State Street (STT) 18 Jan 192018 Q4 Earnings call transcript

Good morning and welcome to the State Street Corporation's Fourth 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 recorded for rebroadcast or distribution in whole or in part without the express written authorization from State Street Corporation. of website. will broadcast the housed authorized Street’s State only this be call on The

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

us. Relations which thank and XXXX all Investor CEO, and in full of O'Hanley first, will year our speak is earnings website, download investors.statestreet.com. Eric will call the our take morning Good you Ron for joining through available today, our On for you section we'll take our Aboaf, CFO presentation, happy be then slide questions. our fourth quarter Afterwards, to

During the then yourself two re-queue. questions Q&A, and please limit to

Before we presentation. measure from are of comparable to these presented to results on regulatory you get a the appendix our GAAP slide non-GAAP basis or measures GAAP. that Reconciliations to or like most items remind today’s that directly available presentation one-on-one include I started, the will excludes in would adjusts

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

Our them forward-looking views if as statements Ron. to With we today it change. turn let over even that, me our to obligation speak disclaim any and only update of

morning, Good everyone.

is you at becoming State the to As Street’s this my address know, CEO start opportunity first you since of XXXX.

their going comments to going performance we’re and to outlining Let my and want announced providing XXXX by focus year full to the to quarter as means environment, forward. results do more them context Market and themselves. X. addressing financial the me bulk morning consequently in managers shift fourth our margin then passive to The fees well who led overall our slide challenged I for on amongst start resulting turn our face to are terms differently what The managers some peers this clients. and thinner We of for importantly, providers. of from volumes increase has lower thinner their pressure increasingly are dynamics and compression as outperform active competition changing investment fees

similarly more generate to streamlined reduce need do Asset facing more increase less. to operating ability efficiently better inadequate turn, returns, are costs. same owners, and In pressuring clients their technology alpha and operations these providers to for

we these exposure our for from change, competitive, be today I want manage growth own income our headwinds. clear and to want destiny adapting FX and market it by means we to more strong year our strategically headwinds Given to That our essential real to revenue our clients. acquired you, offer ahead. State clients, the at contribution increasingly as it well the as trading my about I are drive in made the partner functionality net quarter make more have fourth River become to Year-over-year, recently the was effectively better and driven the that will and colleagues greater performance Charles clear to to in in business. change interest and talk Street development

engagements client interest servicing the by a quarter unfavorable XX positive fourth revenues. and were fee by the deal. trends we continued including offset CRD are conditions, in total announcing ongoing significantly since We which with are seeing of impacted during markets the the our compression, down encouraged These market fee

servicing levels Assets business client and Fourth decreased reflecting wins equity under and administration billion. market were custody lower XXX quarter-over-quarter, transitions. new quarter

our and servicing of equity business exposure disproportionate classes, be X.X the Global end, XXX the yet asset high a approximately AUCA a record market other Advisors yield. billion. was wins. XXXX, has impacted as trillion to on environment such level year totaled new of quarter installed markets also to Street State we experienced for by at full Additionally, risk At as

as institutional outflows, well primarily quarter-over-quarter, decreased net partially markets by ETF offset driven weaker and management inflows. under cash Assets by as equity

SSGA results take management include our as relationships been demand diversify to solutions. mix, as to them asset These working While shift the across and we products. allocation, leverage a offerings have range like advantage not well of for products where to offerings would fill outsourced as business we in be, from we State ETF yet are CIO Street of and exposure

ETFs, For of European and other asset our multi organic OCIO our just good solutions and targeted example, such US this ESG, our growth that growth. to and cost name ETFs quarter, in in strategy future drive few, confident we growth saw remain ETFs areas low as a will and

That need that advances put, that to Regarding solve we being this better. bottom client's smarter deliver servicing in costs building reducing we performance our and across overall how our challenges. fee we a sustainable and the do and made reigniting Collectively, have way, means automation. solutions can line digitization means upon and about faster our simply organization in greatest growth

actions dynamics, repositioning position position XXXX return become organization of taking clients our and CCAR for supporting strong. capital non-critical action more ensure better on shareholders alike. a hiring levels we freeze for light industry Our all XXXX optimistic the immediate for our roles. a to we wide have completed efficient the ongoing and stronger results of are capital is firm I recent us expenses our are that implemented for we balance cycle, In during sheet shareholders. Moreover,

a in we pyramid accountable quickly. execute performance hubs. layers are the XX% reducing organization. are by create and our out a beacon by confident and compressing agile work enabled of and to the across consolidation These and system while ability the rolling spans management global more XX%, structurally are into our actions Thus, by rigorous and to are senior bank We the improving reducing new management work

initial already occurred. reductions have fact, In

across while new XXXX we invest are program structural the our addressing in to business entire launched through on inefficiencies to base that and focused enabling Additionally, a reduce savings us expenses, expense also will appropriately. continue have cost

XX expect repositioning pretax from the to a we million that part program, XXX benefits within cover months. will we charge, of which shortly, As XX realize fully which Eric recorded to

the new of provider the X. for managers Four, by other an will technology to action share against data slide And becoming servicer, forward These high to the to initiatives. institutional innovate time, need leadership, to scale driven upgrading NII costs driven flattening as of by my structural and Two, through faced same and world’s vision moved will outlines One, are be vision and the a reduce do we underway. by I'm we increase to owners that, more industry's back and a by business. and over more turn become today. our grow insight servicing new data And performance organization Three, are we quarter to the processes manager you Eric deploy Thus, let to expense is our asset me priorities. building will the partner around At which me strategic term, continue The asset concerted Street. X short Executing speed skill actions Slide which intend evolving State and by by increasing must We client and technology the already unit to operations scale platform clients, changes, must in Let key enduring performing asset five markets needs. meet capital. agenda. automating more diversified to of leading and opportunities. announced decision across relationships. front including core vision to saves turn wallet coverage base it our we select structure, five, our technology these to to priorities. leveraging senior issues require and provider. gaining will among we employees’ the our clients hubs the essential revenue fee our generate global improve and be streams, growth including This to C with through detail. take we strategic driving services, evidenced the suite to in the our our model leading investments, making have

Thank you, good morning, Ron and everyone.

XX, write my XXX I notable like streamlining Before and pretax our recognized our more new and organizational say that are severance announced take begin consisting to quarter on costs, of and estate month. offs. financials. have and slide to tackling In charge XQ a to impacted details industry expense last moment we fourth This actions to of they I'll is X Ron results, expenses million XXXX how in the XXX of challenging real discuss we announced our items how conditions in initiative including the on response review de-layering and presentation, repositioning later includes million the in I'd today.

show On leverage two In did a of basis, leverage in page achieve addition, the but $X.XX notable we of and On those as our trends. fee original to or well our below XX Charles this related of sale X, also the million XXX a described items of related some million to XXXX. the you underlying our goal, XX for in just servicing we total, our River, panels didn't costs. million Islands we which operating XX top results small want the deliver who to million related notable GAAP as primarily see had and results in of legal alternative our acquisition restructuring I In overall share. operating ex a we recognized positive we was estimate, business items Channel of costs pretax

and the quarter-on-quarter, but our tax XQXX the impact of down reform primarily Now, XQXX charge XX% to X, year-over-year, slide EPS moving $X.XX repositioning was reflecting XX% of costs. XQXX up

year the For over up EPS of was XXXX. GAAP our XXXX, full $X.XX XX%

was points sequentially, notable expense to at the on items. X.X down equity XQXX, return quarter's percentage related Looking primarily

up X.X and rates, basis, higher where active both in share, we acquisition growth taxes. ROE NII the of year For through Overall, XXXX, full FX points saw interest growth year a ROE by the and from EPS management driven trading, XXXX. full continue sheet gain we full balance CRD was and lower to percentage year on

fee however few our our actions describe drivers our I'll are on next businesses the and several of additional We and performance by pages. disappointed the in

slide fourth past industry in AUM effect the to quarter as end AUCA the period and levels X, during end cumulative our the well markets of the equity significantly sharp as year. Turning by were in impacted sell-off of of flows the

digit down year inflows know summarized industry the on markets sidelines. as and sat was same global side posting time, At dramatically and equity on page, XXXX. X% cumulative double last you down the activity of transaction were during have investors in gains muted, the were as right XX% we significant XXXX, after client As flows to after in this

