State Street (STT) 16 Jul 242024 Q2 Earnings call transcript

Good morning, and welcome to State Street Corporation's Second Quarter 2024 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. be part rebroadcast authorization without Street not whole distribution from may Corporation. in or the call recorded or or in State This express written the call authorized be of only website. this The housed broadcast on State Street will

Lynn, Now Investor Head Relations I of Street. Global introduce State would to like Liz at

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

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

today's XX-K. addition, as those from variety today such of the statements. factors call Risk filings, may to important SEC in Form of Factors results In our our statements forward-looking due and our those discussion factors differ including a materially will contain in section Actual

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

Now let me turn it over to Ron.

and Thank morning, you, good Liz, everyone.

that horrible must violence to assassination and on attempt active Trump. no our the was I acknowledge we begin today's a want condemned. discussion, Before former President place be It democracy has in

victim thoughts to senseless a makes to a loss sit of democratic that can and unity better hope we an was participant seriously process, act and and tragic an in saddened our the act America. a those our civility was -- respect At resulted action. this We and we are our commitment by injury and along President relieved Disagreement the and which front life to all must former Each not are from this for time, impacted. this condolences in which in extend this We makes innocent all. country. even harmed,

Earlier Now sustained the turning for expense in with financial momentum both of of along and XQ positive second half almost fee total released to and pretax good quarter. This our growth the revenue a operating results, today, the continued return delivered resulted which margin year, leverage, nearly modest and the we as quarter. in year-over-year discipline. we first XX% XX%, equity on represented in total of

the second and operating and We successfully model will also venture These Street years consolidated actions improve will productivity to our State in in further in unlock client we the experience the in transformation savings continue simplification steps quarter. ahead. of to enable as continue important our take operations to joint India

the T+X significant May, In investors. for global transition event a settlement was to

Importantly, our essential as presented partner an Street to an it State position clients. with opportunity to our demonstrate

we cuts, in remain cuts generally delivered rate first ECB of and fixed geopolitical Meanwhile, data a market income and global backdrop, operational gains context rate continue role through economic clients equity our second assisting against executed in robust continued, market concentrated cycle in was the Our reached market average while even mixed, pandemic. remained more few underscore to narrowly value reinforced new and our names. Through The equity the the transition continued key the gradual successfully financial higher in XQ this our focused markets as successfully struggled XQ depth of priced in in all-time move to daily levels to highs quarter, strategic as risk this markets since again clients be investors capabilities. priorities. and its

quarter the highlights XQ investor Slide performance. of you X Beginning in our more with presentation, before detail. I will our to review Eric our through Turning financial takes

Second business and revenues, negatively year FX the quarter X%. of disclosed client evident revenue ago the impacted transition The period. offset than quarter helping compared servicing in that durable $X.XX NII our growth more previously nature was fees, EPS in to of was trading management $X.XX a to as in as drive year-over-year strength fee

We by our supported remain focused also expenses our productivity make efforts. our X% managing total base on while year-over-year, to XQ tightly continuing by cost than in ongoing businesses, increased investments less

Turning business our to momentum.

the in look we at see in positioning well well generating page, progress targeted While continue you $XXX we as more execute faster billion, of gives in distributed regionally of key you sales line areas back-office billion growth, middle number fee revenue us of our can wins aimed strategy, further making $XXX included to confidence which AUC/A generated in can which we -- against a and see our install was the services, our ahead. with than asset to custody Within strategy. which of

region. this APAC the the win Alpha growth. a for came attractive deepen in an existing installations clear in performance, client a Alpha creates new that an ongoing coupled and covering globally. long-term new wins servicing of including drive demonstrated set turn, with for quarter Street, win X/X relationship services, mandate strategically roughly our office. relationships is is helping This this the client growth. mandate large point Encouragingly, from proof AUC/A for The future a State client value broad future business well fee to new back is proposition Alpha us of an State advantage This client Street competitive in anticipated us positions quarter, positions that as increase to another

to Servicing $XX quarter million servicing totaling $XXX in fee first fourth fee revenue wins million, last the the months. the over is $XX a XX row quarter. million in This wins strong of over up from amounted revenue

and Our million achieve million pipeline sales our revenue confident is $XXX remain year. to servicing $XXX in goal of strong, ability our increased to fee this we

quarter a increase an with XX% end. were reaching million, buoyed At by $XXX year-over-year, at markets, equity management of Global AUM XQ Advisors, trillion $X.X higher average fees record

in by aggregate largely driven quarter, the rebalancings. was it outflows limited While GA net of number a client experienced

Encouragingly, we number continue progress focus strategic areas. in key to make a of

of from inflows we ETF to EMEA. the $X share amounted provider data saw integrated leading net consistent advisory high low-cost distribution solutions. to will a Advisors and total in future example, U.S. continued worth ETFs. Elsewhere, enhance access driving the planned expansion Advisors' in net wealth strategic investment also wealth Envestnet, growth. share strategy, billion, channels technology, in Global benefited Street's and services market This State For SPDR announced independent Regionally, wealth gain investment, Global with equity market

