital of of all

our the only XX increase standardized XQ the in balances, overdraft to client basis since common reversed. impact tier compared has XXXX, a ratio points As equity version and which recovered significant of to by been an change X has a decrease the due of in was clients

growth are XX%. we XX, To put saw Slide resulting of recent regulatory we revenue in servicing we mindful XX% our confident, for While clients. to total momentum, even ratios, recap, make our revenue growth work business headline strong of fee leverage and moving of can our us balance more developments to sheet

X.X margin XQ from by Our increased pretax EPS growth of percentage XX%. XXXX, and we points delivered

provide to our Before turning additional a with relative outlook. color back to the to let some moment call Jay, me take quarterly you

We asset continue. servicing expect to business momentum within

quarters business some Although, there is as be within installed. new variability may

at muted enhanced expect experience XQ in to to We and some last seasonal agency custody the finance, relation businesses, which albeit relative securities uptick to XQ, includes levels year.

expect earlier, of swap As I as sheet. mentioned cost we currency to adjust our moderate we mix balance the

million other As such, quarterly XXXX. around processing a million should $XX be in for fees typical to range and $XX revenue

NII range. first and positions in In our that both year against provided quarter to business positive keeping outlook strong January. execute believe in strategic momentum well us our our continue in we with year target We XQ, including range expect full to momentum our we fee leverage, consistent that with priorities, summary, XXXX full in operating financial

Now turn call me Jay. let the back to

now And should Eric. the call open then we – I'd you Sam, Thanks, to ask questions. to

Instructions] Your from UBS. question Hawken first Brennan [Operator comes with

Eric, morning, and to shift plan of looking more the to a helpful little a it Thanks. about Good base hear change, think think portfolio. we interested I as And for the as to about grow? thanks of the you taking the investment might question. little how should loans earning What types proportionally? of are to bit up bit be far that that. asset a sort

Eric. It's Brennan. Hey,

enter right? our it's to keep consider versus of assets. with made you've other to asked I'll part little some that bit on be see into for assets a earning earning describe interests for this of that we come non-HQLA natural choice balance me much back that Let is a as clients, moment. market – us time as a intentions to here. assets rates, And Clearly, continue interest sheet. that optimize rising to how of about a We've time And some of doing the lending, shifting over will in what us you'll

qualifying, other Some reinvested support portion, the support that out that'll that'll another business, enhanced And and some we thereby, balance interest be sheet. then earning the assets custody balance our HQLA in just activities.

continue the balance multiple that design us supports in see to sheet you'll think way I a So objectives.

do growth, Act some lend large funds, over the consistent We the of client. and been terms see our lend equity some of private lending year. last parent the to our for of financing last we lending, lending we call you our of In mid-teen growth companies It's to clients, over years. XX of capital couple

that to that's lending the And is that be And core that will call on that'll we what it, I'll – so, of, kind continue end of the do. near is perspective of lending remunerative our be own. its some

that an that's lending clients. with us connect they and because positive, actually extra that to of Some interact our gives something to is And way value. it

of part for that sometimes And mandates in. servicing actually participate ask as for the we others

Yes, to thanks. of a expand a actually. it good way sense That out the And relationship. makes lot seems like

Eric, seems it here correct like It the your to please wrong. on me peers. like in balance And if question deposit though appetite another there. it the there sheet. So sheet balance the similar seems I'm seemed you implied is But remarks, average prepared sustained as but and grew balances the

And so here reverting that, here? think about growth or far think what in was strong shouldn't quarter? at the pretty looks least that necessarily like correct this rate so could we implying am a you And that durable that pretty indication sustain, I it's from

our kind deposits part did the sheet of focus of growth Brennan, yes, dial the I had. the size And needed valuable that about compress to our we of of to like think think most funding balance years, of you sheet other. the balance three we we that back is many the way that and

also we NIM we make compact I like think up currencies And of to overall year, had continue last and higher we and another seen felt generating. some felt in more and like more trim balances some to kind we tick it balances. and had

the of we're quarters over part last we our that point with a where to gotten outlook, as growth. we've and with of comfortable signaled, modest comfortable the think we're January size I couple sheet of balance

And for do what parties. in clients, of a asset good we just the particular, our And ability earnings all investment with quarter-on-quarter. that's of at The it's bit whether with little some saw you dollars of of circle, us earnings providers, to part to way do. us. and come a ability such a the growth Deposits the can you should and in to it's portfolio leave full it's in for value service do engage alternative the come healthy counterparty. their kind another the gives of of now, whether trimming provides it's an and perspective all good our that's cash so FX margins. And is, them managers, if highly-rated They And that. that, whether