XX% AUCA X% levels X% and As and quarter-on-quarter fell XX% AUM year-on-year, a result, while saw we fall respectively. levels

and bar the page the quarter-on-quarter Moving were on some blue total the year-on-year. of spend piece dark quarter-on-quarter year-on-year. to which X% revenues, slide Servicing the want up X% X% in up of stacked fees, side X, shown X% down I were to left time and unpacking

we basis, to year-over-year you some X equity a give servicing had both the me sequential and markets. fees Let On falling in due reduction X color. global to quarter point

points year-on-year, In about which addition, we've new client average quarter flows recently of To offset was context, The and percentage worth X of of net activity point typical over of caused had X effect generated which annually added headwinds growth, Positive been year-on-year offset client was business the have percentage cumulative by been annually term all also the X the material previously Without though, on has numbers the transactional points has also client partially transition, and year under these activity another last annual one since X particularly about seeing years. percentage new tailwind of lifted which pricing pricing by X twice percentage in points net and servicing been pressure X X percentage And has the have downdraft has fees. that in challenging in structure. markets a client put equity headwinds. last and pricing nor are points flows seen This fees we industry activity. year. by market disclosed historical appreciation inherent average our over about in just points appreciation per annually. pricing percentage business we've typically client servicing long

expense pricing new since resolute meaningful such we which as undertaken program initiatives base a on can we client process. minutes. what thus lower, to few we even headwinds, our pricing coverage these discipline strengthening further through have and we governance I'll discuss upgrading focus actively to our that need in our And are to need combat control, manage We more

quarter-on-quarter, our up revenues. me slide up trading briefly in XX% recognition XQ focus year-over-year, strong was driven FX outflows equity revenue and categories lower institutional fees, continues other services our relationships equity revenue focused margin. higher and higher our Beginning as on but driven SSGA to that let well FX as with primarily offer to continued business. adoption, driven year-on-year, saw performance, volumes XQ product net expanding volatility. by by X% X% Turning down by fee discuss XX, management markets

with I depth were differentiate assets our quarter-on-quarter securities We XX% XQ finance and continue clients, to lower spreads our after but effects FX revenues evolve note reflecting and de-leverage would the changes lending. the the FX, breadth navigated capabilities. the driven in We've of counterparty clients continue agency offerings adjustments. year-on-year, CCAR continues that related lower work on through X% demand fell. industry and loan in to smoothly to by and business down as quite these

with Finally, financials. step in the the significant we fees our a addition for of in first saw CRD time quarter up processing fourth

acquisition, in announced be we're remain our by and synergies. previously excited cost We with confident to the revenue continue and pleased performance its

million CRD net XQXX. of the right XX As new you can of lower see, for on slide, bookings the saw

and have XX expenses. We million revenues XXX million fourth expected higher quarter client delivered board our of than advisory on announcer of new

XX with We costs quarter. this costs XX past also amortization acquisition and incurred of of million million CRD associated

standard. enjoying While the against in accounting XXX lumpiness is momentum, inherent results, reporting revenue the I CRD XQ would annualizing real given these caution simply you

saw to fourth during continued and XX, we Now NIM slide growth expansion on quarter. NII the

quarter-on-quarter quarter-on-quarter basis X% rates benefit US December we activities. year-on-year. to points one-time year-on-year, driven X NII up Fed hikes was well a higher pricing, NIM interest X and XQ saw as while hedging expanded by basis XX% approximately liability September XX discipline from NII million the due Our up and was points of and in as

on see our activity the fairly in deposits increase remained We of just the betas at were similar pleased remained and during quarter. to to over our right can last As slide, our bottom level the average quarter lending see also you an steady XX%.

bodes of XXXX. year All this for well a full

reflecting infrastructure given optimizing a relative as were by standard quarter accounting costs performance as our continued as I'll comp focused expenses, in Now well investments. down increasing items keep by incentive extraordinarily disappointing in expenses discuss River XQ line indicated processing and X%, were and summarizing footprint. merit the as Transaction costs were then on item start we a Occupancy systems during increases, offset this we reflecting excluding in managing sub-custodian XQXX, notable we investments results. as challenging and on to earlier controlled, an a in savings XQ Information expenses technology recognition revenue efforts our annual perspective, are new Charles turning environment. to technology basis, and a benefits increased first X% From our call, well revenue and contractor on in on announced our program the that of you half sequentially, the of renegotiated new can year-over-year just compensation, well and additional I'll to lower largely savings progress row. that expense growth. by support today. for basis second X% our result second half partially and XQXX expenses basis. employee Beginning to flat driven just beacon our savings as global as underlying based slide see expenses down enhancements the up adoption year-over-year summarize XX, the then we to were underlying

Now turning flat challenging the half clear on XX, conditions underlying extent as as expenses slide so last quarterly half revenue we second of an expenses, our committed to to the to basis. the keep actually spring, first managing became

we commitment, more. page, deliver do we this of we but need know to side left the on see you As on this

savings, the the discretionary we contracts relationships XXXX On actions a the sub-custodial down start savings, and renegotiation These savings which million totaled payment management of of de-layering, progress tactical as right better XXXX on in as spending. Beacon certain our side additional in under program. include savings, summarize XXX well included our control of which the of page, the and

new or to of which expense our larger expense XX, during In than Now is macroeconomic we achieve million impacting is significant have expense in program launched of our savings to of light efforts. slide previous in current designed base, year savings revenues, industry conditions program. X% total, our XXXX and this approximately XXX a

engineering page, and more and reduction On headcount further includes rollout you'll automation, system vendor XX% savings two and previously cost of control the XXX our workforce Staffing categories respectively. our done advantage of Process of of right approximately lower engineering identified, with discipline XXX person. discipline process XXXX better side to a and include are estate we've standardized the million able major and approximately resource as high X% million and and the cost automation, of more management see tackling now roles savings in of and a Resource announced the part footprint. were rigorous further the and management, to performance in the are senior benefits reduction to management continued recently of a real automation processes our expected take assessments to model globalized locations. of shift per we or expected

which We hubs well XQ certain as common this the and Even mentioned, the technology why of drive as ventures the and charge of know headcount initiation program side forward, though applications. we which of reduce retirement rolled also good this the payback, platforms repositioning size these left intend we and we've portions results to I operational The of management out in going page. continue control. the need charges performance streamline system to three new legacy towards that a described is of the two is we joint charge in

ratios similar of a ended tier to slide year, X to XX, X of set Moving with standardized leverage a X.X% ago of and those capital the our year XX.X%.

We actions quarter process. be and the also XXXX CCAR undertook to better in the for positioned fourth sheet balance counterparty certain

over percentage during the not rebalancing, to portfolio of stress. maturity a As XX% reducing adjusted XQ under left NII HQLA on the our page, thus the shifted further and impact you investment holdings, to associated negative we the and turning AOCI to book held the increase securities the have including see further volatility of about growth. expected to portfolio of This the side capital is on

Lastly resume to we and share up million consistent XXXX. with our will XX, through to XXX and announcement, intend repurchase repurchases this previous month June

I'd to like XX, outlook. slide to Turning now our on focus XXXX

step would Before I XXXX from over we continued end a in indices geared which will macro slowing has revenue rates run year our uplift modest of AUM growth. forward underlying current moving are off drag this interest muted end share and ago it Market sell a two I worse flows start continued, down then, AUCA and Fed seen assuming period, quarter. from some when is US views. the level, though, note global quarterly with I'd December since Conference. but days two be just And like for first equity the XX in a with too, material was albeit Amidst the year the today the Since hikes markets, is has this first the to environment to uncertain levels. off only activity XXXX the equity markedly off At the XX% we've presented in light. investor keep volatility, equity This assumptions, environment, materially the will I of of consensus transactional operating versus and laser selloff put fee on markets than that a at significant none. Goldman the nearly fourth we on almost of same picture changed revenue our it XXXX rates rate months expenses. with focused

improvements, can aside investments. XXXX process believe necessary reduction offset X% in walk, should we the you X% items. X% both which notable year underlying from and usual achieve and net business effect see total discipline of larger resource productivity CRD than can program, yield includes by re-engineering in ongoing of our approximately XXXX partially driven As the by full expense and saves, we a an approximately IT cost, This in

freeze exits. to our we In senior environment, currently XQXX deferred reduce management and seasonally addition, given XQXX, via the to X expenses severe market expect recent points percentage compensation excluding hiring from

we revenues our percentage our control, expenses. material not control can and of by While informed markets in