These XQ. support driven in them targeted clients of by increased number loan performance actions last NII over with our offer include and engagement cash deposit, higher strong growth. NII solutions as portfolio operating investment quarters in management sponsored the financing we also to XQ. repo as a positive to year was to in balances, leverage and resulting of sequential row growth X These expanded contributed have carefully total revenue actions while well NII a our in and

million Our balance sheet the over strong, and enabling return quarter of $XXX year-to-date. $XXX capital remains over million second in

our financial with commitment consistent strength Reserve's evident with release in we annual were Subsequently capital was return results Our the our stress to shareholders, June. of to Federal test and the third XX% to increase State by stock Board approval Directors. to intention quarter, the of our our Street's beginning subject by announce in to $X.XX dividend to common per share pleased quarterly

to to this year, committed ahead, excess look conditions remain our capital market shareholders returning to subject other we As and factors. we

I and sharpened performance to delivering another we the revenue business, strong are in the the of total our a advantage to strategy equity continued to Alpha strategy. We revenue total We against in win the year-over-year State clear quarter, To on while the and to which to making new returning significant execute am better demonstrated both conclude, growth, in pleased we business a controlling return delivered progress supported large our start that our client XX% nearly operating Street. by fee our continuing capital organization quarter. with momentum leverage brings make and completely shareholders. a year mandate in second as investments to which and relationship modest the expenses and the quarter, sales all drive recorded

into $XXX line wins to our million to X of remain have year. to this of revenue confident fee and servicing already good on deliver XQ million of We X $XXX new and sight clients our goals ability in Alpha

that, call you over take the the will Eric, hand me through with who to detail. let quarter And in more

Slide was it been last positive you, morning, on everyone. million $X.XX Thank EPS quarter as X, Starting year-on-year, an reported $XX would not year year. the we release the ago. but and $X.XX to second quarter were in Ron, have slightly lower growth for reserve of good compared for a EPS

the X%, income, we quarter. net growth up leverage noted, modestly reflecting Ron positive year-over-year, up which revenue delivered higher X% higher fee As total operating both in interest as well supported as X% revenues,

The and of performance items leverage both year year the fee positive total relative to period. second notable prior the quarter's excluding with encouraging strong an a on half contributed to operating positive year-to-date basis, first

to largely now again Period end tailwinds. record by AUC/A X. Turning levels, increased supported AUM to and Slide market

in venues, As were panel indicators FX of to our but to will market shortly. the related which pleased our the you discuss slide, volumes remained I quarter, business client can on across the see right see trading trading challenging we improved

The headwind mix cash pricing points as disclosed and Turning on shift net headwind was and adjustments, approximately approximately growth, and lower into shift previously declined disclosed headwinds a transition asset activity including X were more of X. including earning client lower of X equity business, the previously and the to the to Slide lower percentage of cash activity growth. percentage higher excluding transition, was mix year-on-year point impact X% equivalents. average by into year-on-year year-on-year asset our client client a while offset Servicing adjustments, fees levels new market and cash client than

begin servicing volumes our put quarterly we million were of revenue We than anticipate of fee average trillion equity mandates. saw servicing vast addition, client expectations $XXX of to quarters the million installed. and pickup transaction back market up million and clients We we prioritize fee to to office, At fees be work. AUC/A XQ onboard. In higher and custody however, the to tick strategy to wins a levels had $XXX sales X%, with pace next the the XQ up, cash over start faster majority back few period level saw end, quarters track reflecting more higher $X.X in do, to back in X servicing our we and as as installing generated be installed of consistent XQ. last recent $XX below activity and Sequentially, of with over revenues in installations

was fees were levels ETF strategic believe we Sequentially, up market X. revenues. offset and inflows net average off primarily Moving starting to by and periods, our fees. offset which prior of XX% year-on-year, from Slide our the levels partially net to and higher pay market impacts flows initiative, by Management reflecting benefit performance volumes repricing is higher of lower both in average the

the pleased new broaden geographies. are range are with Global continue the In continue breadth the the We launch in expand we steady and second to we quarter, of our delivering of our growth we offerings through product as funds to Advisors.

had the percentage up Our investment of quarter-on-quarter. management percentage business X year-on-year, up points healthy margin second points quarter, in X and pretax XX%

Now turning Slide to X.

client As drive year-on-year, in revenue across in of This with uptick needed I noted, remain though to margin. venues. higher compressed FX we helped volumes with markets major XX% saw our our business a volatility nice FX very trading growth activity

revenues lending and services. higher agency both finance from also balances benefit prime on Securities

the impacted revenues. which to U.S. securities subdued quarter, our the activity However, margins and decline finance contributed specials was year-on-year in in