Great. color. all Thanks for the

Your Evercore. Schorr of Glenn comes next line with question the from

Hi, thanks.

new wins. it could bit talk relative Is on? you you you about engaging that? If could a new they're about existing business Talk through the go clients, fee-rate overall maybe of what little versus to

quarter, a couple and start within Obviously, that. for say, business Sure, would jump not in. is Eric new there's deals an surprisingly, Glenn. our then quarter with fewer Jay. providers. consolidating commitments, embedded I trillion. of general the outsized This themes, that I'll $X.X big this clients And can

if two So terrific. geographies chose that, operates which deals, State global with different represented the in is a one many Street, consolidate that big to player and

large for the outsource to The the asset ongoing to get speaks client outsource to big deal ways challenge is to other looking and the that administration. represented industry management think having for decided that the efficient, more a first time activities. Which fund just I more accounting

a we So as would is offshore Europe, we that marketplace. the in which in diverse. pipelines proposition. to growth bit think quarter. business that provider a Little little say, I outperformer the of the a we pretty very an more ETS, concentration be generally, and service continues maybe in Glenn, have committed new differentiated outlier the represent ETS, to the

you'd And theme. expect, geographies, were big went that positively. embedded deep that featured But I their at, ETS continue very we the give capabilities. in as very well to looking two a – the the So State before in in Beacon both Eric point shot make Final is balanced. a diligence They across be quarter. I'd Street's that deals

and view the peel a back front consolidating back, how making As middle, office, we people it's future investments differentiator. and the covers and that really a around understand we're get in

the And got, one deeper that better in of client. being they we So examined particular, in those the remember don't the looked. I by way examined perspective were we

reinforcing, say they've are we but I'd this business look me, efficiencies, when it's over add look So really the vision And to more a that at clients us, about for have just would a is do future. you to efforts going been create Beacon, that not investing the understand we Eric, to of time. take – anything? how

business. It's Yes, Glenn, careful. and I'd showed in the be to that real just add when some I'd model just this. that, momentum how it positive hard

new in business away. right comes Some

simpler the activity. of Some

more stuff not as to quarter, time. complex particular or get the stuff in of We're Some going to, give takes not. guidance to going is any installed when

I think is fee we're an on the X it or you bring you a just structure. going then. alternative and range, bps there Sometimes to because mandate overdo But of right? get X

Sometimes on in get of administration, custody you fee be terms so as it typical what might accounting comes yield.

or possible And might be in activities may the just because sometimes, down you there discussion road. custody get other

And rate. your the to comes so foot you that start speak. fee in at door, so typical a the And with or average the of fraction

a there is mix there. So

nice and which progress good little it's momentum today. successes feel about a the think makes business a a I us positive from standpoint,

Okay. One tiny follow-up, Eric, got seems rate floating. it more on the balance sheet. versus like It fixed

that. rising, as would've not thought. it's As involved more than I'm sure are as just much rates I intuitive

really which immediate the Yes, the on the asset change Glenn. side quarter-on-quarter change Good of observation, just balance that sheet. you the a is what – noticed,

down we on liabilities the back come sell as securities. asset the the side we'll on Non-HQLA So

be rate. the floating were Credit bulk tend instruments credit You of know to those instruments.

feel that rates, out last changes curve. in And balance for kind a mix still sheet end not – – the in amount. in we asset-sensitive nature, nicely We've sensitivity to we'll So dollar that. continued just the paid rising range asset where percentage short of positioned good particular, a That's though, had. the and about our of remains we've maintain, in two in a this we're over the years so where the

Thank Okay. you.

And next is question Your comes Ken with open. Ken line from Jefferies. Usdin your

Blostein Your from from Sachs. next Goldman question comes Alex

I start talking morning. about off to in the operating want just Hi with the quarter. guys, leverage good dynamic

the dynamic. FX the operating from Obviously, it you swap X point So Eric, tracked leverage a I fee on percentage side. about point understand

in adjusted modestly markets improving equity again albeit, positive, and pretty of especially the but light very So strong volumes. modest

might've fee what's maybe the through a little don't in which drove, this leverage there? So sizable quarter. is on a go muted I Anything wins on operating going that sort that suppressed some side that particular, the little of of bit. know,

to how of year. rest the operating just through the So fee think help us through understand the leverage

both question. Alex. There's variability Yes, always side. revenue on the the expense quarter-on-quarter side Fair and

swaps. And other You the their Every revenue that line. somewhere saw processing side in line in other really we kind bank that FX books. that has the of on with that all it's have, the

