BNY Mellon reported better-than-expected earnings for the fourth quarter of 2024, with earnings per share (EPS) surpassing analyst forecasts. The financial institution's stock saw a positive premarket movement following the announcement. The company also highlighted significant milestones in its operations and strategic initiatives.
Key Takeaways
- BNY Mellon's Q4 2024 EPS was $1.54, beating the forecast of $1.51.
- Revenue reached $4.85 billion, exceeding the expected $4.64 billion.
- The stock rose 1.21% in premarket trading following the earnings release.
- The company reported crossing $50 trillion in assets under custody and/or administration for the first time.
- Strategic acquisitions and platform transitions were key highlights.
Company Performance
BNY Mellon demonstrated robust performance in the fourth quarter of 2024, with a 5% year-over-year increase in total revenue to $4.6 billion. The company reported a 22% rise in reported EPS to $1.50, with adjusted EPS up 20% to $1.52. This performance is in line with the company's strategic focus on innovation and operational efficiency, as evidenced by its continued investment in platform operating models and expansion in ETF servicing capabilities.
Financial Highlights
- Revenue: $4.6 billion, up 5% year-over-year
- Reported EPS: $1.50, up 22% YoY
- Adjusted EPS: $1.52, up 20% YoY
- Expenses: $3.1 billion, flat YoY
- Pretax margin: 33%
- Return on tangible common equity: 23%
Earnings vs. Forecast
BNY Mellon reported an EPS of $1.54, surpassing the analyst forecast of $1.51, marking a positive earnings surprise of approximately 2%. The company also exceeded revenue expectations, with actual revenue of $4.85 billion compared to the forecasted $4.64 billion. This outperformance is consistent with the company's historical trend of meeting or exceeding earnings expectations.
Market Reaction
Following the earnings announcement, BNY Mellon's stock price increased by 1.21% in premarket trading, reaching $76.86. The stock's movement reflects investor confidence in the company's strong financial performance and strategic direction. The current stock price remains within its 52-week range, highlighting a stable market position.
Outlook & Guidance
Looking ahead, BNY Mellon expects to maintain a pretax margin of 33% and plans to return over 100% of earnings to shareholders. The company is targeting net interest income of around $1 billion in the fourth quarter. Additionally, BNY Mellon is focused on completing its platform transition within the next 18 months, which is expected to enhance operational efficiency and client service.
Executive Commentary
CEO Robin Vince stated, "We broke through the 50. By the way, we ended at 52," highlighting the significant milestone of surpassing $50 trillion in assets under custody. CFO Dermot McDonough emphasized the company's commitment to maintaining 33% margins, saying, "We want to demonstrate that we can prove that we can deliver 33% margins through the cycle."
Q&A
During the earnings call, analysts inquired about BNY Mellon's repo market activity and its impact on net interest income. The company also addressed its AI investment strategy and capital allocation plans, providing insights into future growth drivers and operational priorities.
Risks and Challenges
- Potential geopolitical tensions could impact global financial markets.
- The transition to a new platform operating model poses operational risks.
- Fluctuations in interest rates may affect net interest income.
- Macroeconomic pressures, including inflation and monetary policy changes, could influence financial performance.
- Competitive pressures in the financial services industry may challenge market share retention.
Full transcript - Bank of NY Mellon Corporation (NYSE:BK) Q3 2024:
Conference Call Operator: Good morning, and welcome to the 2024 Third Quarter Earnings Conference Call hosted by BNY. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. Please note that this conference call and webcast will be recorded and will consist of copyrighted material. You may not record or rebroadcast these materials without BNY's consent.
I will now turn the call over to Marius Mers, BNY Head of Investor Relations. Please go ahead.
Marius Mers, Head of Investor Relations, BNY: Thank you, operator. Good morning, everyone, and welcome to our Q3 earnings call. I'm joined by Robin Vince, our President and Chief Executive Officer and Dermot McDonough, our Chief Financial Officer. As usual, we will reference our financial highlights presentation, which can be found on the Investor Relations page of our site at bny.com. I also note that our remarks will contain forward looking statements and non GAAP measures.
Actual results may differ materially from those projected in the forward looking statements. Information about these statements and non GAAP measures are available in the earnings press release, financial supplement and financial highlights presentation, all available on the Investor Relations page of our website. Forward looking statements made on this call speak only as of today, October 11, 2024, and will not be updated. With that, I will turn it over to
Robin Vince, President and Chief Executive Officer, BNY: Robin. Thanks, Marius. Good morning, everyone. Thank you for joining us. I'll start with a few remarks on the quarter, and then Dermot will take you through the financials in greater detail.
In short, BNY reported strong third quarter results, reflecting growth across our 3 business segments and consistent execution on our strategic priorities. Stepping back on the macro side for a moment. At the beginning of the year, markets had priced in significant monetary policy easing in anticipation of economic slowdowns. Despite numerous shifts in the macroeconomic outlook since then, we've now seen the start of the easing cycle in several markets around the world, including a 50 basis point reduction in policy rates in the U. S.
As the Federal Reserve recalibrates its policy stance to balance employment, inflation and growth. Following increased market volatility and a sell off in equities in early August, markets recovered, and both equity and fixed income values ended the quarter higher. A little more micro but relevant for markets. Around the most recent quarter end, the market saw simultaneous flows into the Fed's reverse repo facility alongside the first meaningful usage of the standing repo facility, both of which we administer. At the same time, sponsored cleared repo volumes increased on the back of higher repo rates, possibly signaling a transition from abundant to ample reserves in the system with potential implication for the pace of QT going forward.
More broadly, while markets have been constructive, there are clearly risks and uncertainties ahead. And so we constantly prepare and position for the many tail risks that exist from geopolitical tensions and conflicts to fiscal deficits and the impact of impending regulations and elections. Now referring to Page 2 of the financial highlights presentation. As I said earlier, BNY delivered a strong financial performance in the 3rd quarter, with strong EPS growth on the back of broad based revenue growth and positive operating leverage. Reported earnings per share of $1.50 were up 22% year over year.