Moving fees. processing to software and

strong Second in quarter greater detail renewals performance, engagement though with client benefit year-on-year slides. from to on is on-premise which cadence the CRD, impacted of continued shown the performance negatively following

can over we represent as office the model services we from as XX% X, data professional transition XX you revenues over business software-enabled year. and revenues a and greater of in quarter, software these our clients more another Slide the to last on-premise On to proportion see, SaaS and increased durable expect front time

years. we in Street, in significant $X over software X potentially business the revenues State growth billion As outlined May, revenue reaching driver a for our annual we can be believe next

XX momentum we and mandates win, end. mandate an addition, at bringing reported we're total quarter Alpha the in of live seeing additional with pleased number the are live in Alpha. In to continued We mandates XQ, went X

long-term APAC As this key Alpha relationship strategy. Alpha of benefit differentiated mandates win large a XX-year our a Alpha We represents a quarter's this Ron like view brand-new are with client. mentioned,

periods. up loan million quarter, Slide to $XXX Turning offset expected and as X% sequentially stronger was than investment up continued NII X. this both than X% growth yields mix portfolio in more higher deposit and to shift year-on-year higher

balances portfolio higher NII. a addition, our increased at proactively In basis, on quarter-on-quarter investment yields, we which benefited

June Looking and did first of that the to geared we noninterest-bearing again the at relative during inflow some deposits strong holiday note mid-June performance valuable see I did clients see in in an late the July. although weekend, in expectations June, would quarterly for week our of early up reversal as we

Similarly, benefited program. efforts in our spreads engagement clients higher client business to our as deposits the join X% We would X% Average expect of as of continue also due as sponsored operate NII better increased we from this the interest-bearing back to as year-on-year balances to more repo volumes well look to the and level quarter-on-quarter. higher year. half deposit at within balances

areas. in the business than Slide the to while to contained Year-on-year XX. benefits X to productivity key expense invest quarter, X%. In less delivering Turning continued growth also was second we in

in to this consolidations are these in integration last the with The approximately million excluding our quarter, savings India ventures $XX The first JV is quarter. late associated year-on-year joint consolidate with X in operations year X associated costs. decision

left gives as process including by our to us initiatives, we with for our along the ongoing The JVs clients a we catalyst basis, down us franchise. lower our to the continue our the time, a including well year-on-year pro percentage quarter points benefited ability importantly, Second, on our which meaningful actions these as from control, simplify management to and serves helped ongoing streamlining of strategy expected delayering our the model JV productivity reinvest as and more an staff and our the ability drive and facilitate as deliver X in including the future. global build our slide. forma benefits headcount confidence enabled operating increase costs detailed Together, better combination second on of and improvements bottom to benefit to to over saves as serve consolidations, organizational of X% with our span by on to invest and compensation year-on-year initiatives, in functions to

XX. Slide to Moving

As you and comfortably can above see, strong our minimums. regulatory remain capital levels the

we CETX continued as XX.X% support well partially share from higher standardized higher as as our fees the million to generated balance second the end, offset quarter quarter through share to We shareholders was and prior the between our earnings by NII. dividends return dividends have quarter ratio we in returned repurchases turn RWAs clients the tried of over strike right our goals followed higher capital $XXX and and drove was As of million repurchases from first common in slightly which $XXX capital support the quarter clients. as and in of by as our

to per subject planned ahead have increase on year's in a strong dividend and quarterly the year, CCAR XQ announced we starting of half approval. the of XX% under performance heels common back share to a Board Looking this the

half the the In buybacks first pace addition, to the is our intention accelerate year. to of relative of quarterly

payout range likely be the our ratio with to to XX% far year full XX% the the given in of XXXX targets. modest medium-term line year, closer for repurchase However, so activity more level this will

In quarter drive are our results, against and with summary, our leverage, notable total sustained delivering positive second momentum our strategy we while half first ability demonstrate to operating which business pleased excluding to items. execute

we're operating that, political uncertain for I in. With would to full the have economic improved highlight given me environment which let outlook, potential variability cover the and our continues year

are as the In are global macro the to terms quarter here markets flat of today, assumptions, end remainder of year. our assuming we we current stand for second equity

end, both specials outlook and as remain rate broadly market forward FX while of aligns curve expect muted. to current we with quarter Our the volatility

growth. the likely X% revenue up market the full for somewhat a will in expect now of year on roughly and expectations that X% year strong prior levels, range fee we start year-on-year higher be total our to our basis, better to average Given than X%

Turning to NII.