We will intervene if necessary. further

down scenario percentage under markets fee this And in the end a of a with because fee could quarter-on-quarter picture volatility, several effects historical revenue rate December and off, the we as year to for and this the XQXX operating points, known uplift and there X driven market we CRD than is the however, this and even quarters. with step factors X by off, selloff total modest our retreat, pricing sustained XQ see further increased XXXX, where trading. could to of revenues or headwinds change. during At point, quarterly revenue, scenario fee lumpy company Turning the fiscal step by this including uptick could XXXX market linear higher see market revenue we’re equity run in the be

about of million with X uplift is in for terms to quarter. NII, example, of mid-single year. revenue For quarter we regards lag to see servicing a fee expect to digit point in market percentage a XX growth sensitivity, our half the a In per instantaneous worth markets to low

of For which approvals. balance for the a we better the upon And hedging to higher I process, expect Taxes upcoming the XXXX benefits given in CCAR Reserve are the the XX% the fourth we we finally, should be mentioned expect the associated to for CCAR optimistic would XQXX XX% downtick, to accounted absence payout a XX% that be of undertaken expect XQ, CCAR episodic earlier. would Federal days for scenarios at though XX%. range over are we subject two the scenarios, for XQ repositioning and positioned cycle. quarter, the sheet and target by to the we specific fully year, in course total Depending be fewer of

equity year record our servicing the conditions. a Revenues strong, which weaker mixed had to capabilities. had to but given XX, industry solid our half, trillion, start reflects in with new second full XXXX distinct of servicing X.X We Finally wins we was year slide difficult summary, a and exposure a year. started markets to challenging

X.X with ROE we've XX% driven points. clients. EPS NII increased ourselves distinguish as as how FX as in to percentage engaged All increased we've and continue growth, effectively trading We told, well

XXXX the are positioned priorities the shareholders CCAR capital to one better substantial cycle return front, capital On is for of year. to our we top and this

ago, Finally, XXXX taking actions year. the underlying we to as announced expense well immediate position relative base we to call And last environment with this Ron. hand for and are new a back confident expense that, moments outlined adjust us to today base, action our revenue to few we're our me the let reduce I

Thanks, Eric. questions. we call open Operator, now can to the

[Operator Glenn Instructions] Your question comes line first Schorr with the Evercore. from of

on the all comment about I surprise other at lower. what a like get year we X old. words, think pricing, so point. I this Further worst because don't in this is that weeks the start curious fee I'm you think how this the year, used I mean, think The I market and itself, out drops it pricing, is, phrase manifests That's,

we about because a are bit -- like to as it So five understand comes get gone years, XX new up wanted of straight? each just years comes new it -- about the I little kind talking up the like pricing more the that what's and contract last rolls has over about next down

This is Ron.

earlier -- else’s large gone We've of business in and then and is of around business some if business get year accumulates. disproportionately under are at mean, has and and The want very managers, our asset repricings for industry in you something importantly had in for there gone it and is assumptions the number no are will terms worked time been the importantly us our as pressure same I outlined the around have reprice, very then there those a pricing the and through asset you that down through assumptions, say clients all part. flows. part in built on that market I've to you and as applied managers when me Let serve for sharp probably start or has that reasons market assume historically particularly We on Eric on I over way everybody a works of on this least it. since flows. that

one, volume XXXX between for half haven't usual latter kind So the and particularly the second fact of led the the what's pricing our out, and of outlook. of towards yet that that's to played results, our assumptions

to, you much, we as talked in on want rely we've Do that's assumptions that Now, flows, to obviously add at these we're rethinking of if we’re what of -- have about, market anything? referring part but and it's to pricing how terms the really all, to here. discipline

and add this contracts I’ll those Glenn, the business, the to just headwinds part got pricing and decade, X% offset are negotiations in occur to that than set in We've that. live forth. contract over a of seen to market closer happen, levels the headwinds actually as the then contracts, been Literally, right, the historically X.X% the negotiations, volumes some or X% clarity bit more then decades we've been so by changes we've said, our we place term. We've have and have headwinds putting gone we've market and and that Yeah. appreciation, around halfway this through year. flows the about through same. for on just while those And well expectations fee assumptions pricing extending history. structure underlying historically expect been and up and if we're we half range. think about decade last renegotiating a we the coming And some That we've back seen the in activity year, and

the are hit more what headwinds in than to the the I say to of little kind calendarization. we a bit part fee the to and need So the just of earlier going because will we're of have of that's just navigate. majority that what to tend the we year just part through a of part, below live latter

structure the feel that's reversion so usual seen like But -- we've the can the incorporated there revenues than strengthens past take wave end our at in we've we've got out, work a that with day, and to productivity We've it's our We to than we our we that think the in what of a we've be is cost improved to mean. line got and wave, part of this are forecast. to is the to expenses. be that, on got some and got And earn. in our net will expenses this it said, resolve larger The is – that adjust industry.

actually timing well be than save partial we're my the also, That timing both one, other comp not ramping but if the ramping and could of just to of, those more program, leads while it's pipeline, could the as talk headcount at because offsets the follow-up it, focused yet and you is, then funded cost say, because and about obviously.

Yeah.

lot on because my expect down intervening increments. on prepared just a saw because the think by expect an the by of of stepwise an me in trying sense and you for I been Let quarter, terms management month XQ. been X comes Ron from year we've what we expenses that and just a in XQ start X% you and personally putting my on I've on down quarter total by to about underlying points month to underlying we're and adjust basis and the expense we time basis, expense percentage be to But the gave with do of remarks, I in that's, team side, to that

and it cost to quality that to our that's need so for deliver to meet ramping so some will that's in some trying investments time, at to got that we're carefully, down clients to But, got lines think that serve we've the down same get to there highest fixed what and we've of so base, the are and manner. what services in at about of we -- peel do I the the relatively same got we continue ongoing it the the year. time, X% at we the a well steps do off expenses, take

from the comes Usdin line of question Jefferies. next with Your Ken

was about on the given but a how ‘XX could think helpful not of you've us help give flush expense, you the is on out and you point Hey, side year sense underlying if expected adds? revenue rating cost if both us made And side? help Eric, contribution wondering a full you're you thinking possible, on can I would you us CRD also understand I be could what the about basis the the for it if Thanks. us the run what be, of more CRD? just would your

Sure.

in natural little we Let most at colleagues page software year typically we a fourth and rough of revenues, it amount. me cover. sales, with that bit, that's of and a the business you’d something XQ quarter about on the but because I XQ that's I you think seasonal vary XX% XX% natural that -- that. full you'll may of P&L will see seasonality of some in think Think part fourth and least quarter to fourth off includes the more downtick of materials. in the I that calendarization It business to probably detail XX I is And so your in this start position. a after that that here quarter can revenues total disclosed describe kind software fees a kind guidance CRD, of oriented models a to gave think way, of happens the for see that the in provided CRD you of or the have We that on of build

we doing and engagements. first right, expenses, those for or In install be not that XX to installation, We've the to of adding what but a that further install the in tends was just build client timely bottleneck, out force because manner. our we've actually to part terms all the these is ability CRD -- sales, expenses, sales product in you'd intention. things added we're and engagement and the are to engineers XX described, We've of tackling begun quarterly expect we're are

ramp So analysis of the that as part -- the we accretion expenses for integrate. year commitments dilution and That's all the we during CRD made. will

company, Charles assume last this to River the -- of and five were got that a different we that quarters representative take to business goal. double of run in to that on invest should what be The top historically need of that so you to the and the you line. the the or actions deliver through growth that. about to rate double series over earlier X% rate, I do, in on four synergies has ramp years you a kind years trying to so would Remember, the might you've software some because think where growth underlying effectively revenue And is original are been

the fees the I with so And balance all-inclusive going of know then top your going you outlook one and harder, through take on comments concept just got I trying make of pricing to on fee back how -- and leverage to up if market ability of the be to if positive the I term, on the what's we've an the to come and I environment house, you about think what your can improves? as and given given just it's are added this it hey, basis, of but and just CRD, the we you're points then that those, just -- it to you were opening positive comments, is leverage the or market just to the tougher it operating to you deliver operating do how back the think us longer that, some gave this