And so Slightly And ago. have had slightly year. below results year this we then that you the from swaps. better average a

And so accentuated. got actually the year-on-year

there. You stuff Small have in other stuff.

mark-to-mark which a You positive was for the seed ago. year have fund, a asset the on capital new management

tax they You've advantage much and revenue. got how through investments run the

the less year side, a that negative was ago. On negative

takes. And and why processing part then for So FX swap, top than stuff, to line addition swaps. in line like one in of just point to other play you and point we saw but lower of another FX that's kind tends it's into, have those we And small puts get that operating typical don't but through. impacted to the is leverage there which the by

currency on restructuring, standard a side, more given expenses the just revenue business, expenses, accounting, the and eye if the typical On the you eye That's you absence a little quarter. may translation, on in through keep an in of the an it in but up than came then expense recognition [indiscernible] were keep the accounting underlying the X%. think revenue momentum

new business, of bring run on, to that you've got So as ramp-up in parallel. new as you of kind the some And has some on before you we mentioned, flows. you it ebbs and you imagine right? But cost, bring business, as of had

up. parallel, Before set in run you you to got

cost, which typically is expense. that Some of technology is

people, Some of some is processing. underlying is of that that

advance or XX%. then markets up fees, emerging are. I That's higher And one quarter revenues. where expense sub almost if in of we even you noted, the custodians sub-custody periods noticed, had, up we are were so where two some there quarters, also And pick can

higher being up a this quarter. particular And end so little than

bit And So the there variability variability, think, fee on anyway, with a is there some is the in little my of expense at we're that pleased range the our – of I end full operating said fee line. committed revenue we prepared point. We're I that as momentum. at provided in this revenue to have within overall remarks, line, the year the leverage

Okay.

no one, And So pretty the NIR question guess, some deposit me, of in well maybe Obviously, change controlled guess just U.S. would – dynamics. costing there. second side. for you I real betas. be then the I around the could hit on the can

frankly times some quite well. For as

the versus goes $XX Maybe about around quarter, bit then million And conversation I guess, the peers? So for betas you so fees to of they're lower NIR correctly and steps but roughly $XX that, million-ish side were what NIR. about away, Do little talk deposit FX cost a up just down your $XX up then than much round whole the fee kind on if the why so million. maybe processing hear go I drag this processing U.S.

take me the in those order Let you asked. that questions

to So in well betas relative reasonably came expectations.

we signaling We been the kind the low been we had. hike rates XX% they up up. We betas guess, had floating XX%. they've right where from it I in about had last, is would of we've range, U.S. last come. That's that in the which So thought had

part to was The sheet interest-bearing, performs from that the to actually transition expectation actually slower kind of we've model. better we're balance – our of line non-interest-bearing that been up in So than was expectations. than we've in with continued moving

bit I than think what so And at I interest-bearing we've peers. I total are that's what that's think in the better. you of in betas, though a come seen even better really back, And matters, if But betas expected. Because expectations deposit if that's range think about step or right? in

custody retail high types and think The well – you deposit that tend a management very corporate middle I the are very deposits is very money, money, in we beta. beta high be as Or see to low the of bank. some beta.

of those for NIR, the If results. been swap – – hedge we've with it on processing just fees. And that that's you've pleased in they ended that swaps, qualified right. the FX in other accounting, had instead And so finally, in cost, up They line. got FX they been would've being

going perspective the certainly as we hedge is, accounting. think our much swaps. of of the at qualify – $XX billion the range. level. kind now we by volumes should to of They level. trending were even sure making to $XX to in $XX they as more forward, down end actually up $XX the billion our at line intention into FX But put is possible billion bring – the I lower billion NII the importantly, that And for They're

further. can of Our down intention non-HQLA by investment portion investment actually, as the further. down basis, is trimming the even the coming bring in And the portfolio swaps quarter to dollar-for-dollar dollar the actually bring we've trimmed portfolio on that side, a on

one so is to fact, dislocations cost currency the – bring little perspective or bit way other. swap take matched the time, time, balance better align the depending to as over sheet give down. possible. it's the it'll a that do advantage us, swap in over ability our That'll So actually as and of And

Thanks taking questions. it, for all Got great. the

comes Brian question with Your Bedell next Bank. from Deutsche

one on the to more just The balance a sheet, back period go balance Maybe obviously, sheet. end – lot of was higher.