Given will full better with year now our down full to guide benefit expect of NII basis. we year along we our have NII slightly performance which the also management actions than XQ growth year-over-year, year, on X% of up a is previous taken this roughly support be continued

full improved to X.X% are the year to expenses costs. top expectations, year expected this these up line expect higher excluding outlook now notable likely be about up our be Finally, year. somewhat items, of given this X% prior We than expenses, revenue-related given

to operating improved we leverage fee positive year this given Importantly, leverage excluding outlook, now positive both deliver total notable operating expect the items. full and for

And with that, call let the me back to Ron. hand

it Operator, for you, up can Thank open Eric. we questions.

one follow-up rejoining to limit one the queue. [Operator and question yourself Instructions] before Please

[Operator Instructions] Schorr with Your Evercore from question ISI. first comes Glenn

Advisors. Global on Question

in function last just markets equity are You the the of custody strong your I'm a supposed had going that more curious similar outflows the much some we rebalancing? in markets. X how trends strong forward you quarters And expect seeing despite to institutional led base? and of are given is

it's Ron. Glenn,

have You around is one from client correct most vast an extremely The classes. rebalancing away the there. asset certain it client it rebalancing. it, that's case, large of In majority of

continue We it both business the Global comfortable and institutional the business. So don't it's trajectory to feel that very we in idiosyncratic. ETF and expect is in the on, Advisors with

Okay. Ron, European their about over servicing you. while been platform. potentially articles have so year we talking last certain several or selling a the bank has There

to You've been linked it.

in past. you the consolidating things said, been you've As in great

which saga that. not as I'm on any these you if approach am conceptually how shareholders about thinking Brown on lessons Harriman in you're Brothers prefer some thoughts and any near-term, think comment the conceptually on asking your So opportunities services? things from you is learned I were buybacks, I'm asking, to how consolidation there just might just curious

Yes.

mean, So about pretty been Glenn, consistent we've I this.

market very, We position. very have a strong

has past built the in by Now some been that of M&A.

activity where our business. it's very And strong. of XXXXs. around you organic back vast build-out go our to the think we you now, about majority of the if is But are If

just that clients of -- on our focusing geographies terms to in what some focus geographies. them is of far That by and that and capabilities focused Some extending the on within building of other is.

of shareholders said -- consider strategy continuing to our returning we then is to it it To it. I've but and in can what pace to the building organically, shareholders, at out effectively is this strategy, to of implement to help the capital our reasonable the is extent But past, superior excel and on a mean, we'll a and being at superior passes to test not -- a return focus do. M&A capital I us it

with Ken comes Your next question Jefferies. from Usdin

on NII, the Eric, just strong this we of the uncertainty up lower imply in result if were this great versus heard So would know outlook year the there's a lot and out I quarter? environment. second second now. still still updated that slightly a wondering And half really there

fact, just strength? us what of here? in are if, in So think terms comes in second help is deposits caveats how to from off the of And still quarter mind can you what we contemplating there think you continue second that half a should track through real

Ken, it's Eric.

you on As pleased NII. results we're quarter with second said, the

rate support engaging that of them well. both taking that is good we've and our on with balance the as in interest terms But their environment. of deposits growth we been sides the as lend actions of is being management and the really Some for portion sheet of clients there and

had tailwind from This a strong. quarter was long-term rates. particularly nice We

During helped. quarter, the that

end, noninterest-bearing. You half of little us more. build out the portfolio ticked towards second especially our Deposits and saw June in up investment a

across what But stack, the exception call, the, what deposits is are in I'll and pleasing find the initiatives. I pricing deposits, coming the stronger transactional price deposits the that

with that testament that's the across spectrum. be clients And really had there. the engagement a our So we've to to

base. into still That Deposits. quarter we to tailwinds We're look down. bit they we like that billion talked the that continues still mix less that's little past we're was little than seeing a about be some quarter, now seem the that, bit of in been shift quarters, of about. start seeing -- interest-bearing deposit trend the fourth quarter, rates and and of see this that think some that pricing out interest-bearing that Short-term a that rotated the will will a we've as rotation to third I that noninterest-bearing but from forward and and still -- prior of $X headwinds slowing still and headwind. is

end year, modest out that that, see just but playing we the is the at pace. through of a more So

long-term do, our support clients to and rates, offset that are purposeful NII that tactically support of the The digits, then to up to continue lending been investment portfolio. lending and that's and we to mix adjusting is the double

come in over And we're level a are of come deposits in so erosion those at the with continues. and where our But couple seeing -- sheet, next will nice it's could net balance a the that some on place quarters. of robust probably lending

nice. over think, we're we gives we're good a getting of us kind equalizing exactly where to headwinds And NII see, forward. I bottoming, to and tell with And can basis few a tailwinds going to the when, look a to so start to Hard which point inflection next quarters. say, time, but an and see is that over it the I'll of,

Okay. then one, Got one Ron, question. it. And

kind the growth to just to that think stuff. here. you episodic that's on the But I I I that and mentioned working really that the that And bit. and think a little increment. mentioned you we get that deepen people know ETF should from are better you like on mentioned against, of core wanted the have you mean, still the I You ask such, deconversion stuff looking and for onboardings fees but

we're the fee show is finally that and that like going that better drives guide rate -- management change? what line So to to fee that half a for those second incrementally of is see better servicing start

Yes.

about talk servicing largely -- me think drives it, I it. a what you Ken, core let because but bit really go about -- little have you there's deeper, if think fees, So let's

retention. is First

than and before planned. a to levels, amount well we're And them, talked Second is And what continuing higher new then them track coming which retention and then repeat. business -- our of rinse we even had sales, they and little third and bit rate onboarding. about the against the is at and we've time

onboardings. Second,

going than onboard should to they year As onboard there but that of and we expected rate. forward and onboard book to got We've this a slower visibility have lots to to increasing. start Eric start in see accelerating big that an been noted, will