Ken, weren't about in change it's just environment equity real half, even the it's think, negative. levels, even the it's in long of a I've market term over whether and year, more December the Europe were, December they the lower latter were to be negative. whether Through market clear been right, right. just between last US $XXX November billion honest, flows, the outflows and month billion $XXX I

then macroeconomic -- we this questions. the and So geopolitical trade and have and all

do think in expenses. part our we how and run careful that as makes that and clear we what remarks so on about done company. what And doing should be we feel I a can real of as we've be be here result, conservative And the should prepared is us

what coming give on there's as change. good real a and on and think we the ranges, and think of I or -- are revenue a you just do revenues a that visibility the quarters be commitment just quarter expenses scenarios there's rather range I'd developments I touch in on get is into We then as

do to client muted it some with some somewhat company quality driven means to terms this of about those what need macro manage the by effects and we Charles that see, markets it means actually of clients more think that service that, might in to there and activity driven, it what manage Having can the it increase that consolidation, the uncertainty to but am environment, so macro will the on by that for Ken, us believe drive understand do and out in would we to is I simply that company anything be basis River we revenue investor the we for said our add of expense flows. outlook. There's encouraged outlook. the side, for much very we we continue the with do overwhelm makes then muted on it actually we for I sense what that really confident so

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

context to apply that in to each my think the want term intended Just to try for targets XX% XX% the that this out the medium term apply year, of a laid about in GAAP metric actually to that one it you was actually included the that and I December. it to targets early believe guys EPS understanding XXXX. would was medium

still of layering to deck, then in I to not operating that that help we that should can correctly, sustained cuts some so ‘XX X.XX, sure give was provide amortization want had but in that which because temporary some Thanks. be intact some hopefully how further in now and might rate about about expense you’re pressure, EPS get from like GAAP maybe XXX stability there, for pressure know seems guide what you your with we fee also Eric, then the and such of fee is to you me that's -- and rate and is in, you're clarity? understand net about one, the I adding and CRD XQ, think the we indicating to maybe, number making make maybe So expenses that think at reference here, to that thinking

Eric. it's Brennan,

financial me capital return made of forth. take for across a so very to growth, We that. Let EPS medium and the term different commitments series some reigniting from revenue clear elements

equity said I markets whether prepared of whether it's of the few up my it's we and medium a the another term as had thinks last we of those and or whether there a off in for long racking, in wider scenarios half, taking down this has in targets than really XX%, -- and worst put as the year the consciously getting think XXXX the early last remarks, month geopolitical is I a step sideways, revenue range bit. environment, term environment months one it's changed flows a mind now think economic years, in December, I we

to perspective going one. year is hold to think be a do going I is the point, I challenging term And from XXXX medium more targets, is like be too So are this we to itself the what I’d my at think optimistic. not to

I got we ago. our just call, had I is, as think update a it here conservative comes, we've environment perspective react more but we didn't I a and year this of bit than take think couple too challenging as ago, expected months to the quickly a think optimistic, were you XXXX enough perspective and be in more changed a and will

totally the know follow to way deposit that then thinking off. for And about Good my front my isn't up. math cost

encouraging. further has a beta, of is show the Looks hike You XX% guys continued deteriorated. to which likelihood a like rate

us for XXXX, term we you should about further continue in through So, think on could pressure deposit don't maybe a are rates, how costs can deposit short there. your we and expectations expectations to in see cost walk where pressure increases cost upward we and still deposit that what your see

continue Deposit Brennan. betas upwards. Sure, float to costs and will

interest that that non-interest very and forecast. to and while. were bearing. will XX% jump X not, range that have in during smack into we it would we bearing the ago, XX% to so expect firms tick the our our year so and range case we of continue be in the We up the range continue from certainly to transition expect I continued XX%, year, This been, seen into the betas XX% up we right moved modest to as and for think we've middle the on, will a any for grind just up high that other very, beta early levels, don't in in we’re and we've think indication inherent we years that's that XX%

digits that started, full of I'd of of the off, our the efforts say our during and suite of earliest things it we've build right, gathering low in engagement is has of volume expanded ago that, our to I year confidence our us with capability I that they deposit that put of and one single as what we on virtue of right that the some sheet. step client just about NII off of to solidified was probably clients on the really think cash the amount us gives the gives program, by and digits actually the outlook deposits, with course year, the one mid-single a minds in do Ron right, actually XQ balance deposits coverage the was to their need of

that high the positive. lending get do quality of also that if deposits the And that equity XXx needs private see leverage obviously fund can drive of that market to steady, we only a so somewhat positive be and need, if subject some is year sheet and in what we we way. capital would plus do or how like they that this call to hold the And the lending part a would deploy that balance in them would ebbs flows to because we but be not up can

growth of So, that this a we're some to in on drive there working dimensions year. different there are couple coming

question Goldman from comes Blostein next of Alex Your the Sachs. with line

So hoping talked on about click detail. double I we was the can here in of more things we some

sort continue pressure, us better the doesn't fee flavor a what gives of help guys could segments guys where why beyond X% little annual like I of customer beyond drag you So XXXX, will a I that color the doesn't of types, confidence of bit points I geographies, terms with normalize starting one, And client guess, that provide period? so particular, guess pain guess to get if that in you the are? in things pressure

is Ron. this Alex,

of seeing markets time, certainly and for but general, started clients active the ongoing managers, and in up begin the active running at pricing with the that things. combination have doing big where more really occurred of the pressure the I managers think that that -- discussions is and or same that managers the revenues State I were the in the on while were much earnest gathering [indiscernible] big on Street same

So amount it and as view led to we an heightened amount of a accelerated would discussions. what fee

this outlined term though, Eric we've pretty and into much moved as period, pricing. one, we've our gone As insisted upon for

the in it other part discussion. to the of been as business less make and more variable a past little than in we’ve So words, pricing second, actually most it's in cases, gathered

more over and and that So we're feel it's extended more why XX% through but we've we've for never the that away, of Eric it, our go A clients ones bit to the business. in terms on going done that noted it term reason gotten little than that as we abate I one, confident this. it just think, will of will is, discussions abate, about,

this a So that bit cyclical it here, we that's would of but should confident a feel why is that improve. low feel

earlier, in had we'll ETF differential but we discussions kind be similar the think to of Europe. fund partly because Eric. because sizable, We've passive. to the now There it's phenomenon I’d started were difficult, mutual of it’s asset the and a just also the in active that right, quite as as not see. US, managers under is say sooner more pressure US flows this Alex, of the that obviously isn't

can and appreciate, back. if well, and type segment right, market That pension provider you're where to me I scaled some ups intense in being the more negotiations the these ups of so your bill So less natural bill, run my marketplace. you will you had get Why? your an or have as be, said, and fee marketplace to of paying oftentimes, it's little the your some become going in companies. affecting go a just are are asset think how up inclination fees that that about us asset markets about those insurance most and intense yourself in that’s we a the at let Because manager, managers seeing talk is run primarily after bill levels, other look

gone by half for we severe or pricing. decade, seen, so run as markets we've more connection more, between And a in a up some followed have in back decade adjustments

we the see And get to level goes X.X% share see, some obviously X%, with in and between of them, more see if more back steady we'll as we of reversion X% markets, we some goes somewhere think it this so the you. we'll I we'll more, whether normalization kind mean, back think to growth get to we'll whether to

question working the help I'm environment of still are rate is agency to enhanced second kind custody call you was sort low again And to can securities CCAR? business that’s versus jumping thought the what's around the said earlier better out through that of guys XXX so you quarter, this or at just looking off rate run this how I is? custody still lending, run roughly the model the same, assuming break in $XXX traditional at enhanced stays for trying of then and ongoing, still million a point reposition bit get a my sense you what