trend on $XX the balance And big side, of billion. a of and looks look sort non-interest-bearing up. know that also you sheet. on the lot from average whether spiked big balance – the that noise. end always think can by the if on Eric, at should reverts like the we about It line I about – a maybe, a there's step you comment quarter difference I sheet. average As mean But

sure make core point more that's it out side, that? rate on basis to that mistaken. of a So X $XX non-U.S. instead if the want an would just like then And core XX the not that. basis think on swap, we're make million normalizing of the I I'm point deposit And rate

Let little I'd the actually – more. sheet. And to bit swap question start clarify balance the me on a then

I then a quarter and very do we of don't other end the on typical. in balance right and on than nothing quite moving little do cases, the But average think direction. think higher And sheet, the our was our sheet. in asset on really ends on Friday. get deposit changes was the On basis described, we more any is cash signals that management sheet, end largest sheet. of that, it average about you quarter the if there – about a Good nothing balance daily as other which balance is clients, quarter the some there's this a basis, The than get, balances. quarter ended creates balance I pension any unique I And a think different

I engagement. we there want to for we're revenue got perspective is your the got clarify And in our this of them I that. keep more we client making of to that's rises that fee balance something a business. going Do the work we sheet. is nice fair continue of as That's that put rate benefit on just sides. have you way to little think doing second good our question? with both the in to can and our on good sure supplement clients, sharing to engage a the said our If clients a We've we've benefits earlier,

correct of Yes, rate X that you did the all – to And average Is I'm in sort accurate? points to I line. am is would that basis cost the non-U.S. basis sorry, establish I rate. now? your geography to the a $XX million from deposit was take Is that where I'm putting balance the that XX I sheet points non-interest, think – that added of swap to in core published the

follow Let up we team the have don't me off-line. – IR why

a two is that question. there parts – to of you're answer think the I

and million benefit $XX $X First, FX swap the were year this a million quarter cost they were a ago.

So the year-on-year. called $XX million the I out, delta

got sheet. So you've to item then can the line the adjust we And the with of part you on for work absolutes. balance

the view currency is it domiciled I'll non-U.S. I of go depositors, think domicile directionally, depositors. remind should a view. the you, this not against

similar. Sometimes, those are

Sometimes, those are not.

But help. footnotes the do help why the you So extra with just average try bottom don't modeling. to that And you've we have at page of careful there. some balance the to of supplement we be and got to sheet that offline with do

to the sounds the then of clients, Yes, two that be in on the what is wins, would bulk Jay. And trillion, $X.X sure. Perfect. backup follow-up the like

Sometimes say be if the understanding, you It'd business. I If the just you again, once – the those. I actual clients. if could that not, know know announced – great of you've don't nature

I I be level did think of you you level, AUC the AUA funds yield it it administration. as was than an the mid-office? should mutual or we higher one loss And forget, BlackRock And mentioned in, is thinking a a looks the offsets was? effectively, this a overall, from like and say coming other accounting BlackRock

active the passive, other which names. way multidimensional. reporting, Yes, of you let piece take really transactions they're our meaty couple and till And we're me one of. that, requirement. kind they And custody, bulk monthly along over multi-geographic of of had it have the fund not a feeling. the fund – feather right next would Both then asset by represent a pressure increasingly admin, back new multiple position – in of liquidity parts the We new a is the admin. which custody And But advantage that that get to felt of took the a by But Both course the make small full the of consolidating industry all year to these million. implemented. represents to in capabilities accounting the And will these U.S. there more pressure with management clients name up described as I the a $X.X Brian. I've liquidity, regulatory are middle-office. that they're saying are SEC of Mostly of both we clients my the clients, on we're the been I fully dimensions, is way, it I along, more fewer getting providers. which think, go that with do we point, component what existing

had also So mentioned, outsourcing. consolidation. And we domiciles. new of more It's typical good business across our I range think across more All ETF, offshore hedge, news. as, I it's

momentum. So a really good

BlackRock offsets, kind well. generally, year roll of think a commence of the kind mid-year I to – which all offset, that'll this outflow, they and said we mentioned the out take somewhere You mean, will as I of BlackRock

the to all So it for on meet our us provided gives in collectively, – confidence we growth XXXX. guidance ability rates greater fee it that service

loss? a to richer fair And say than is revenue yield BlackRock it's it the

It's be to a down. that me for sensible Brian. real break mix, It wouldn't to try

much. enough, thank very you Fair Okay.