And excluding notable items, earnings per share of $1.52 were up 20%. Total (EPA:TTEF) revenue of $4,600,000,000 increased by 5% year over year, and reported expenses of $3,100,000,000 were flat. Excluding the impact of notable items, expenses were up 1% year over year as we continue to invest in our people and technology, while we also generate greater efficiencies from running our company in new and better ways. Pretax margin and return on tangible common equity improved year over year to 33% and 23%, respectively. For the first time in our history, we reported over $50,000,000,000,000 of assets under custody and or administration at the end of the quarter.
Now custody is not something we are, but it is something important that we do. This number one market position improves our unique vantage point as a global financial services company, and it provides opportunity to drive value across our portfolio of adjacent businesses to deliver more of BNY to our clients. We increasingly see that the true power of BNY's client franchise exists in the combination of capabilities across our leading security services, market and wealth services and investments and wealth businesses. We have the ability to enhance this and to deliver more to our clients by bringing new innovative solutions to the market from across the seams of these businesses. As an example, we recently announced the planned acquisition of Archer, a leading technology enabled service provider of managed account solutions to the asset and wealth management industry.
Archer provides comprehensive technology and operational solutions that allow asset and wealth managers to access one of the fastest growing investment vehicles in the industry, managed accounts at scale, expanding distribution, streamlining operations, launching new investment products and delivering personalized outcomes for their clients. The integration of Archer should produce a positive impact across several of our lines of business. In addition to augmenting our asset servicing capabilities for managed accounts, Archer will provide our investments business as well as our WOVE Wealth Advisor platform in Pershing with expanded distribution of model portfolios and access to Archer's multi custodial network. Buy it once, use it many, if you will. The transaction is expected to close before the end of the year, and we look forward to welcoming the Archer team to BNY.
Another one of the fastest growing areas in Financial Services, alternatives, also presents a promising opportunity for us to deliver new client solutions across 1 BNY. We already have relationships with hundreds of alternatives managers as well as roughly $3,000,000,000,000 of wealth assets on our platforms. We believe there is more for us to do to mine the opportunity and build the technology to reach across our franchise and unlock the fast growing alternatives market for wealth intermediaries, advisers and the investors they serve. Last month, we introduced AltsBridge, a comprehensive data software and services solution built for wealth advisers. Alt's Bridge aims to make investing in alternatives easier for advisers through a streamlined end to end experience and direct integration into advisers' existing desktops, starting with our purging Net X 360 Plus and WoVE platforms.
As we continue to deliver new innovative products, we are also addressing the significant opportunity from enhancing our commercial model, making it easier for clients to navigate BNY. In order to accomplish this, we are promoting an enterprise approach to client coverage, and we are operationalizing our new commercial model. For example, over the summer and for the first time in recent memory, we brought together several 100 of BNY's client facing commercial leaders from around the world as well as members of our executive committee for a 2 day event we called Commercial Lift Off. This program enabled our top client coverage people and their business partners to take a one BNY view to account planning, creating a shared vision for serving each of our clients holistically across the entire relationship, generating new ideas to meet the clients' objectives and developing action oriented plans to deliver on those goals. During the quarter, we also made progress toward running our company better, including the ongoing transition to a platform's operating model, enhancing the connectivity across our teams and empowering our people to drive change across the company.
In September, we went live with the next step on our multiyear plan to unite related capabilities around BNY and elevate our execution by doing things in one place and doing them well. We now have about 13,000 or about onefour of our people working in our new operating model. As we've said before, powering our 1 BNY culture in order to be more for our clients and run our company better requires not just words, but action. I want to thank our people around the world for their hard work and for collectively pulling together as a team to create the change for our clients, for our shareholders and for one another. To wrap up, the combination of our talented team, our portfolio of leading businesses working together and the strength of our balance sheet gives us a great foundation to deliver more to our clients and drive sustainable long term shareholder value.
While our results in the Q3 demonstrate continued execution against our strategic priorities as well as progress toward our medium term financial targets, our team remains focused on the work ahead. With that, over to you, Dumbert.
Dermot McDonough, Chief Financial Officer, BNY: Thank you, Robin, and good morning, everyone. Starting on Page 3 of the presentation, I'll begin with our consolidated financial results for the quarter. Total revenue of $4,600,000,000 was up 5% year over year. Fee revenue was up 5%. This includes 5% growth in investment services fees, reflecting higher market values and net new business across our Security Services and Market and Wealth Services segments.
Investment Management and performance fees from our Investment and Wealth Management segment were up 2%, driven by higher market values, partially offset by the mix of AUM flows and lower performance fees. Firm wide AUCA of $52,100,000,000,000 were up 14% year over year, reflecting higher market values, net new business and client inflows. Assets under management of $2,100,000,000,000 were up 18% year over year, primarily reflecting higher market values and the favorable impact of a weaker dollar. Foreign exchange revenue increased by 14%, driven by higher volumes. Investment and other revenue was $196,000,000 in the quarter, reflecting continued strength in fixed income and equity trading.
The year over year increase primarily reflects a strategic equity investment loss recorded in the Q3 of last year and improved results from our SEEK Capital investments. Net interest income increased by 3% year over year, primarily reflecting improved investment securities portfolio yields and balance sheet growth, partially offset by changes in deposit mix. Expenses of $3,100,000,000 were flat year over year on a reported basis and up 1% excluding notable items. This reflects higher investment and employee merit increases, partially offset by efficiency savings. Provision for credit losses was $23,000,000 in the quarter, primarily reflecting reserve bills related to commercial real estate exposure.
As Robin mentioned earlier, we reported earnings per share of $1.50 up 22 percent year over year and excluding notable items, earnings per share were $1.52 up 20% year over year. Pretax margin was 33% and return on tangible common equity was 23%. Turning to capital liquidity on Page 4. Our Tier 1 leverage ratio for the quarter was 6%. Tier 1 capital increased by 4% sequentially, primarily reflecting capital generated through earnings and improvement accumulated through other comprehensive income, partially offset by cash returns for our shareholders through common stock repurchases and dividends.