XXX this quarter. At the lending custody. for Yeah. see, in XX-XX, about lending XX-XX, classic versus agency It's point, securities the roughly enhanced are, let’s revenues

range. in that that So and of kind in – it's

agency I area. around there going two now think on are right really in area the this things and it's

by with reasonable lower. lending, the just on in But seen have on hedge market, enhanced markets We've to seen you the who -- some stability I loans need assets some real levels think agency we've custody. classic of seen some funds we've borrow. stability, falling, de-leveraging are

the de-leverage. quarter levels down demand little lower so we to back, average, what to funds have come still that some I fourth and have going for to likely have happens levels you to first a is, on think, continue in October-November. to And a of average And if and below persists, a still spreads measures hedge as demand well. bounce some I had less create S&P happens, we're a that's highly than question We've have bit one quarter but likely if lower to at first as and there's market close demand a you remember, dampening question XX% quarter. out So result, what December, there think ended and is

embedded there's a and So is here makes sequential feel careful XQ to market my demand clearly fee that element the XQ guidance. us in about

historically right, with had and does we're connect to I I something trades been of think be their to other is we've kind a the is parties, transaction add The types it's don't little in tell continue tools work a really actually lending. agency counter of have working lending compression dime than just quite a all more the is terrific question there adjust business. enhanced the little half structure custody fee and securities marketplace. through more part still of of refine it of number be on. how has processes. need think do think lending in an bit to think on us parties kind which so parties we've earn lending That actually are of significant counter and through In the concentrated to innovation in we've of of for a done to most In of area out innovating, through kind while and and as can said, various been of it, unchanged team diversifying approaches us. you are sec and to innovation that you always an would intermediary space, quite sec I is, the effect FX, CCAR on much and agency counterparty I opposed a what's agency the in it's vast the effectively we've and There and doing and I a lending, turned fewer been job time more counter available trades,

talk that the So certainly we'll and more to more on over coming quarters. come

the from of comes question next Betsy Your Morgan Stanley. line Graseck with

through Could to ran year a positioning on on changed how it last you follow much give new of, you would sense just the CCAR, Eric, that. results? your have up us if

we've the question because do right, like investment this work. models you mark portfolios. that portfolio OCI market that's our and team Betsy -- points points, I changing their mark the work have how the banks could X to of think tell on positions got would the X, other bit the and large I'd chuckling that's data capital think be the or we more to we and now – I ask the on a with to effect we've the Fed, quite modeled market how got done on the X, I’m data

worth, a got it estimates. think is much how So, I we've of range

or adjust capital if done. capital are capital points the mark I of felt kind we what have in saying year, about that's of if return percentage and those know you earnings we've we're you’d impact optimistic think and million, math percentage much X to return points have the a earnings for we is X.X XX know sense how what think been percentage the how points $XXX our we we points have some create that return we another terms XX at billion and market it, to return right, every XX we position to much billion, so of XX of reason about the if it's of like comfortable percentage of to

it do AOCI with to but in portfolio. So I'd context quantitative I the share our want we've how on about position predict a that's could impacts that's thought all kind of and don't be We the you. maybe really to rough estimates,

tests, that mean CCAR ratios, And then on for not run separately, proposing leverage only on talked it's has through Fed you have and could RWAs the you. what stress about just thought

Yeah.

that. we've of the think modeling I done

benefit between and tier think fair there's our difference constraint X exactly outside under constraint, I months, how discernable, an a the working that I factors it's the having not are Fed $X some Vice [indiscernible] of the of leverage more, market of is we while hear optimistic but when there versus is so Chairman’s we has material now, X think X.X the and passed hopefully perfectly of forth, of constraint an maybe is what us. a positive range, modeling run, and tier and depends but the is a movement matter not but stress it’s a the the test important real The of finding been with quarter kind in rough for I on leverage that amount estimates, RWA implementation some and think is binding some and right binding is on various comments time real timing that just billion, it billion and that test.

about, talked give revenues as then scenarios expenses guess to to muted there a because I'm a I just revenue trying little just did bit just if outlook, feel expense or have on to, and know trying sense a you bigger and a just do I could us then understand And if have Ron, to picture, you've maybe more is like more cost opportunities that invest to you And do get there a you I understand, further still know you really you or here. further big opportunity potential saves chop? is restructuring can is I'm incremental you

what go us going after you're we to believe is is outlook from going we cautious what one forward. and go need given hearing the done expenses after, second, should we've after just what we a that So

is, program is go noted -- course is drive be If more. place a expect that your we've we've able to to we in question more of comprehensive there after, got there to actually and

also the after have all Beacon, a look we'll that's and underway terms hearing of one investment. we'd do thing We what in emphasize important. our enough work I in the the mean, that the the think terms we at consolidating we’d been and will the XXXX market had start an that obviously adjusted the because than sensible at then to even to that's our work done that environment extent go I saw delivery but the past last that investment of pattern can't in finally, that's in to opportunities continue and of worse we which to operations believe is things us, we pay we cautious to, we it's And was from have realities, program, those if that to and What you're like off again efforts look too. beyond. of

line comes Brian Deutsche with the next Bedell Bank. Your of from question

growth expenses then revenue to move I'll with Maybe question. start on just and

year? for the we're deal, which that would and the XXX So delivery include you how you did amortization if and to those basically to can it and costs from on achieve first, I'm of talk trajectory is be as rate just and and getting expenses run then if some on just about – synergies portion that you're of expenses. billion that for Eric, XXX X.X at you you looking into the XXXX, maybe going delivery about the XXXX. expenses, to acquisition exclude saves CRD down can that clarify an what guiding the costs to also potentially expenses given expense core any related you revenue But when XXXX would CRD outlined

Brian, it's Eric.

different a directions. do this Let of me from try to couple

we I deck helpful a the ’XX. think of And XX define where as starting end at XXXX probably of forth. that’s end so because is those you expect to page underlying and expenses point, kind we then the the know of CRD ex

do take put in there. I to think -- CRD need you

versus bit you of scale if will it to quickly we investing, while come in of think, million think about, I range, rate a bounding level. can unreasonable ask a -- you're in reasonable of there an can a I I'd limit what's but rate little you that a and just I there's and $XX how think you off at right, it quarter, there's invest think through First expense business, well be quickly to XQ, growth think set up run

So that. I think can of you off work

You which do to we've restructuring acquisition have and amortization, then factor also the and the flow defined there intangible through. will in costs

actions they line what be this those the we’ve in a come, rate obviously run I is basis, accounting. appropriate should quarterly good but the with think and take example a a on of take as we’ll quarter

and to team from with So at things you those are to it happy take work the how IR pieces, out look and take modeling you're a there.

you on are just going, appreciate you on sense could of River goal, facing of a some Ron, whether that the you clients characterize business offline. if us Okay. concept refresh We’ll that’s maybe trajectory optimistic receptive customers just then of you of with could perspective new XX CRD but from how sort could plan you give And that some with that mentioned revenue how outset side, client pressure on and at of maybe concept? the the mentioned if Charles those the they're conversations synergies, XXXX give if perspective, and the the revenue managers to do the engagements that are the a the winning asset game partnering very talking are and you

about conversations, with nature question very We're give those The start me revenue let those. let you So, of of some achieving, sense if synergy optimistic optimism. me exceeding the not goals. the on

of and a clients, clients, Some we owner, in good more private cases more price expected like or serve owner it those there's for and simply the we CRD of Street from in is CRD competitive series or a so operations movement And presence equity, minimal all which revenue shrink-wrap hadn't we which there's and profitability there where of all and stability the a more their is them perspective don't also either was with are the to we, set them course even they of is at that of a attraction of serve of typically all internal conversations lost of a where a from new bidding State the them client may being -- they and client from or CRD. activity CRD in activities see and now with a client looked new to value stack. is be that that There's Street sees again. of CRD a way that be of and series cloud, situation client a in conversations couple just are happening, the no CRD having where of stack the then together honesty, operating a technology State having, simplification

in in about things driven more these it's to business -- but it's of the negatives we a by positives all are marketplace, real share with seeing talk higher and much term revenues, these the end, we short having, think all the comprehensive are to us consolidate So us pervasive, and real it's which wallet.

more you achieve linear on next do towards stick those in based those XX XX? revenue synergies is can years or and over fashion think -- a conversations you three the it potentially hockey And

the too change, bit discussions. early pretty a It's little because whether these to on comprehensive tell are pattern to is Brian, going

fast try firms to they're going really once terms you about move take along of their in change them and you're but a talking generation these because time, run how as they can, business. in as a You in

would right but sticking timeframe, amount. the So to highly that emphasize the I we're now, confident we're achieving in