And 'XX. the there's We're for then track that we there. on X One, fee disproportionate focus traditional it things this it back-office and either associated in We Alpha, if in process. servicing stand-alone an increased sales on on amounts, but making 'XX. sales, third we going that first also upped Alpha of Alpha conversions is again target, upped onboard, with assignment or the occur office as when part fees, back they're comes sure in whole the learning have

itself and in encouragement like now want seems by -- deconversion will terms of forever, mean little more. that then So Eric us a gives into The about hitting that we've go bit we're right this that. I and bottom to talked probably

start as a and X. in or move we'll that and So quarter the improvement its to beyond comp see effect on starting next it

fees fees. and that's servicing management So

it's in in we're is -- in both and seeing of It's represent ETFs. low-cost penetration working All market. We've what SSGA. important about about flows. part institutional been encouraged by ETF very share very into crafted the market retail effect a at the the are We talked carefully talked strategy, well. ETFs, that which We've

of build and volatility there. pay there that up terms on the finance. And highly there's finally, been Again, the some new strategy both had saw on low team some FX our a FX. move to securities clients continuing progress we've off to in panels. historically been of within And where and in then focused put place in this has you share Nonetheless,

is this feel quite So together about. -- is we coming of but of inches good we here what of game there's a do much a inches, that lot

with UBS. next question Brennan Your from Hawken comes

euro ECB cut the I this quarter. rates with would like to deposits, start

So is I'm biggest believe, currency deposit euro, in know I base. hear, curious I your to your second

does equivalent expectation cut. So on saw was roughly And And what the in that how from your the impact that beta to the the inform about that experience, for on Fed Where based cuts cut? when was funds? final saw we that betas you you it on that increases? see curious

seen the and It's reverse out and that, We've to it portfolio interest think sheet Brennan, slowly. -- it's of and Eric. will it see like our because take top to I nice feels some or balance so environment is insulated our roughly be rate reverse, which decreases. begin neutral it and beginning increases will industry time, fine remember, relatively now which will is from the

sheet, slight banks have a the million slight. points, year per basis across balance about of NII. rates central across on talking if We all it's base curve impact It's but $X.X -- $X a the we're XX billion sensitivity quarter full cut by

about that's effects. small the talking we're -- So

to opposite a good to euro your starting To point, way are euro is lagged place start up because move rates the increased now and the on in direction.

and move expect experience said first that euro the rate have see on has this We betas. demonstrated we largely to symmetry the in

time we've the the said that. over as And back and rate the increased of rate initial towards what tend see rate deposits the area of reversal area, deposits by then transaction lagged rates will is, exception end betas -- deposits, rose, as the we and we So rate cycle. to

see specifically so euros, that. we in And did

was to tick on healthy and level. at up, set of we pricing largely the last similar is We tick means to a think we what down first expect I even the our feel beta see. And you a that on is like further, -- beta representation step the the back that good if

have pricing range deposits way, clients. and have a with of a of in We our built engagement real and, pools

understand model as floated in similarly, and the rates And trade together understood floated the balance down of rates comes they it up. model they as So nicely. the

anticipated? is continue another based more that, a happening given your x I recently that has to factor And you that of strength playing seems Do on maybe robust in is then appreciate down, pronounced seems allow been the you it. for it brought it. step improved could a marketplace as Got that out the you NII Obvious less is the But strong On guidance. though guidance to repo think originally thinking of year half in than see to had been embed? about that better up factor has pretty recent quarters. story what's another been sustainable? bit back the

it's is been the based on talk balance most that sheet lot again. really Eric notwithstanding of of Brennan, There's on our NII a we and about lending. funding earn repo, deposit

So which We're XX% is talking our about repo. on deposits, loans, investment is XX%, NII around of portfolio.

context. true, SOFR. to the operation bit So better Why? dislocation repo, expected NII of in the for was Fed overnight repo little quarter. And relative came is some the in in there than it second Because just a

clients our So way. came

in balance dealer $XX clients. We also the nice a than nice it -- sheet take, range. there for million it $X expectation be a but saw not was has million strain, and to was It's to But the to couple was to actually, a fact, higher accommodate been clients. over thinner tends but to it relatively down last and smidge because useful margin, to of a a be our in that's way quarters, the repo our flat

It's think And included to going large the fully not we be driver in a NII. it's coming of guide. our

the think loans of and the around rates investment then I followed real and really mix parts big by we'll short portfolio long that and moving deposits, are see.