Average assets increased by 1%. Our CET1 ratio at the end of the quarter was 11.9%. PE Q1 capital increased by 5% and risk weighted assets increased by 1%. We returned $1,100,000,000 of capital to our shareholders over the course of the 3rd quarter. Year to date, we returned 103 percent of earnings through dividends and buybacks.
Moving to liquidity. The consolidated liquidity coverage ratio was 116%, a 1 percentage point increase sequentially due to a favorable change in our deposit composition and the consolidated net stable funding ratio was 132%, unchanged sequentially. Next (LON:NXT), net interest income and the underlying balance sheet trends on Page 5. Net interest income of over $1,000,000,000 was up 3% year over year and up 2% quarter over quarter. This sequential increase was helped by higher sponsored Q repo activity, and its market volatility and increased client demand.
Average deposit balances remained flat sequentially. Non interest bearing deposits decreased about 2% in the quarter and interest bearing deposits were flat. Average interest bearing assets were up 4% quarter over quarter. Our investment securities portfolio balances as well as loan balances increased by 1% and cash and reverse repo balances remained flat. Our broader liquidity ecosystem reached an all time high at the end of the quarter of over $1,500,000,000,000 worth of client cash across deposits, money market funds, securities lending, sponsor cleared repo and other short term investment alternatives.
Turning to our business segments starting on Page 6. Security Services reported total revenue of $2,200,000,000 up 6% year over year. Total Investment Services fees were up 4% year over year. In Asset Servicing, Investment Services fees grew by 5%, primarily reflecting higher market values. For the Q3 in a row, the impact of repricing was de minimis.
ETF AUCA of $2,700,000,000,000 was up more than 70% year on year and the number of funds serviced was up 20% year on year. Inflows into ETFs on our platform remained strong this quarter with growth across all asset classes. As the ETF industry continues to grow, we are dedicated to scaling our best in class ETF service offering. For example, we have successfully onboarded several new liquidity providers to our electronic order execution platform to advance digital adoption. In Issuer Services, investment services fees were up 1%.
Net new business and higher client activity in Corporate Trust was partially offset by lower deposit receipt fees reflecting corporate actions in the prior year. Against the backdrop of increased issuance activity, we continue to see strength in corporate trust, capitalizing on our investments in people and technology to enhance client service and scalability. In this segment, foreign exchange revenue was up 28% year over year, reflecting growth from newly onboarded clients as well as a higher level of client activity. Net interest income for the segment was up 2% year over year. Segment expenses of $1,600,000,000 were down 3% year over year, reflecting efficiency savings and lower severance expenses, partially offset by higher investments and employee merit increases.
Pretax income was $642,000,000 a 38% increase year over year and pretax margin was 29%. Next, Marketing and Wealth Services on Page 7. Marketing and Wealth Services reported total revenue of $1,500,000,000 up 7% year over year. Total investment services fees were up 7% year over year. In Pershing, investment services fees were down 1%, reflecting the impact of lost business in the prior year, partially offset by higher market values.
Net new assets were negative $22,000,000,000 for the quarter, reflecting the ongoing deconversion of lost business in the prior year, which is now largely behind us. Excluding the deconversion, we saw approximately 4% annualized net new asset growth in the 3rd quarter. Wove continues to see strong client demand. We signed up 14 additional clients in the 3rd quarter and we remain on track for the $30,000,000 to $40,000,000 of revenue in 2024 as we guided in January. Wove is helping us attract new clients and deepen relationships with existing ones.
For example, Pershing provides custody and clearing solutions for Sanctuary, a large and fast growing wealth manager servicing the high net worth and ultra high net worth segments. Sanctuary will also leverage Wolfe portfolio solutions, trading and rebalancing and reporting for teams that custody with Pershing as well as those that use another custodian. In Clearance and Collateral Management, Investment Services fees increased by 16%, primarily reflecting higher collateral management fees and higher clearance volumes. Against the backdrop of a growing market and active trading, U. S.
Securities clearance and settlement volumes have remained strong. As you may remember, we created our global clearing platform earlier this year through the realignment of Pershing Institutional Solutions. We're pleased to see the pipeline of this platform continue to build for our full suite of institutional clearing, settlement, execution and financing solutions in over 100 markets around the world. In Treasury Services, Investment Services fees were up 11%, primarily reflecting net new business. The business continues to execute well against the growth agenda we presented in January.
And we are seeing our investments in modernizing and digitizing our payments platform pay off in the form of growth in our strategic target markets. Net interest income for the segment overall was up 3% year over year. Segment expenses of $834,000,000 were up 5% year over year, reflecting higher investments and employee merit increases, partially offset by efficiency savings. Pretax income was up 8% year over year at $704,000,000 representing a 46% pretax margin. Turning to Investment and Wealth Management on Page 8.
Investment and Wealth Management reported total revenue of $849,000,000 up 2% year over year. In our Investment Management business, revenue was up 1%, reflecting higher market values and improved CCAPTIL results, partially offset by lower performance fees and the mix of AUM flows. And in Wealth Management, revenue increased by 6%, reflecting higher market values and net interest income, partially offset by changes in product mix. Segment expenses of CAD672,000,000 were flat year over year as efficiency savings offset employee merit increases and higher investments. Pretax income was CAD176,000,000 up 7% year over year and pre tax margin was 21%.
As I mentioned earlier, assets under management of $2,100,000,000,000 increased by 18% year over year, primarily reflecting higher market values and the favorable impact of the weaker dollar. In the Q3, we saw strength in our short term strategies with $24,000,000,000 of net inflows into cash, reflecting our leading position and strong investment performance in our DRIFEST money market funds. Long term active strategies saw $8,000,000,000 of net outflows spread across multi asset, LDI and active equity, partially offset by net inflows into fixed income. And we saw $16,000,000,000 of net outflows from index strategies. Wealth Management client assets of $333,000,000,000 increased by 14% year over year, reflecting higher market values and cumulative net inflows.