Your Lynch. next question comes from Merrill of Bank of America line the with Carrier Mike

question. so morning, Good first

when seeing kind think want from cost revenue versus more of of gauge, with I'm you're program just I sort the done what's on we to -- trying the backdrop it's going make some of of ebb about the thinking structure the and step comp, like business, can of to kind more the lines or tough guess I variable, structural. of basically, some to has variable predict, XXX, away other, revenue revenue what that you flow fixed just expenses, the the be been is on that given of the like have to some maybe the expense transaction, maybe the trends how side, that just and that but to and is Just core pricing much if about uncertainties like

Mike, Eric. it's

about we because one is, labor the the business our we Let means be that I honest we've become, think, And me in has we've as actually over as than that Ron some have made it, need of expenses, I business of variable put to to two the sufficiently more partly automate, labor stack start don't as more becoming and, describes, even work more be shift I fixed but time. investments we but good things. and is automation, adjusted than against terms capital of some in of fixed actually more dramatic feel think and we make think variable that the and on our that we nature that of

ways parties. need we automate ways downwards, get -- step means both force labor from base, out to out, our and we we that of expense we of adjust find as to kind scale we of to benefits to larger and take the take with step program find to as to vendors, work standpoint, get out larger think off an expenses and I need to as they we we so expense programmatic level, need function accrue

just business evolved, manual, that's business, what highly need as because a where of variable has of of how nature we So highly the XX years relative XX, this do to part XX, to it was ago.

find take expenses, to like, difficult would wise ability function I more actually developed step move need up in is we second create because adjust step hard revenues variable, the times, that an as could leverage in truth, and in perspective think senior to are margin as we ways because we've and team level it's or as that expansion in moving the to it's we they fixed more that have more that than some the a here times, while good reductions we down. given much

run may need historic so of about that's business that's that to we back sense it with we a makes I not And think made but belief has and operated, maybe something times, really this in think leverage our good step think we been something in past, operating should that point that change. how I as sense have the

to least market thinking to you as through work but about well. first that context we environment, so particular need as some at gives And this going we're this how forward

too as last the Mike I been there grown Eric's the been. scale people variable, operations the part benefits I in rapidly and point the because of want has facing through we're is to these add it's we past, weren't not could should have and costs to been now think that had that have challenge that as as just have, distributed as it, we there we have achieving we business were

should the With is and the operations been group creation of of delivery into just the the talking global consolidation terms and that's but about benefits be in operating we this Eric's of than the achieve much hubs, consequence, running good not a have this leverage in what last deliver able is better in scale to we times, done Beacon, actually that as year, our work and these more to over goal past.

And just a then up. follow quick

some resources offering, or there's opportunity challenges think the you across are the areas that mentioned maybe management that growth pressure, you're not pricing some CNF, the services asset same of more you're most the you other where of about but seeing of you can when asset to? servicing of where You seeing allocate products, level industry maybe the guys versus

Eric. it’s Mike,

the your think the stack really we is question I offer. to answer product around that

there it, the how price the most be and administration, prospectus Then there's then think for about commoditized then office, think actually there's we If gotten products. where smarter accounting, you we is example is to about custody that and funded our of about operate middle creation, I business. how we've better

like some up of and the effectively contracts industry. pricing as I the software, recently so we've actually that reporting in think stack, of seen and think something and of of you move business or and So terms power inflation fact because in there's product in escalators of SEC I new more forth, see that nature requirements actually we more with the CRD

on the accounting, where that us custody, make so to we do accounting. and stack, and we forth. to also so sure are think do part I also continue When this we're pivot which do So in is you of actually administration and when of encourages kind offering we

a And so as you to flavor bit have little where maybe that's strength. of

think in different downwards, as particular, I you their directions, an to and are part other we back lastly the only have moving And more where accordingly for look, been working think have and left most of active wallet the and paid books more service I’d tell we've ability controlled of of there, pricing in us de-leveraging with than that's we Ron and and rigorous players our about be – ways, I appropriately for much some some wallet found that's then space, back the important more you adjust of what other being that very forth. the for the or area different place price deposits manner not discussions we for had manner, rigorous paid folks, in in with provide. we also we've being places we're is other place clients found have and some with put said, need and been have to processes fund through in more senior pricing that that hedge paid we've another in where and we asked the have as but gone share adjust and with I we have a as very discussions we disciplined

line the from with Mitchell comes Jim of question Research. next Buckingham Your

up on stops, and once deposit follow reprice outlook then pretty the deposit and and historically a to Street or deposit guess, stopped Fed betas your State you NIM, repricing has on mean, that hikes stop, Maybe just typically were Fed rate seen on you high betas has NII as leverage sounds didn't, like, you because view. during I Eric the have quickly, I stop, assets reinforce if

once it’s So should where stops Fed how well expect something over to so deposit or still you yield securities X%, -- X-year just has Treasury, Fed -- portfolio about little do your thoughts securities given NIM. we and changed a grind stops, once below yield the the is, your should pricing think higher we Fed on

Yes.

from of it couple tackle me different directions. Let a

we a if will some ways Fed incremental I couple there NII. in the now, get stops think are growth that

’XX, a that's rate the year the relative get back create fourth the ‘XX First, earlier over just full to run quarter first to quarters will piece.

book, are a falling continue work there. little the also that not but more piece, we higher the but have to and continues worth, complicated it’s second portfolio that only operate described those is our off, US the geography, we The investment you coupons as international that's investment to because there tractor more upwards is than geography, for in

I credit and a historically kind We've of third, is large run think there a with mixing of barbell continued very of portfolio. a portfolio the treasuries.

shifted see some seen seen changes we've the the fourth you've of gives some of quarter we've some versus then also some government quarter to of of relative of treasuries I of you us in directly, global pickup in sovereigns, think that into can ‘XX portfolio made, and we supers that and -- ’XX, first it's types the the MBS the you've the foreign agency sovereign the then agencies. more of out also shifted and it other but of and

but the our So And do final then we we some some up one, repo, it's find ways in we sweeps where, And direct is repo, cash, do it's grind business is better so right. needs only of think there is think to work. for their position, ways FIC whether I their create it’s I it’s or that's think, continue amount money on how their and to connected engaging how solutions the repo market not for them cash forth. which and on clients cash with most actually

line engaged volume And so drive feel report on we we conversation, that bottom we that just developments. very backing will the each and extent amount see as some one we can follow like is a growth, the of of those can to just,

no pricing rate do hikes? go despite the the still prices on deposit And point, up

No.

you tail a little get bit I deposit end relative of pricing the get first flowing some I in quarter, through the December, think. stability you of think but

think direct so deposits much is need with rate is the relatively in and for a situation in see I the competition that what question carefully. we of X% grows then X%, some can if always out is the favor but more and banks what is watching quickly don't lending environment, a see we there's think always lending at happens then spillover the you there X%, think in of a and we're time and I how this the to I period, effect we point, see deposit banking back that deposits system competition there think can there I while to the flat on basis, a happens for X%, to pricing, pricing directly against favor compete, the get clients and fund you go don't range banks. competition, where

for quarters index. I US, now, And that what X% first right which us purposes, you in the you guidance? forecast, about we’re to to modeling that fee up your market revenue kind fee assuming just footnote, assuming, question, up X% help in on understand talk depending obviously, then you on growth a X% see follow as us from revenue, you're our second in levels are the What December levels, just your can and kind of give of

I just that's the pricing of fees end. geared so step gave quarter, total particular XQ. At our that off a some markets why started it's done for guidance US on this to with international the, the the well. some what we've we've as and is, XXst point, Because cautious off I'm the way month a of literally, for the December for works on little is

daily a point is mix helpful so get going flows and here averages, is that's And and it's think I Some it and the you XXst so of sometimes was activity December to client other it's part print. that that right. X on a there matter, not geared average

much flows managers, a of I get get because added points think kinds my of are that size a we we those that asset And over of counts. little now, that first the I why of in see the that is our for another activity worth not the we right reason we bit in growth remember percentage so on of the all at our the that about flows we're right, because of and describes flows, EMEA seeing records, right. and been the our around transactional and well. in business in business X remarks, you course natural and inflows But get course custodial cautious of client of and on that's in quarter historically in wording books or activity industry, that annually, That's third the as and US then we've of the material. quite

of from with comes Brian Kleinhanzl The the next question line KBW.