next Your question with is from Buckingham Research. Jim Mitchell

it good you it's of been? sense like of stronger quarter active the Do your feel Maybe had couple or kind good Just wins. big than discussions now? just Jay, today Obviously, a morning. your sense a a right Hey, get following sort of you up very that. what's on of on has I pipeline of environment. guess,

we thoughts do So how it going your pipeline think on forward? about and

little transactions steady don't of I interest to which little the The Folks positioned, be Brian's we see activity. stress fund it's liquidity more opportunities outsourcing There analytics traditional the quite the is would two world DataGX, offering mentioned and There's consolidating, the And database to or outlier. office us question across – continue testing. I and more middle-office. we're it's a increasing alternative continue back the been bit wire spectrum. piece, world. But world, Jim, services. positive. ETF bit. I more. a doing the an maybe in new whether got say, Through these together having we'll middle-office into

requirements. to owners, our So more regulatory only the also analytics, respond outsourcing, ability not more environment that craving – such asset to managers is but asset pension funds big more

comes lot do opportunity – level, steady pretty with it So of also And But there may you to that pressure that more normal back is client set. pressures with might it's a in say at, to for extent one it’s them. also our us.

ahead of on And which well. stay referenced to is opportunities, are some vast product the the pretty new of spend as technology designed

don't environment business. So see real I strong, new No broad change. be for it there. up leading

one grow period Okay, quarter-over-quarter a peers pretty end. significantly were and be maybe dead sheet. helpful. on deposits then see the at that's to horse But you your Eric, the balance of grow And really only guys for to

signaling maybe are of signaling sort You're continued growth in average others when assets declines.

seeing? is are are mean deposits about you're those attracting price? I what peers do and seeing think – what how you you're your how versus So on it competing we

seasonality that Yes, – the well be higher. in couple There the on. think, I is of going things is there of And natural I lighter. referenced, There a of quarter-end spikes have part some averages. tends there others think the some, the a as Jim, little then deposits versus is are to a March February, January,

trend, version are books there some So are custody obviously and enough. I is mentioned see similar of heard outside we that that which

move if read if up mean be end be of versa. into with waterfall monthly, cash result relationship. ends have lot larger we and ones, to tends for market, we the a some view time. that, with actually you part and There it as things. all that is we not and cash of continue are hot but clients asset them The U.S. that have flow. to dollars I tier fact we we sleep perspective money clients of should the the cash the market that at arm. I at of it's stable. on we had other periods that’s and There’s our do been we all are immediate engage that And the tend deposit somewhat and to a vice and the They of too right? money, so pricing, to clients and we want and are Appropriately It's on but them wouldn't mean, you I with in which all cash cash pricing are on not easiest look forth we've need engage that. So shouldn't availability into funds, we differentiate that prices Because there – they It clients we've should look do and relationships need client don't take disciplined for our we being much pricing in, versus all to of smaller currencies. or around I something support betas part be other looking They with so management price. have some of actually and won’t we them in to have deposits it, it the mean for fact, discussions that strictly described underlying in and it. our that's not is a

that's you're saying business? change incremental you're for demand guys. Thanks. So just it's great. Okay, No you pricing in the how really

Yes.

question Securities. from Next Fargo is Wells Mike Mayo with

I’m going state over think, your Hi, to cognitive of I dissonance results.

me help can you If out.

all And growth, decade. year-over-year. was project wins for headcount had business on a put On Beacon the the years. efficiently more Beacon all expenses expected peered, Jay, negative compensation for able And spend. and you and But these and X% great way you've tax this And I few to savings. had That some side, new thought of than at restructuring surpasses to you it's purpose have is hear to I business quarter. on more more I certainly experience Beacon then up mean, had think its

growth So I hand, organic double-digit feeling in is on guess positive I feeling negative the great. that's client the have. other which the the first is quarter,

about before. much thoughts, this business and had you can't those lag all what an adding the the new answer said getting of that. impact to think two So reconcile in and I comes when I the I'm that's remember trying from between revenues

color at can be of you or you kind the this expenses quarter, if would extra that, So what a least expect helpful. that give little on of quantify revenues bit

Happy life leverage in a few we our fee goal do don't said that, Sure. We're is is achieve to I'll as operating We're operating this Mike. to goal determined quarter. to on wrap times, We Jay. XXXX. And new This we bringing investing. Eric. quickly are a We're a clients. confidently multi-year journey. by against Beacon tracking measure

sure and allow just come and to in investing not investing business. asset go products asset to to bring a make that's we ultimately us And grow. this have those quarter. an things an we're So clients. that's But to continue in differentiate servicing, investing on will we're can We're management. And new that

that activity in and you Eric, We're some based happy Eric as sure about our with spend in again, completing the he market over a to what referenced But clients the of that's with get in and bring ahead want thrilled pack might And in to to? and We're we with and driving. pretty the top So regard successfully going stay that revenue line. to episodic quarter. need X% go thrilled our order businesses. he'll revenues make expense we're can we're operating situations we But, spend these to those leverage.