Page 9 shows the results of the other segments. Before I wrap up, a couple of comments on the outlook for the year, starting with net interest income. Remember, we began the year setting up for positive operating leverage despite an expectation for full year net interest income to be down 10% in 2024. While we're currently forecasting for 4th quarter net interest income to be slightly below what we saw in our strong 3rd quarter results, the resilience of our net interest income over the 1st 9 months of the year has positioned us to outperform our outlook for the full year net interest income growth rate from January by approximately 5 percentage points. Regarding expenses, we continue to work hard to keep core expenses excluding notable items for the full year 2024 roughly flat.
We now expect our effective tax rate for the full year 2024 to be at the lower end of the 23% to 24% range we estimated in January. And lastly, as we said at the beginning of the year, we expect to return 100% or more of 2024 earnings to our shareholders through dividends and buybacks. And we remain on track having returned 103% of earnings year to date. In conclusion, our results this past quarter reflect broad based growth across our 3 business segments and continued progress on our strategic priorities. We're pleased with the company's performance year to date and we're proud of our people who continue to execute well toward our medium term financial targets, while we all remain focused on the work and the tremendous opportunity ahead of us.
With that, operator, can you please open the line for Q and A?
Conference Call Operator: We'll take our first question from Brennan Hawken with UBS.
Brennan Hawken, Analyst, UBS: Good morning. Thanks for taking my questions. You flagged some of the ETF wins that you had in the servicing side. So curious about that. Number 1, how much of that was the BlackRock (NYSE:BLK) business that you've won?
And has the revenue from that win, that big win fully turned on? And did those dynamics have something or like is the fee rate lower because fees in asset servicing were up about 5%, but AUC 16%. And I know sometimes the ETF fee rates are a little lower. So curious to flush that out a bit. Thank you.
Dermot McDonough, Chief Financial Officer, BNY: So, thanks for the question. I don't really want to get into the specifics on one client or transaction, but to just to take a step back on ETFs generally, it is a growing market. You may have watched Larry from BlackRock on CNBC this morning. It is a secular trend. It is a very big and growing market and we are a key player on that.
As I said in my prepared remarks, we have CHF 2,700,000,000,000 on the platform. That's up 70% year on year and the number of funds serviced is up 20%. That's on the back of strong leadership and a real investment in technology, so we can be best in class. So without going into specifics, we're there to take advantage of the secular trend and we'll continue to innovate and solve for our clients' needs.
Brennan Hawken, Analyst, UBS: Okay. Thanks for that. Maybe if I could word it a little differently. The strong ETF growth that you have seen this quarter, is the revenue fully reflected this quarter? Or is some of those wins still have some revenue ramp to come?
Dermot McDonough, Chief Financial Officer, BNY: I would say it's the latter. It's generally speaking, strong pipeline. We're always adding new clients to the platform and they because of the size of what's been onboarded, they tend to do it in a phased approach. So some revenue is on the platform, some revenue to come.
Brennan Hawken, Analyst, UBS: Excellent. Thanks for that, Dermot. Thank you also for the update on NII, encouraging to see things working better. Could you speak to the deposit beta that you experienced with the first rate cut? And given that we're seeing rates coming down now, is it reasonable to think that deposits could begin to grow from here?
Dermot McDonough, Chief Financial Officer, BNY: So the betas, I think we've said on previous calls, we view it as symmetrical. So for us, the 1st rig cost was 100% passed on. So we feel pretty good about that. I think in terms of where we are in the Fed easing cycle, I think it's probably a little bit too early to see how that's going to feed into the deposit balance story. I think overall, we've kind of we've held in there.
We had a strong Q3 for a variety of different reasons. So I would say, I expect where we are to moderate a little bit on balances in Q4 and we'll see what happens next with the next Fed meeting, but no significant change for us as we kind of sit here right here today.
Brennan Hawken, Analyst, UBS: Great. Thank you for taking my questions.
Conference Call Operator: We'll move to our next question from Mike Mayo with Wells Fargo (NYSE:WFC).
Mike Mayo, Analyst, Wells Fargo: Hey, how are you doing?
Robin Vince, President and Chief Executive Officer, BNY: Hey, Mike. How are you?
Betsy Graseck, Analyst, Morgan Stanley (NYSE:MS): Good. Look, I'm just that's
Mike Mayo, Analyst, Wells Fargo: a big number, the $50,000,000,000,000 of AUC, a nice round number. You did be it's factual that you beat expectations for the quarter and the year so far as you've highlighted. I'm just trying to figure out how much of this is lucky versus being smart. And I imagine it's a bit of both, but the lucky part is record stock market volatility, trading, some other factors in the market that have gone your way. And I don't feel like we have enough information on your client growth, the underlying client growth, the most repeatable part of the company.
So could you give some color on whether it's growth in clients or maybe it's revenues per client or maybe it's products per client or all those adjacent businesses that you talk about, how you're managing the company better versus simply a better environment to operate in?
Robin Vince, President and Chief Executive Officer, BNY: Sure, Mike. It's Robin. I understand the question and it's obviously a very legit question. We broke through the 50. By the way, we ended at 52.
So the good news is we didn't stop at the round number. Look, I'd say that it isn't just fashionable. It's actually old fashioned traditional just the way that we want to do it in terms of being able to deliberate growth and this focus. And so we've tried to provide as much visibility as we reasonably can into the inputs of what it is that's ultimately driving this progress because we understand we have benefited from a terrific backdrop in terms of markets. And of course, it's part of our business to be able to be well positioned to take advantage of those backdrops.
We've got parts of our business which respond to asset values. We've got parts of our business that respond to the number of accounts. We've got parts of our business that respond to software sales, transaction volumes and having that multifaceted set of business response functions, if you want to call it. That is actually a deliberate strategy so that we can participate in the growth of markets. And so if you believe that overall debt issued in the world, equity valuations in the world, financial market activities are going to grow, we're trying to hitch our wagon to all of those growth trends.