A is quick question sensitivity on a the XX fees. mentioned you servicing that market in that gave, you million uplift X%

in that X% markets. So uplift are, what it's X% about for uptick the if you to relative the revenues I the mean, XXXX put revenue

X% a when was you it So last you through so it rate. increase, quarter that, gives gave pull a XX% XX% and

a This quarter, now, XX% through rate. to pull down it's

you when done, be have step from you for sensitivity all So mean, all finish market to do you I it these does market look sensitivity expect how when down another that here? the ongoing, renegotiations and said

Brian, it's Eric.

percentage gave so points. in guidance change that we equity we’ve given XX% the our around think relatively is X historical -- worth about guidance, in is I consistent markets

a of of fees, on about million. right, base servicing So billion $X that's $XXX

I X get you quarter, XX a today about call more XX. but of I XX, that part earlier prepared is in said you get my is worth that XX first it quarter, about you to points, remarks so think than a XX little lose what percentage

of So which X%, XX% million. of $XXX kind would you're within that and give you range the

that give The other part with you fees management get ranges also you that bit so we on trying little a of have a can kind offline, that do so through, is through of you of little could of go work some but bit to just sensitivity to estimation. the there, that

should trying is assumption it as you're -- fixed pricing asset business. servicing more moving move in Maybe to be the fix general lower, the to

structure happened has structure the fixed the less Well, variable. more -- cost in That's on and become just side. -- what's to clarify, I on cost is cost think the

but that pricing and discussions counterparties. been those important who's of and what those the On and negotiated, at the are our our still in pricing, some has what those into should in the don't relative there's and we internal pricing pricing as see as pricing fixed, ways fees them, baked ways levels are and at that think some fees how I to some is shifts side, get what this basis, that don't most has we're we point, in for it, this have we're have mean, controls but I having we FX we different deposits, terms for adjusted changed we've some level senior pricing seen downward trying those level and put and had engaged on lending around real most we the it’s structure not do in at to also asset have point. several transactional the only we pricing our have the levels of that structures pricing that's around be contracts processes at at still servicing pricing which negotiating variability in that we and discussions, now having security because really markets new is seniority in

just that thing you X% mean before correct? AUC, from you in want gave guidance, mean, fee the to revenues clarify total you as were about and X% right, about I I guidance, talking one I were fee quarter, first on down mentioned. And you fourth being talking to quarter AUM had the but

Yeah. Correct. That's categories. correct and that of fee just our all includes

Mayo the question from Your line Mike comes with of next Wells Securities. Fargo

and in pretax over Beacon the you're ops you and to you're Hey, this IT increasing to target at but that period, I XX% assurance margin savings you pretax the is be saying, Ron. pretax transformation X will what my in Charles what XX% program, and hear synergies almost achieved year. all margin with have decade XXXX answering, new and only Project the all missed Street, said from XXXX its intensity, target what’s the savings margin merger year own the before here's River, Street it your here's from had question. my can of XX%. sustainable What new start that State But a savings margin head. give declined from improve State XX% expense last and but target, not from to a pretax business in

pay. and sustainable? not the Thank and after the the is, shareholder So question worse at I is CEO's question victory would new but access, but earnings apply its you. State is you given me Grade to you've while you give guys to what always what have calls, press on this you, the State this look the business looking to assurance have met, extent at clawbacks pretax A predates can X over board still the proxy took potential from are you Street years, and don't point, a interests, treated extent but Jay, a margin the targets say, know well, releases were savings again Street person, what that some to me got laps well, actually, Ron, is prior

is operations need the been going that's lot is we're I that that have the sure thinking happened in past, about have make Two, have underway, been in much come things or me I'm been rate. from the as to too what this we that Mike, on like going terms or One, decade may same in costs the that almost keep terms of regulatory of revenues need as work full spend and that. have not done coming benefits on from. firm, to that doing business, of but what this were what forward promise not not has consolidated to over I completed the here. but not time that, We realize in gone and we and that we in talking about, at and Beacon, but let the happened actually costs back presented, work earlier, we're assurances to back the we forecasts realized up keep about there's a something this talk coming to just may accelerate

pay and we gotten not we're because have business way work the because tie, sufficient very ever the We've very system and is board close forward, accountability to more We of than so in manage the involved our and there's been on worked going them done this. more benefits. between scale new capture and that's advantages, will a of scale with very, management frankly Three, performance. performance going the

do said be got am we've here we that down need deliver to will be to to so to a firm, And we've I we that we achieve so across and aligned the incentives this. coming that the service that confident to we what because on position, able business firstly, have see in the road, we just all understand

that and we recognize things we while around efforts things as the therefore so Secondly, like certain there to there's why can of lot we there. such as markets, are client flows things we redouble such that, a can’t that's need control,

XXXX, of off. like we periods, don't in that a So kind those fall same see that

the more you about think your these was first for so the bottom what a launched, should past State scale not from and view, it transformation the follow but margin, this perspective? you'd much, business more the a Street investors as decade, predates fresh see your do up, pretax given IT scale a you, benefits then fresh while talked the line ops the improving about again these Street what's for just of with say changing covering in And success when you of programs, of really State again, think comments about prior programs, lot success and and

beginning would the that at of cost the I I point two don't and think what just to increase last the decade of things. significance that that One regulatory anticipated be. anybody is

scale. Second, we to have been slow achieve

We have and that focused we've at got much we now. achieved not where as right laser should pace the have scale that's

of The next question from the comes Cassidy Gerard with line RBC.

equity got billion, of would how you've be us, total markets, equity the tied with customers of it of good sensitivity amount servicing at so but at to when disproportionate this estimate your that your fee share a base, you Can X.X a number the customers? quarter, being Ron on mentioned what client color X.X fee to us you look much is for some billion, in revenue let's call gave equity that the type you out related.

I’m a disclosure in the for do equities Gerard, trying disclose of ACAs business to in mix and of in our have underlying we think sec on We management the our equity based quantitative if of business. lending that. mix obviously asset supplement, some then estimate is our a our the heavy

remember when equity there I even wide are for funds of in asset custody higher have I a So multiple the that I aggregate. is know we servicing an than excellent don't have that industry we kind think estimate, funds, range. exposure because do that

based. supplement, financial you that is If and our under you billion those see of of thought do being described one to $XX.X equity XX X turn assets custody in our of we will there trillion page

on that's page I cut indication good management on equity on and So XX. think do side, a asset side the then also the we custodial the

-- So, it's somewhat are see dependent in XX-ish XX, can percentage so markets. we the it's you range equity it's significant, in and XX, the on

that's so are we always can scalable think good certainly to is times, are cost that model. on that in we make careful I be costs that to many – we also benefit to heavily in But that able need of but through. from expenses we -- that good navigate going that, add sure and don't actually it we we're need we time, base, so create business too our part why,

for that? other or And has price something but it to brought Eric you XXXX. then to up business cross just aggressive to X%, at the in way the What's Is maybe competitors something was products, more like but think loss looked it selling up driving up that to as they're that used XXXX, historically you that much Ron, on similar and what was maybe the up, in just a do X.X% headwinds are of you're X% getting pricing bumped follow looking you driven I being leaving and products willing doubling to be? think common, touched maybe, what it it to it

Gerard, I I think the these earlier, is it's clients said on heard we high. amount what quite are

small. So typical whether large, medium asset manager, or you're

that that flows isn't So thin, level you market assumption, fees number price, it's an will sustainable. there's a two, price may basis this pressure takes management initial like fall help it one. make When too entry over out. an bare just that that price it had sustained Number of particularly base in and like on what just price time market the make client, assumption you're asset entry client from pricing lays as an look fact away, the time as the goes actually and that coming an and that kind level both there'll looks with inordinate when be over

from us, less -- careful so more about think at be So the about the can't as get it obviously all in not what and kinds change it another things. at addition or price and some looking in of commodity at deposits it or of as industry, becomes term, pricing Eric other caused try those sure stack and to if more That out least about to will. of can overnight, has getting hard part then rest us wallet of we cases, tends talked or of And sensitive you up be most but less, products the earlier, insensitive, we less we're getting and for some that much importantly, move less price making less that custody and consolidation how looking you for this. speak and as product to like, the it's