about Mike, and just a have I as that's of to ramp installation, bit Q&A, of the prepared might up of the the in come and variability expenses little some to we do kind them that, right. remarks talk those Yes, on add The go the I both right. mentioned earlier and cost,

about are of takes can’t the effort be because want unique, way, we in, it and plugs clients, us custom the We And the $XXX the the remind so client especially see and way, some in relative acquired tax largest spend spend on you on say, which were seasonal I that remember in some more take continue million of our development fees, revenues. volumes line, markets that product Beaconize effort. as spend for mentioned which that a once We fluent year. to the in to on differed some connecting quiet, some so we them we the some sell client functionality flows incentive to you as float to in. the effect, comp and first higher typically right, comes ended – invest levels forth. more up by And sub-custard quarter because there carefully as up and I emerging quarter want see this we one will others and with market emerging expenses spoke markets. and are quarter, purposely up on of for through, to fourth headroom because you

the We in headcount geographies X% to in It's some modeling, manage. Overall you you capabilities is down of purposeful an rate the right? what a the as strong around our run headcount that it global is. actively location world you not not is headcount. finally, something exactly out, – hubs, found on actually movement about new the So X% High have to think from China, up, Poland. others. range. the cost our this just then This really we which eye is mentioned we is pointed which keep the X%, And as is India,

you And of that the of Beacon so see floats in because numbers But that you bubble that's up. the another transition create won't nominal headcount kind of part effort. in the

attempt, it expenses more bread you of size new the box, the extra some along is material? than disconnect the come all one any in mean, So the wins? did at can And custody business? management also, with I is between it bigger asset business

expense some and be to revenue going always there's think I variability.

I right? think we one a we That full operating Mike, basis is year, the way committed points think to points for to XXX an about operating on range leverage it, leverage to, gave basis. fee XX basis

full the So on on is can the XX that's percentage way basis One variability right? And of year there there a basis, easily imagine other. or And by we of you point X can what in points On be variability. expenses, year. quarter, is trying do particular a in considerate envelope that want the we operate. which the But we're to time by quarter manner. and to business just by thing right over a do do

were bigger the themselves prospect. owners. a as us, on deals business these just No, Mike, management this. asset They managers did along asset because of asset most supposed And come to as – management any asset build applicable

All right. Thank you.

with comes from Gerard Cassidy RBC. Your next question

course, to still pricing? you quarter, the the this morning, good these always better always? has price just Are competitive as Street. or extrapolate to you've been of been at long State it is products now are types of as pricing as Or know us I you for you as – able that Can saw. of were already Eric. can that are share Jay, what like as on customers which they these shared business guys dug operating, you morning, Jay, they into had even wins you more And way outsized? Good that, with you competitive us of

let Gerard. me that, unpack try to Yes,

true been I'll the have different give the very I lot complicated in the transaction a locations. that deal three is, more the just is the involved I pricing. as people, may it a pricing But throughout you trading couple always difficult. there's that more The people commoditized got And one lot think there of activity when counterintuitive. theme, about a better of geographies. you've bid, the think that And a where the And talked when that couple general of sound it's that a complicated. can a desk been of very model It's it's we yet, crosses – different gets you service compete.

got locations, three You've product middle in back capability office. office, it's servicing other

the folks gets the field better. that's as as of number theme can the I'd result, And generally compete. narrows that So say pricing holds. a as that And far

the to – the through across it, I this their understand gets cost referenced. little once that of complicated another own factor. I case, becomes work But the – a would about what think was it doing which making when say, with that a more I at try really cost, because other less that number doing a are is in And be internal products. decision more had accounting one they're would different they and risky a about go wanted on bit outsource of business in vignettes to fund globally someone's situations of scale

is think don’t know and I still front the by So the gets. helpful. true moving if activity the service I back better office, to bilayers it that pricing geographies of generally more that’s involved holds

since A color and about higher overdrafts. us know couple ratios your of due you client drove client No, growth That mentioned Do growth appear no. your they saw, sequentially you that. the the And fair then, at on RWA Thank second, of good is. gave you. be since Eric, look to some CETX that the capital questions to what a you did revenue interest material to much you amount? by And overdrafts? net numbers, due ratio overdrafts you how the those fall when then pretty incremental was