We think that's good. Having said that, to the heart of your question, this is the work that we've really done in the early days since this management team took over, which was to understand the components that we had and to really start to understand how they could work together, so that they could together in order to be able to unlock more potential. And so we rallied to the firm around 3 strategic pillars, this thing of being more for our clients. And that's just not just words, it's been about maturing this 1 BNY philosophy that we've talked before about, about having a different type of dialogue. It's about the movement over time to solutions as opposed to just products.
It's like the examples that I gave and Dermot gave in our prepared remarks where clients are coming to us because we can do more than one thing for them. And it's not just that we're selling more things to them, it's that they actually want to take advantage of bundles of things which actually provide a better solution to their business. And then our second pillar of running the company better, that's been about sales rhythms and sales targets and bringing our people together and having them understand what it is that we're trying to do. And then wrapping the whole thing is this culture of wanting to have a winning culture, wanting to push forward, wanting to make BNY of the future more than BNY Mellon was of the past. And those things are all quite deliberate, and we start and we believe that we're starting to see the results of that, although it's still early in our results.
But Dermot can give you a couple of additional things on this, which I think also would be helpful.
Dermot McDonough, Chief Financial Officer, BNY: So Mike, the way I from just thinking about it from a numbers perspective, right, we're up 5% year on year in fee growth and constructive markets. And so we've been able to take advantage of constructive markets. But a couple of important points that I would draw out is that in all three of our business segments, we've seen solid underlying growth. And in Robin's prepared remarks, he talked about the fact that we're evolving into a platform company. And when we have platforms that we're investing in at scale, so when you have high volume and you have constructive markets, we have the platforms in situ that can take advantage of that.
Asset Servicing, we're winning and onboarding new business. We came into the year with a backlog. We onboarded the business throughout the year and we're beginning to go into the Q4 with a bigger backlog than we came into the beginning of the year. So asset servicing, I feel very proud of. Corporate Trust, Depository Receipts, Corporate Trust specifically, a good margin business, but something that has been devoid of investment over a number of years and we've put money to work there in terms of leadership and scaling our technology.
And that's going to be a business an important business for us in the future. And Treasury and Services and Clearance and Collateral Management have really kind of shown was when you have a scale platform with high volumes, strong markets, lots of issuance, lots of payments, you take advantage of that. And then on just the client specific thing, albeit it's a small base and we can we've highlighted a couple of transactions this year where client we're able to have a much more sophisticated conversation with clients and clients are now buying from us across more than one line of business, in some cases, four lines of business. That was something that we just could not do a couple of years ago. And Robin's point about bringing the 1 BNY to bear on clients is really beginning to pay dividends.
Mike Mayo, Analyst, Wells Fargo: All right. Well, that was very comprehensive. Just last follow-up, are you implying and by the way, on all the metrics, again, the client growth numbers are what and thanks for pulling back the layers of the onion there, but always like even more layers, never enough for us, but in terms of growth in clients and more specifics going down the line. But the expense is clearly the plant expenses, that's very clear, that part of it. Are you implying even lower expenses in the Q4 based on your new guide today?
Dermot McDonough, Chief Financial Officer, BNY: So, look, the thing I would like to convey to you and to our shareholders is that we work really hard over the last couple of years to build credibility that we are good stewards of our expense base. And we guided flat at the beginning of the year. And broadly speaking, there's been some pressure, I would say, on expenses that for the most part are revenue related. And so if revenues are higher, there's some aspects that you just have to pay more expenses. So while I've guided roughly flat for the full year, there may be a little bit of pressure over the course of that because of higher revenues.
And also, as Robin said in his remarks, we've announced the acquisition of Archer and there'll be some integration costs associated with that. But I feel very good the fact that now we have 53,000 people who understand the importance of financial discipline and that goes to pillar number 2 of being a really well run company.
Mike Mayo, Analyst, Wells Fargo: All right. Thank you.
Conference Call Operator: We'll move to our next question from Brian Bedell with Deutsche Bank (ETR:DBKGn).
Brian Bedell, Analyst, Deutsche Bank: Great. Thanks. Good morning, folks. Thanks for taking my questions. Maybe just on just sticking with the revenue dynamic, talking about the obviously the commercial lift off and the enterprise approach.
The early traction that you're getting, I think you referenced some clients now doing multiple services. Can you talk a little bit more about how you think that might impact the revenue growth trajectory? And then also just if you can just reconfirm the general revenue delta to equity markets. I think it was like 10% equity market moves can have an impact of about 1% revenue. So just wanted to sort of break apart those two dynamics, just really kind of showing that you're actually generating this revenue growth aside from markets?
Dermot McDonough, Chief Financial Officer, BNY: So if I take the last question first, hopefully that was your 2 questions in one go. So 5% gradual change in equity markets is roughly $60,000,000 in fees annually and a 5% gradual change in fixed income markets is roughly 40 percent a $40,000,000 in fees annually. So that's a little bit on the sensitivity analysis. And so on just the commercial lift off that Robin talked about in his remarks, it really is Katinka Walstrom, who's with us now for over a year, spent the 1st year really on a listening tour and organizing roughly our 1200 to 1500 leading client coverage people around the world in terms of what we want our ambition to be, what are the products that we have and how can we educate our total force to be able to out there with clients delivering the whole of the firm. I think and also if you kind of just talk about Archer for a second, I think a couple of years ago, if we were to do that acquisition, one part of the firm would have bought it for its business.
And I think Robin's point in his remarks are really, really important where you buy it once,
Brian Bedell, Analyst, Deutsche Bank: you
Dermot McDonough, Chief Financial Officer, BNY: use it multiple times and it's an acquisition that's done for the enterprise that will serve multiple lines of business. And that's how you should think about how our client coverage model is going to work in a strategic way going forward. We're going to deliver holistic solutions for our clients. Clients have a better understanding of the diversified nature of our business franchise and they're just buying more from us and it's just going to show up in revenue and we feel very good about where we are today in terms of planning for the budget season for Q4 and the opportunities that are going to come our way in 2025.