from comes Mitchell Global. Seaport next Your with Jim question

the Eric, maybe just following up NII a little bit story. on

Is to book talk HTM at back your that timing coming when get it the HTM that inflection down. a how year? your that? of over -- an potentially takes discuss much a maybe that is And asset then of that little inflection the next X%? And how coming. of you on book in? I still of the story big maybe Can long maturity yields, weighing Can about talk kind part look You you back that's pace about yielding

the in it's Eric. things an of NII do. turn Calling inflection or one to Jim, hardest a is

we'll we're been few it stabilization, we've begin that is outlook But so that next time, and the will around see we'll go first some, quarters, from seeing to trends bounce the to our upwards. in then that. And over -- tick

factors The with and multifaceted number of outs. are ins a and

rates sustained with we in will $X nice The the is books what in some area, roll-offs, tailwind slowly. about curve half the to have solid and versus over by we bonds spread is a turned It's and turning investment are those long over. the bit to portfolio roll a in in is $X worth a now amount assuming year. front in that's say, are the change a there across and through roll-ons comes right. of -- the of, stay longer-dated last tailwind, little more AFS. end. because XXX It play HTM maybe through the point and You're and $X differential, I'll primary that HTM, remember, second somewhere basis because the over But billion a the turning that as portfolio And billion that way, a those in the quarter, quite of billion, at

the rolling and mix a started component. stabilize clients, that's the needle the the XX% to now coming we deposit think, be in positive that the in investment we're actually That happens, last the out through, as Once from natural total And deposits to do because as factor I business turn is long-term quarters. than and the on our to servicing will So year-on-year us. additional the it the lending. often the you've then lend And we've rates the to I now, mix, benefit see then Right levels Lending is in loans, quarters, few a stabilize. the with have see right? us I trying impact portfolio stabilized mean think there the levels for lean portfolio what's and these to up clients. moving investment our they seen into be And more matter. net pricing most. of NII growth noninterest-bearing, will we biggest component really factors deposit all

And really That's maybe just being key point driver. growth your a on deposit to Okay. helpful.

experience? rate to catalyst cuts, like growth on is about What based growth looking can be for we do in to back more less. QX that Do think rate cuts feel do see? a we're historical you normal at How of deposits? getting kind Now levels need you

rate that environment. think direct seen the quite the environment we've moved answer has I deposit from the around bit the and is rate effect a

sheet repo seen are banking tightening conditions -- those balance we've and We've been relatively overnight the Fed actions that's been slowing telegraphed with that also as our have operation telegraph sheet, they've reverse easing. think I seen isn't been And through through. the system. although the balance those

And deposit have levels. deposits interest telegraphed. expect exogenous of think I years have the modest the that array been driven largely So to I last an with over sense have data our the don't impact on talking the cuts, number factors of X vast have. clients but of kind We'll of see, our much that analyzing from and that's that rate we

will over time the difference feel is we make What sales.

the this servicing even the process custodial not $XXX just the -- the tilt towards deposit up year. because year as a accounting but And activity, buffer than with sales, targeting about part that. or the balances a to -- custody, million $XXX million we talk of activities transactional balances remember, it's for with activity year they're it or $XXX the less we lot from That's handle custodial to office, before middle and So that the brings and million before fee needed a that clients. the

which what continue onboard look accelerate we have will fee sales And to additional way, happen, year of into bring year system organic a sales at so also in will think, forward, growth. and this because nice are our that's deposits a be the bring to I that rate those growth in bring year by help as we as we NII model, it growth and will part by deposit at, on will that, expect drive but growth, both then

Morgan with next Graseck Betsy question comes Stanley. from Your

the million and for show your wins are goal us key $XXX to what Page this to sales. want XQ is the $XX million. just XQ, last year. the did the comment rev around X, $XXX million of I point, Obviously, and $XX off to And million you for on

that an that you're of pretty able that each the level So us million towards going to for expectation to XQ. aggressively be $XXX bump with up leaves XQ and

And gives page, and installation of, new this confidence X million that? of of a in a in what already and are hits so the Is so just next confidence you that these in wins the that it $XXX each of my gets that you the that lot level are of it's to contract that the sales that function generate question quarters? you can gives

Ron. Betsy, it's

that. take Let me

point. to about and not wouldn't anything it that include installs, So right? numbers are this just to and talking that's under we're subject clarify, Firstly, these contract onboarding sales at

mean, I is about think think you Eric way there. it this that's the what that why gave But if -- to I the number X-quarter

Third for to better. and fourth tend us, little be historically a quarter, bit

year the the of year. little the better bit is half of first Second than half a

And Point pipeline. the about #X. point that's pipeline. the good So feel pretty we #X,

that confidence So $XXX million to in continuing target affirm of that's we're have we why that to million. $XXX

Yes. half it. And Got Perfect. was XQ. Xx year, in can see last I second the

history, yes, So obviously, should shows that that, happen.

great. So that's

Okay.

a then follow-up. So

are my would the clarify of I not include been onboarded. that anything number there. me not but clear part contract, let message The was first include that's actually Betsy, in because things

see have includes there, basically So when past sales. you out the number that to-be-onboarded we that