The Sure, large committed what’s large to not overdraft, relative our overdrafts. That’s lines. it’s about had We’ve a undrawn Gerard. billion on $X number. in typical. that But totaled spikes

are The them – are have of – markets half the one when have not storms open. we always sometimes have This Friday and the aren’t either Good markets open, holidays. – weather you remember events, when you you are if half end You had there in when the quarter. at particular,

lines who is for so on little bit in and what of clients have those lines. to one honest, exist. draw other part of up end so their kind their the And a short you a discontinuity why, Which ahead of funds, is happens on be

are they’ve them We’ve clients. so supported know literally help clients, good there, our two, was been We as And for to there We’re five to four, And needed. delighted well. them. us. handful. three, It them a

don’t a it quarter every the the happen. it’s occasionally We thing end. quarter will So like occasionally, kind it when was just holiday a effect. of is an you expect end, that and have environment, this in But something in case,

terms effect, NII is one right? because by of big the is course In a there balances NII, Not over quarter, all XX driven not day. remember average So one of days.

reasons of kind described of And client like really a Jay a this that. for a like a So to have our accommodation have, clients banks for we’re can the of sheet some had clients is there that positive wouldn’t got such – that’s strong This we we’re larger they And the impact accommodate example, that for so expectation of big And have, doing. custodial NII. balance is those clients. some one we’ve the that us. on

you. help. Thank Great. I appreciate the

Sure.

Autonomous question Research. Elliott This line the comes from of Geoffrey with

Good morning. Thanks for question. taking the

plus You the binding CCAR touched on, you you earlier. as on constraints changes what would SLR your elaborate a we think Can some proposed proposed, changes on regulatory changes get if the capital bit be? of new the

the important endeavor. all way, It’s back and the new obviously capital X a obviously how your look, if say in other you the had with studied bank important have mean CCAR, laid that And the I tried well think to to and teams a been Eric. you I it take of many reformatted CCAR, the because modeled that’s stage results nice it’s it’s and I to Geoffrey, other team say And would and NPR, buffer. one that stress a to us. out. last

with where leverage CCAR kind let perspective leverage our depending constraints But I kind constraints be either the back think Tier SLR. Tier binding step core constraint. on me our start we’re binding of binding could as CETX today it that’s is from then or you X capital or X of a know,

right now across the amount has the implementation early I think obviously right think well-intentioned, that designed. that is will backstop. modeling the binding is hard some or with those that in industry going think suggest core the like sure observed does leverage what that be actually than some others some create X bank, precisely, have SLR standard it There the FCB related are model it from I And particularly should the seems both but I and Tier CETX. constraint capacity. different it done constraint is ours, a the create not five risk is to kind think seems the It’s ratios, FCB should refinements clearly leverage for Tier the we'll I'm there we’ve is of will various X amount be assets that the right? modeling should capacity. the capital is the for thing seen it move leverage And we there of I which dominant the That’s proposal That of to banks, but The so any direction. and well bank about. suggest, to ratio, is capital

Thank always State in there's an you on you. another the the slide know deck. one. slide quick like in outlook And feels been kind time. maybe touched outlook Street this outlook of comments. the No It just I

decided include that in this So I time. you hear, while would love not to to

messaging all. really There's at no Sure.

operative an think I outlook we it’s to in gave industry It full year we operative. was when now. January operative is that conference – went the in February that fully was

made I outlook do a do will that verbally always a have there that save all. the going January, when quarter-on-quarter adjust we’re I messaging. swings, is is I’ll And the what to this just but are slide full process in we keep our keep do changes, think the deliver did at signals that. compact some verbally, confidence simple an intention We're and quarter and and commitment trying kind and minds message seasonality we'll – slide but other new extra outlook or no our is it – those is of tree I to year we've will thereby, if in What commitment. deck our the and in

Thank Thanks Taking slide definitely is off one very appreciated. you. much.

Stanley. question with Your is Morgan Graseck Betsy next from

Hey, good morning.

Good morning.

either each, options. capacity more have balance mix One do I on just proposed of do is, even just two that are preference with further And one obviously, for Do want you but the sense the you have out the today. outstanding. you a is a a or can One other the give questions. you take It basic you changes potential some one one? to of could two either that got us is that seems percentage or sheet reduce options, callable of the in press discussed. to you'd deposits, two you've press have have you like grow there

it's Eric. Betsy,

I mature think at we this point, pretty will choice to make a there.

certain the are as they – I a in rules think constraining are rules obviously the way. stand