Brian Bedell, Analyst, Deutsche Bank: Great. That's helpful. I'll get back in the queue for another question, Ashley.
Conference Call Operator: We'll move to our next question from Alex Blostein with Goldman Sachs (NYSE:GS).
Alex Blostein, Analyst, Goldman Sachs: Thanks. Thanks. Good morning, guys. So maybe just wrapping some of the comments you made around fee in a bigger picture question. When you guys think about a number of different growth areas, you outlined some of the specifics and obviously the approach to cross selling has taken a whole different turn here.
So when you zoom out and you look at the business holistically, how do you think about the organic fee growth that the enterprise can generate over time?
Dermot McDonough, Chief Financial Officer, BNY: So, you're trying so we don't guide on fees. Haven't done don't intend to do it here. But what I would say is, and I gave this answer as an earlier question, we are seeing underlying growth across all three of our business segments. Our underlying organic growth this year, we feel quite happy about and we feel it reflects a really good 9 months of the year. And there's no reason to expect that that momentum won't continue.
And I do feel the way we've set up for the back half of this year and into next year, it's a kind of flywheel of innovation. And we have a lot of growth initiatives. And we've come together and we have a group of people who are working on what we call integrated solutions. And so we have a number of interesting things in the pipeline. Robin talked about AlstBridge in his remarks, talked about Archer in his remarks.
There are things that we're doing within specific lines of business coming together. We talked about purging being realigned into clearance and collateral management and that's driving growth as well. So the decisions that we've taken over the last couple of years in terms of realigning certain activities into different parts of the firm are showing up in our revenues this year and we will continue to do that into next year.
Robin Vince, President and Chief Executive Officer, BNY: And Alex, I just add, Dermot really alluded to this in what he just said, but right from the beginning, we've had 2 approaches. 1 is to think about this endeavor of fully realizing BNY's potential as a multiyear endeavor. And we recognize that there are going to be different ways in which that will come together in different years. And Northstar, as you know, for us is operating leverage and that came about in a slightly different way in 2023 than it did in 2024 and it could be different again in 2025 as we really get into that conversation ultimately when we talk to you in January. But we've simultaneously invested in things that we knew would be important for the shorter term and for the medium term and for the longer term.
And so both Dermot and I have talked about this platform's operating model. That's a great example. There have been some benefits that come early on in that process. We brought like things together across the company. There have been benefits on the revenue side.
There have been benefits on the expense side from doing it. But then the value of having done it creates medium term momentum because now we're able to be more dynamic for clients, we're able to solve problems more quickly for clients. And so there's a payoff there. And then over the longer term, it actually makes it easier to be able to assemble these new solutions that Dermot just talking about. And again, there's a revenue story there, but there's also an expense story.
And that's how we're thinking about it, notwithstanding we haven't given you a specific growth target number. Make no mistake, we're invested in creating that growth.
Alex Blostein, Analyst, Goldman Sachs: Yes. No, fair enough. I appreciate all that. Smaller kind of tactical question for you guys. So the repo activity continue to be quite elevated and you mentioned that in your prepared remarks as well.
Is it possible to help size how much repo contributed sort of across the enterprise? It hits you in a couple of different ways. Obviously, there's the NII benefit and there's some fee benefits. So as you think about the more normalized level of repo activity versus what you saw in the quarter, How big of a contributor was that in kind of totality? And as you look forward, given changes in monetary policy expectations, but also some of the client behavior that you mentioned earlier, how sustainable do you ultimately think this more elevated pace of activity in this market?
Dermot McDonough, Chief Financial Officer, BNY: So on the repo question, so a cleared repo for sure we saw elevated activity, particularly going into the back end of the quarter and in the early part of this quarter. And that, in large part, contributed to the outperformance for the Q3 NII. That has now moderated somewhat. And so in my prepared remarks and in terms of the guidance, that's why I kind of feel like roughly for NII, we're about $1,000,000,000 for the 4th quarter. In terms of cleared repo, overall as a kind of contributor to the NII over the course of the year, it's roughly about 5% of the number.
As it relates to elevated activity in terms of volume and activity, I think from what we see on our platforms, we kind of see that continuing to be the case. In the medium term, there's no reason for the slowdown. It's been a very strong year, very, very active client engagement, product innovation. And particularly on the international side, we said at the beginning of the year in our kind of strategic call in January that international was going to be a key area of focus on the platform and that's been the case and that's shown up in the results. So I think overall and I said in my prepared remarks as well in terms of the liquidity ecosystem, in total, hit a high for us at €1,500,000,000,000 That's up from €1,200,000,000,000 a couple of years ago, and that's in the backdrop of liquidity coming out of the system.
So we've grown quite substantially and that again is coming back to connecting the dots across the firm, getting teams collaborating more, being more digital, providing innovative solutions to clients and that is really powering the growth.
Robin Vince, President and Chief Executive Officer, BNY: If I could just relate that back to a question that Mike had asked earlier on because I think these things are relevant. You got to remember that the strategy of us having roughly the right ores in roughly the right waters to be able to participate in things that are happening in the world, that's very important. So if I just supplement what Dermot said with the additional observation that we're the world's largest securities lender that generates repo activity, we're the world's largest collateral manager, so we get to capture fees associated with people doing repo. We obviously play this role in the U. S.
Treasury market, which participates in the growth of U. S. Treasury repo. We have all of these different touch points. And so there are different ways in which we can collect across software in some cases, services that we administer in others and participation in different both global markets and also product types, which align in indirect ways to that.
So that's an important part of how we look at the overall system and understand how our products and services can help clients navigate those and we can participate in the benefit of their growth.
Alex Blostein, Analyst, Goldman Sachs: Yes, that's a helpful framework to discuss this way. Yes. Thank you guys both.
Conference Call Operator: We'll move to our next question from Gerard Cassidy with RBC.
Gerard Cassidy, Analyst, RBC: Hi, Dermot. Hi, Robin. Robin, can you give us some thoughts with obviously you talked a little bit about the acquisition you accomplished in this quarter. What your outlook is for you obviously got very strong capital levels. Your stock has moved very nicely this year, you got a better currency.