I So to hope I that. mean clear. that's didn't confuse

minimum Okay. it. just room. And like at follow-up got that the of understand Is you've SLR that on that to flexing going SLR And X.X% the And lot versus constraint? I'm Appreciate the that for a is fair? be feels and opportunity buyback, I you've buybacks. then got your the with expecting X%, you're increasing

we understand what want what What anticipating models that kind SLR to you're X%. how thinking much of to of holding buffer want Regulatory through just expect -- I the our level on as that, estimate about how of hold? top working you're just on is you should minimum you? buybacks for we So we're

Eric. it's Betsy,

Let me that. take

had then on, second million, we reflecting first quarter. at in you're buybacks quarter said the and million booked we $XXX lighter were As $XXX in

expect that again fourth then the to into quarter the pace accelerate into We quarter. third and

and able deliver we have So that. good each that's amount our capital of on quarter generation to and a room intention, be to

one ratio. we're stakeholders that also and level, the operate to us, good most think accelerating -- of good And various at think terms In the buybacks. for is CETX allows we the I a constraints, can pace pace that the for a good continue our I important of constraints, us at ratio but a

or leverage Tier informative operate we are of can but right, preferred where the equity, right actually to. The we X ratio level relatively the -- we with manageable, could leverage need supplementary

within is are that I eminently common comes we've range it Tier from at operate We've leverage, buybacks. And I'd kind standpoint leverage of similar both the on think and least preferred -- the as it as we necessary. can and when we'll Tier a related in say really clear supplementary way share a manageable stack it the are to a think and and leverage, ratio range. not can range. been conceptual what But you as not formalized them those externally, adjust X flows X constraint and our operational equity of really of

Right.

we Okay. of that is about about which from dollars? total thinking pace That's Or pace we're think accelerating up great. And then pace about? How $XXX that the when million is here, the Q-on-Q? you're should talking

we on it market when -- buybacks, depends It's and always environment so the the talk -- there's forth. and conditions

into capital careful that we well also return, And and of always careful that's leans want be run us that. management a commitment. but a and you'd to expect seen as both with team our So you've

liked million $XXX million would to the deliver. below we feel what quarter that was have was have certainly first $XXX I feel what in the below liked to think deliver. we would We we

increase there's So coming. a I solid think

a in a on. create dollar it think to terms. could about think I well. curve begin And points can Two go got be that as you've enough but You line, to

enough you've think got to on. go I

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

reading read I just with quarters, deposit you're of with client. pretty or the saying be I noninterest-bearing you should saying into the that to I you're not you declines I should be much correctly? over what the you sure make understand much the is, much too NII pretty done and think major But that want what next with much Am it. hear decommission much I and be too pretty should did on declines, X the done done

NII little bit be and myself next a to regard I've said so giving honest, I'm deposits, to to noninterest-bearing because With predict room it's Mike, of it's the Eric. perfectly. few hard quarters

a with stick few I'll quarters. so And

that think works bit I kind more. little that and covers of maybe range your certainly and a

wanted what see, So way, to horizon but we that's just we I think, here we communicate. in want and a this, can to over live the through

On X year-on-year point this the basis. point about we largest X.X about fees. the year-on-year originally total year said last if a and next be about points deconversion, We X percentage year. recall, of would was on It year, client year-on-year said you year X.X year-on-year point this percentage worth

through, us. this the a it, year the we'll it by X but quarters be behind of there'll call be still and then through of effect, will coming next year, I'll So be that end of piece

you new, continuing which about but pricing mentioned also is nothing highlight which about you XX talked And pressure. years, did we've pressure, for pricing

what better and in APAC, and outside U.S. win the like new imagine Asia context I your So to? the U.S. assume in are I in in spreads are referring you

So are when pressure, it? talk where you about seeing pricing you

Mike, it's again. Eric

last operated talked then natural as of pressure about just And pricing I get market, get years. market with because increasing for events, part increases think we we the That's a pricing you of a how ask they it's business that say, part just the from -- for upticks. back. has right? course clients, We the of XX

is said last pricing this with about per years less expect guidance. in year. headwinds previous the manager or fund a the versus unexpected we're seeing line X% and This more for be point. the pricing -- mutual any ordinary this It not the seeing in the has of that and of geared anything not and But year that. little tends to not any of because funds and quarter quarter that ETF of of we mutual more be group towards -- that at year, We're to the headwinds rest We've some shifting. segment anything are the it's asset out clients or those is

and a with markets follow guess, one any goes historically Street, you record that legacy I as such then goes long-only just your is the as asset mean, I big for that. to slog which company position the and a managers that uptick? funds, seeing as And are your mentioned, stock it mutual you high goes State one with or clients, strong strength? on up are still your last maybe Or

Ron. it's Mike,

seeing continued to as from ones I take the the that these seen we've to the to the would think business fund they're anybody, the well also firms, me that. you I as you're pretty I ETF types. business. as SMA. continues have DC mean Most the responding they've they're change. new lines. particularly mutual mean, in well-managed offering, ETF move -- the a respond, Let know and offering a And But interesting ways. mutual trust XXX(k) collective but They've product got too. of of I companies the fund even a the now mutual traditional -- one, involved mean, couple in got most if fund

support of to Most them pressure. market that. in are that And the to wealth responding out respond we them continue they're in and So figuring to business. ways participate

were lucrative So some than the nature some things of changing. the In others. cases, more business is

so favor. those cost base, stack, our And in they're their again, businesses, presses their that what also finding focused you're operating in And very on technology their stack.