There's in constructive. which but I proposal, the huge directionally. CCAR move least proposal TLAC the and is CV the also constructive be actual not the at amounts, think proposals SLR direction. right think I we mean,

we sheets together signal think don't CCAR each in really PPNR that the they're be they given balance the the I fairly right. they grow opaque, know, the also, how Fed stress what come how different stress modeled little We how and come the may balance all the to impacts period, going to change see Because sheet, know don't as really and models right. still the are model not of remember how much. they the us have and together is will we'll differently notion and the

the you've other press think question, of – kind sheet of custody RWA portfolio, then I lending them are around RWAs year to around capacity avoid to we the those depending We and the in the If binding there the is right this them balance with right. could every much as want add right, we some of could on will sheet or one one And be and will don't so I enhanced which or and qualified. callable of levers, disciplined the activities balance some investment how callable which disciplined non-HQLA in but today, base deposit like sec leverage quarter mean reduced forth. next after And got have so be some will is changes to in with that consideration. year create of constraint, did the be under terms

So from optimize designed in a way, think would I thing mind, and of but we’ll in this I think this of there’s views a it’s and it’s think perspective, it’s lot turn at how a we’ll shareholder how to have we’ll optimization is that of that optionality we that turn from kind the of be help create we set capital my that’ll better earnings use. – earnings that rules. I from do of lends do to how better the a And growth, a which higher set and into capital a do – again point, return, view that

just the quarter assets to that CETX That’s And for point the example. actions earning some shifting taken are your securities from mix Is so, in in you made, point? positive? loans, of okay, your

we of have those non-clients But lending risk-weighted, if securities. to or some There’s dollar-for-dollar, It’s that, trade saying lever closer XXX%. because fact some have privatization. not another right XX% are I’m opportunity the client in we securities to off clearly and that that is a right,

wallet But the that comes wallet optimize I opportunities to make have what or it are those – the always have clients. we and that think good absolutely client. share grabs to our sure because good see be we returns investment in – with we up We as have non-HQLA from we’re of still we for portfolio

How that, much the is non-HQLA investment in portfolio. left

$XX a base billion. on about of billion down sold We $XX

billion $XX So there’s still plus.

Thank it. Got you.

Yes.

indeed comes from with Bank Our Carrier – Carrier America. our of question Mike next question from Mike

strength I kind revenue X% so still X% had processing volatility then ex months revenue that’s And X%. over guys. Thanks the the just X% year-over-year in side. quick or right. quarter – trading think X%. like the and like Eric, around I one. X%, side we accounting XX could add just one market the that It’s that later last that When growth that other that fee the saw given you that look then like we to the know take I the All that on helped at ex-FX. guys maybe the seems maybe percent the And the also saw like recognition X% of

guess, we’re else a processing that just is expected. seems the anything all bit trying other? Because missing out, growth? I that later and just maybe maybe figure it I’m than really muted So Or – to it still there have maybe is you would little

Eric. it’s Mike Yes,

me quick we Let take without we earnings Page it I quite do I the on and the we’re here show you the to the – that deck enough probably just look. you’ve encouraging show them with We translation, adjust to all X all sure slide have footnotes revenue find can to are revenues. one of and actually currency mean, got good apples-to-apples I you fee comparisons think for make And a how – is and and I circumspect recognition. think so

right? a our That’s year, biggest revenues, single and billion, billion driver half $XX billion of our of of servicing to fees, the $XX $X revenue. think the I revenues is total $XX billion

is we’re with translation. in X% XX% There currency growth So quite there, the adjusted no for meaningful normal there. the think revenue recognition I pleased

that solid. quite been X% year year basis, a that’s full for up adjusted year, range. in And half revenue, So about that’s was right currency that last on last and our

will little performance. But with pleased be good Every we’re a So quarter there. that. a that’s different

think I trading, processing other management less and some of I came that had sales disconnect roles remember the the biggest on finance cost year X.X%. is other we a gain expectations so do $XX, fees, up think securities more with ago, in

which small if of in delta, XX to you do just between the year. this And and was positive XX. is year had add XX, the another, a that the year-on-year, there last comparison FX outs swaps negative then and still You tended ins

think So missing I you’re anything. don’t

in neutral And just here variability tend to still this there’s that on quarters in it will when some other positive others. quarter against think I line. and

like we So business. think there I the good overall in feel momentum is

But minds quarter I on fourth obviously we’re a and We’re item third second little FX our swaps. the step-off the the way results, to pleased the geography and on quarter. was working a start quarter, unfortunate think nice year, in line the good with bit

Thanks Okay. lot. a

Sam, that’s it.

questions. further no are There

morning. Thanks forward Thanks. Okay, the at joining We together everybody this of end the great. look to for us quarter. getting second

gentlemen, call. and Ladies this does conclude conference today’s

may You your disconnect lines. now phone