What the outlook is for just other types of acquisitions if there are some that could be complementary to what you're currently doing?
Robin Vince, President and Chief Executive Officer, BNY: Sure, Gerard. First of all, just make a quick comment about Archo, looking forward to closing that transaction in the Q4 and welcoming the team in. And this relates a little bit to a couple of other things we've already talked about on the call. One is participation in markets and the other one earlier on, on ETFs. If you just think about the way that we view the world construct, once upon a time, there were mutual funds.
More recently, in the past decade or so, it's really been the explosion of ETFs. And there's a simultaneous thing going on, which is the growth of separately managed accounts. And so in the same way that Dermot described how we've participated in sort of outsized participation of the ETF migration, Archer is a transaction that prepositions us to be able to participate hopefully in an outsized way associated with the transition to separately managed accounts. So it relates to that strategic question of growth and participating in different markets that we talked about. Now stepping back to the other part of your question, really the heart of it on M and A, look, our primary focus is what we have and how we can improve on it.
And Joe and I both talk a lot about the fact that we've looked very carefully at our businesses and we love our businesses. We think we have a great set of businesses. We think they are great ones to be in and we think that they have a lot of adjacency to each other And we think that the spread of those things can provide a lot more services to our clients in more joined up way of solutions than maybe we have before. So it isn't that we do M and A from a position in any way of needing to do things. It's we're able to be very opportunistic, and we obviously like that a lot.
But notwithstanding that we're pleased with what we have, we don't want to be complacent. So we keep our eyes open and we look at things and Archer came about as a result of a strategic business review that we did internally looking at long term trends, looking at how we might adapt to those trends. And then we went out and we looked very specifically for a capability that would do that, with the key emphasis being on the word capability, digestible bolt on things that accelerate what we're trying to do or derisk delivery of what we're trying to do. And if we can buy a piece of technology that can be more efficient or less distracting than building it ourselves with a great team, great technology, ideally like this one, an installed book of business is also helpful, then we feel very good about it. As long as it aligns with those priorities, it's a good cultural fit, it has a good attractive return.
So that's our M and A thought process. And then that fits into the overall waterfall, which we've talked about before, which is if we have excess capital, we're going to, of course, be prudent.
Dermot McDonough, Chief Financial Officer, BNY: And
Robin Vince, President and Chief Executive Officer, BNY: so we like excess capital. That's not a bad thing in an uncertain world. And so that's a very important consideration. Then we look at whether or not we could invest it. Good news, as you know, we're pretty capital light model.
We're very capital generative, so we don't need a ton of capital to reinvest in our business to keep growing it. Then we look at whether or not we need something for some type of additional need like the Archer example, and then we distribute the rest. And this has been obviously a good year to see all of that on display. We've been prudent. We've run at elevated capital levels.
And as Dermot has indicated, we intend to return 100% plus of net earnings to shareholders and we've been able to make an acquisition. And so this is a pretty good model year for how we think about the world.
Gerard Cassidy, Analyst, RBC: Very good. Thank you for the answer. And then just as a quick follow-up, Dermot, you gave us that sensitivity analysis about a gradual 5% change in the equity markets and fixed income and the impact it would have on revenue. Was that for up markets, meaning the gradual increase was 5% up? Does that also reflect a down market?
If markets were down 5%, that's the kind of impact we would expect to see?
Dermot McDonough, Chief Financial Officer, BNY: That's correct, Jers. That's correct.
Gerard Cassidy, Analyst, RBC: Okay, great. Thank you.
Conference Call Operator: We'll move to our next question from Ebrahim Poonawala with Bank of America (NYSE:BAC).
Marius Mers, Head of Investor Relations, BNY0: Hey, good morning.
Robin Vince, President and Chief Executive Officer, BNY: Good morning, Ebrahim.
Marius Mers, Head of Investor Relations, BNY0: I had a follow-up with some of your responses. I think, I guess depending how maybe starting with just capital allocation, so heard your response to Jared's question around M and A and such. But just talk to us how you think about means, when we think about the valuation of the stock on price to earnings, price to tangible book, at the same time, this year has been pretty good market backdrop wise. And as an investor shareholder, you care about ROE resiliency of these firms. So one maybe, Robin, Dermot, talk to us about your comfort around ROE resiliency.
If the market backdrop is unfavorable, what's the flex in the system? And given where things stand today, like how do you think about the stock valuation versus the commitment to return 100% plus in buybacks and dividends? Thank you.
Robin Vince, President and Chief Executive Officer, BNY: I'll take the second bit first and then Dermot will reflect on the first part of your question. So the good news is that we can also pay attention to the way that you all think about the stock and your views of our stock and we appreciate the fact that many of you have expressed confidence in our forward direction. We believe in ourselves as well. And so while we do, of course, consider price as one of the many inputs into our capital return framework. We don't view current prices as being problematic in terms of continuing our stock buybacks.
Dermot McDonough, Chief Financial Officer, BNY: When I Abraham, when I took on the role a couple of years ago, I guess I got a lot of questions about, is this just going to be more of the same or what's different? And now we're several quarters into the new team and Robin has really kind of bolstered that team. And through the strategic pillars, communication, the principles, the medium term financial targets has really started to evolve the culture of BNY. And so it is our commitment to deliver to our shareholders positive operating leverage through the cycle. And so if you just take a step back and look at this quarter's financials, 5% revenue growth, flat expense growth, 33% pre tax margin, upper end of Tier 1 leverage 6%, 23% return on tangible common equity and a 22% EPS growth.
And what I would say is a solid beat. So I don't really think about the valuation of the firm on any given day. We just care about delivering for our clients and our shareholders. And if we do that in a first class way, the valuation will take care of itself. And you asked about the returns and
Robin Vince, President and Chief Executive Officer, BNY: our sort of comfort with them. Look, we've given medium term targets, as Dermot just said, that's sort of greater than or equal to 23% for ROTCE. And so we obviously appreciate touching that, but doing it consistently over time is how we really view achieving targets. And in terms of the resiliency, remember the very nature of our business is actually got this diversification. We talked about the equity markets and the fixed income markets.