at we're Alpha think good quite industry, by the office and we about provider in gotten the we've solution, As the far largest that. middle front-to-back

So I as as supporting plays through clients, both them their and in -- cost their well in think partner we product as essential the activities revenue describe operations. ourselves that to and an and our

with from Your Vivek next Juneja comes question JPMorgan.

continue? give costs interest-bearing a is they on that actually there actually rates? have deposit your U.S. just Can I I that understand If to start likely quarter, follow-up, guidance. you look your that? linked at declined. to some drove color And Eric, NII you Did was quick else trying something cutting Or that?

But as just deposits run of tends time. mean across would healthy I deposits. that dollars -- levels part we're franchise to over we'll and large It's transactional volatility in a of seeing Eric. see across our we it's vary the clients' such euros. normal Vivek, I describe that activity

seen we -- surprising area didn't particularly we or in one so another. anything And haven't

I think up are so addendum, our total slightly. U.S. are on so at and up interest-bearing look Euros deposits, and forth. you slightly if

understood amount by some of our in deposits and are fund there extent custody -- the are to driven be a movements pricing at So is cycle truth. determinant point. something And transactional their to we negotiated per of that accounts. isn't this movements need well not we certain Clients se in actions have the and the where tends and the to given now that pricing

Cassidy RBC. with Gerard comes next Your question from

And management in low history. Ron, your see we higher environment with activity, volatility relative to the actually about then to you factors was the to fees what should mentioned all we foreign that forward, especially quite geopolitical as an share that? second, Can we're answers you and go us servicing macro the on in in? one of keep eye that view exchange drive what drove of -- living volatility

business. Eric this runs Well, I'll start. But

bet caused some mean remarkably the strength him. dollar I been turn time. long an dangerous quickly really think driving that. against awfully I'll it's the for simple think to have thing I And dollar the of is what almost I it things it. volatility. low over of if that And So to too been But the there's dollar. become just One --

where so to volatility, expect some we in see times And simply you even haven't. would

We that. haven't seen

think the primary that's the of I driver this been strength inordinate of that So that, dollar. you've got

don't why Eric, I you. But turn it over to

has to X flows ebbs the I ways. currency Gerard, whether and it's globally the really continues euros it's whether substitution, that pass. that, strong of currency while and to for think be to in won, potential we've come and to and petrol, has The seen for add commodities, maybe cetera, been And core et none choice. of dollar dominant

you so And of a a have bit stabilizing factor.

equities U.S. describe And in the and to seen and natural seeing a more and speculation not they're bonds in and of recently abroad sorry, it -- underweight because and other work, been have in a there's cash markets. thing overweight We're not to I clients both started doing underweight internationally. they've -- the as result, seeing currency we're of we've cash put transitional that as that lot is more, the think of I'm that in and I'll flows.

And on so we've not one hand, wood. seen knock on disruptions

consistent consistent the have of and other we hand, on holding currencies. buying of other seen And dollars

multi-dealer are And our are them platforms, of during growth to on are -- through the to and algos, them It some of of our volatilities that clients notwithstanding of we levels so of them. us them that is view continue them do and in like single those some some then feels offer fine has clients. created. to been dealers, trade we'll are and volatility venues, seeing, And more for that's revenue And for them the of of we'll will drive some muted serve -- And set we're volumes point can multiple lower through are higher that a area. us, fruitful support because need that help that we the ways times.

than slower-than-expected go onboarding the circling it was And good. slower both half year? first Very touched pick the onboarding in this year, forward. back, caused What of on you part the expected in you the earlier to as up of but expect we

in It's fair Gerard, I clients partners. large in and I'll of that. partners. this we've be it's us are concentrated doing also journey, around that. joined early talked And amount that development development to some concept a take this about These that think Ron. happen development partners of we're

in things of some in on it. has have been So terms it some that the idiosyncratic And institutions going own caused operations some those some of then of to onboarding. of the their delayed of same -- delayed that

So it. of that's part been a big

The second been has it thing that's been driving private around markets. really

following clients whole our the bring if new we fund drawn right, the haven't actually that capital. have new get brought some actually continued we're of to to we've ones this, paid, on in of many markets with is pleased offering capital us starts draw been when been raised, we've clients start very, funds to While really including largest And on, and very that and you've the and affecting private because invest. slowdown the the

ready and "set but go," revenues that got we're not from up we've So deriving yet. meaningful to actually

on would other So major that factor be that's going the here.

time. further continue. Ron, this are questions There no at please

Well, joining thanks, us. everybody, for

for call. concludes you your This participation. today's Thank

disconnect. may You now