The of Steven with next the question from line comes Wolfe Chubak Research.

follow-up basis So about CCAR, on tier I to leverage points a capital target. ask X Last year, question that you XX return. wanted of stress in short were

medium what gives get flat last year actions you similar Eric, year, more on improve that upcoming you the about assumptions XX% Is helpful in year. do view wondering talking an can What think of can target. payout that is a there are we gave Your or tests? a are really target color, standing. you should achieve test confidence Fed I'm stress the CCAR if you that term taken that – your the to you capital you've to ratios lot as

It's about task Eric. optimistic it. where this there's We're certainty on upcoming no

So, but we're optimistic.

those CCAR, the we had I two the in we results are more other understanding then how quarter we that portfolio think of under don't, the results points quarter we of of the have the you in this and change then year, based so some good to our on and under and we there's if and over then we the adjustments we're some a this we've played of fourth to year. year control investment last that data made learnings those first the last through kind optimistic saw had The that of do one of where and six the are for in made control have reasons and two the shape remember, adjustments right. number one, that we

impacted and our so businesses, runs, how the FX, The Fed we've to the intervened very whether that's and is of sec our second securities have structure actually in exposures and in stress test of choices, levels. because right, in made that better in actively you've one the understood way we've that in some limit now terms counterparty counterparty we across conscious actually our exposure seen whether particular of revenue lending that’s lending which adjust we've

before, used to as be cases, more to to we transact but in much trying some had we've clients we're as best our with Now, calibrated.

trading we operating you that late if been parameters the floor literally, had have they’ve at that we've management they've since literally if fall. early the we So risk installed new team, summer go and -- down and to

see of give -- test do which what's is some global confidence there's able those year. this it. should that can early the in else any late June. better have forth. The new is macroeconomic then everything that. of the on those won't market balance growth we so the it's next us some obviously information then including see we in don't unknown the come assumptions And obvious to and sheet And month both to we shock, trading in in we the or that test, be itself, that areas, piece There right, So month bookshop, we for has this counterparty through until and test

stack, was Got appetite I redeem associated just you certainly your capital the of continue your timing preferreds you peers. of a capital to possibly or speak follow could optimization think excess hoping in capacity how and savings? amount more well one efforts, preferred your the many some it. in those maybe to up have of for of on and about could redemptions of And we significant to me

Yeah.

conscious importance would obviously and that obviously change, opportunity of X go right. -- we'd to or holders, the priority to so leverage like an adjust the as how in common of an call proportioned think to back If where to the our to holders, dealer capital the our our common and go return we is that first is the we the our priority is are the matter into the quite issuances feel we component, stack would the relative this to way to stack us CCAR equity there's implemented CCAR, the so past which our current through having tier capital I get I press. to were in ratios through I do stack. give some as though and activity equity the alternative reconsider year. this We're is capital year press CCAR, of think describe capital first of written is rules process and

that And they've just to the indicated Fed’s you've one that context given that actually mitigate in XXX%, quick that common willingness just to in they're follow the that the equity yourself impact from to payouts, outcome, would changes and fact remark, this you given fail north to more made greenlight look exceed to up dilution maybe the of term of the near CCAR, binary have pass relating the all XX% you're ahead aggressively reposition having CRD? order that clearly

we've that, do we to but our some end necessary able have is effectuate to that just that. we -- both can hope believe we of the intention we'd that's we'd optimistic to and are own XX%, said like what at year this have is to like that adjustments for so and We I'll of necessary be control of we're that's than that clear the that be and that exactly better and there deliver the some made under that and our intention

like So -- deliver -- how that our we'd be we've able to we're on would to proceeding. be what that, we're given intention,

the with from Geoffrey Your of next comes line Elliott Autonomous. question

if get to On sustained, that the just annualizing of guide, that was to right? rate be income of we fee X% the down to all, clear run about X.X, points about annual first that, then X.X and X% billion to of kind an is

we right. and for limited trying XQ, lumpiness the Yes, activity of markets, we're flows, client to it's to the today and from that's where we're mean, I have transaction then XQ amount are where start the That's the right. trading, to trying you with from adjust Eric.

then want always XXX careful And just conservative Charles we of be appropriately and the effects to So, there. there's River.

you expenses effective to careful expect if think doing what going what more we're be said all we and estimates. be and and tried demand careful trying a of like factor we're think a we’ve should to quarters, we're our to that that, of trying to run that's to just good not we'd then that, on rate two, ourselves long, to all in we honest, And several that be we and to then in So about adroit revenues, we've would us. we're or for but even be here interventions quarter that's be very because

because the range see think way those, May, activity. for and changes. February off the and are very market and we're be obviously we'll is the than to positive different there's that the and though I works to assumptions set to out scenarios base, quarters, trying quarter a we honest, We in range there and like some of -- on if underlying calendar flow I so of revenue wide assumptions, transaction just think in and have have in, little we'd quarter, just of pricing, to March factor a see scenarios but just just the a that the ones up little adjustments usual first flows, deeper into the to set tends a conference certainly in a market update bit on including more we be a schedule we've got more of macroeconomics which little and visibility first

that in fair? rate couple I on be Is It that that of sounds a understanding market showing you're we're that of like sure the slide right. run sort around XX, assumptions it for sticks to make could quarters. a just that want

what expense that's up Yeah. we’re our That could to. we're be the case calibrating and

the from question JP [indiscernible] comes I’m with Next Morgan. Stanley, of line sorry, Morgan

questions couple of Hi. This A is Thanks. for Vivek. folks. you

basis, what, is year FAS before a as obviously would what or sort you a of QX, little else? operating you operating in any in a Firstly, of anything on put because savings inflated, guide us cost CRD, on a margin, to XXX normalized more full bit the margin Eric,

business disclosed back operating at in we margin that the XX% for ASC think on I Vivek, basis. old July an around

historically way uptick the what now, the XXX, accounting you from current versus pattern -- going get you given there. they've the a year a of how adjusts for bit, how the margin think I they've, get XXX in from might to just done small

then becomes two and has the in the the to making probably those building going year, relative revenue business up, investments the in bit, we, is One I business. that in. think a will we're tend trend investments that the to the modeling as then facets rate to and early -- the ramp margin down

while right, Yeah. if not costs you have Okay. modeling us presuming out CRD revenues, because the I’m the cautioned we we on All annualizing analyze, right? can separately,

Okay. Different question.

and called quarter? one-time the how hedging in that You activities, of your is benefits you quantify that can out much NIM, from in fourth

in fourth and of know, dislocations there's Yeah. quarter, dislocation holiday particular obviously of taken always million towards being towards quarter. some from markets, the year positions we've bit comes you the In our end was season swap it the about a little down swap some but roughly $X the the, as the the over over

that. And it a you spreads bit, first X just, as the underlying a it because positive. bit actually and So of of move to and long rates of little you that And term was bucks -- accounting market saw how the then got so the some which a bit was we a a on played positive reappear in in get and the debt, mark quarter. currencies yen little of this so about between and through, euro dislocation, adjustment will little credit won't

and base as Can I to they accounting sneak rest which lot one, to a of has -- know FX trading, a you brokerage, have things in diminished have it, combined or brokerage an another FX I else used of smaller like transition part something management, of electronic changed? just with the

No.

foreign both we the certainly the and called materials exchange trading solutions. away, we what think money called electronic other of can to foreign is and like venue, if I electronic plus disclosure historically market, revisit, a is that of fun helpful was were but do our then call, kind direct our, of which trading literally that some took Those portfolio other what line something venues. brokerage we simplify was a I'll connect, smaller did what we're trying total services, had in bit exchange and management transition like items few our little a

So we've FX appropriate. services, give relabeled trading of I the to just, it that description think, that's kind total the just

tend foreign type activity. a I'm of money that, the percent or to rest those within the XX% portfolio think market related, of through, little are bit revenues scanning I about solutions exchange be just

thank questions today's there you concludes for at no And and we time. further call your are This participation. this

You may now disconnect.

Thank you.