I talked about the fact that it is software, it's services, platforms and market valuations and transaction volumes. These are all things that we participate in. Capital markets activity has been important to us in 2024. The fact that we participate through our Corporate Trust business, through our Debt Capital Markets business, those are things that are participating in the growth of capital markets generally. We participate in the scale of markets and things like the treasury market is a good example.
And so this diversification of our mix helps us to be resilient in terms of the vagaries of any one particular market or cycle. Now of course, things will move around and that's why Dermot mentioned the point about our commitment to positive operating leverage in almost all reasonable scenarios that we can imagine because we recognize that NII, which is part of our mix, but so too are the fees and then our ability to control expenses. We could make expenses less than they are now. We've chosen to manage them at the level that they are because we believe that investing in that business for future growth is exactly what we should be doing right now given the environment, but it wouldn't always have to be so.
Marius Mers, Head of Investor Relations, BNY0: Appreciate that. And if I can sneak one quick follow-up. Dermot, I think you mentioned 4th quarter NII slightly lower than 3Q. We've seen a few rate cuts in Europe, in the U. S.
Now in the September. Is it fair to assume that absent a dramatic change in rates, this $1,000,000,000 in quarterly NII is kind of where we are bouncing around at the bottom and then if deposit growth picks up, QT stops that it should go off that base or am I missing something?
Dermot McDonough, Chief Financial Officer, BNY: So if you look back at our last 5 quarters, we've kind of toggled between $1,000,000,000 $1,100,000,000 Q3 was a stronger quarter for us for a number of reasons, principally volatility in the market at the beginning of August and clients held more cash. And then towards the back end of the quarter, once there was a clearer view on where the Fed was going to go at rates, clients started to put money into money market funds, which ended up with us. And so we kind of benefited from those two principal things. And so our deposit balances have kind of leveled off here. We expect maybe NIBs grind down a little bit from here.
And so as I kind of said maybe 10 minutes ago, dollars 1,000,000,000 for Q4 is the best guidance I can give you today. And for 'twenty five, I don't see NII being a kind of a headwind for us. And we've taken extensive action over the last several weeks in terms of repositioning our CIO book to insulate 25.
Marius Mers, Head of Investor Relations, BNY0: That's helpful. Thank you so
Conference Call Operator: We'll move to our next question from Betsy Graseck with Morgan Stanley.
Marius Mers, Head of Investor Relations, BNY0: Hi, good afternoon.
Robin Vince, President and Chief Executive Officer, BNY: Hey, Betsy.
Betsy Graseck, Analyst, Morgan Stanley: Okay. Two quick questions. One is on the buyback question. And I know you said, look, you're very accretive, earnings accretion, you don't need a lot of capital for the business model, of course, as we know. And you're above your targets CET1 up 11 and Tier 1 leverage target 5.5 to 6, you're at the high end of that range.
And so when we think about the 100% plus, how should we think about the plus part of the 100% plus because it feels like totally 100% makes sense. But there's room to bring these optimize the capital structure more. So I'm kind of thinking about I'm wondering what kind of timeframe are we talking about to optimize your capital structure do you feel?
Dermot McDonough, Chief Financial Officer, BNY: So thanks for the question, Betsy. Last year, we returned a little north of 120%. This year in January, we guided 100% or more. Given the uncertainty in the markets, geopolitical, the U. S, presidential elections, wide range of uncertainty with Fed.
In January, we thought the year was going to be very different to where it's ended up. And I think on previous calls, we said we wanted for now stick towards the upper end of our Tier 1 leverage ratio, which is the 6% range. And so when you take that and the Archer transaction, we kind of think we're still on track to do the 100% or more through 3 quarters. We're at 103%. So I wouldn't expect that to materially change from here.
Betsy Graseck, Analyst, Morgan Stanley: Okay, got it. And then the other question is you mentioned 1 third of BNY is now on the platform model. And are you taking 100% of the firm there? And just wondering about implications for a runway for efficiency improvements as you execute on that? Thanks.
Dermot McDonough, Chief Financial Officer, BNY: So a quarter of the firm, roughly 13,000 employees are on the platform now, happened in 2 waves, March September, with another wave going live in Q1 of next year. And so I wouldn't necessarily think about platform operating model as a mechanism just for efficiency. It really is it's going to drive top line growth and it's going to run the company better and it's going to help us have a different culture in terms of more joined up thinking. So it really is the mechanism by which we deliver the 3 strategic pillars. And so the answer to the question about 100% is yes.
And from probably from here, it's probably another 18 months before the firm is fully up there. But by the end of Q1 of next year, we expect about half the firm will be live on the model. And the feedback so far from our team around the world is extraordinarily positive. So it's really worked well for us
Mike Mayo, Analyst, Wells Fargo: as a firm. And Betsy,
Robin Vince, President and Chief Executive Officer, BNY: you remember the tail of benefit extends way past the 18 month point because sometimes it's not until folks are in the model and operating in that new approach that they're really able to examine some of the core questions that that Dermot was describing to be a multiyear endeavor past that 18 month point.
Betsy Graseck, Analyst, Morgan Stanley: Got it. All right. Thanks so much. Appreciate it.
Conference Call Operator: We'll move to our next question from Glyn Schorr with Evercore ISI.
Marius Mers, Head of Investor Relations, BNY1: Hello. Just one wrap up for me. Dermot, I love that you pointed out the 5% revenue growth, flattish expenses lead to 20% earnings growth. That is the power of the BK model. If you look just I know it's just 1 quarter, but if you look at the sequential numbers, the story changed a little bit with everything about flat and earnings down a little bit.
I'm just all I'm asking is does that inform us in any way of how we're looking at as we roll into 'twenty five? A lot of your business metrics and balance and client wins are up. So my gut is no, but I just want to see from that perspective how you feel about that?
Dermot McDonough, Chief Financial Officer, BNY: So I think your gut is correct. It is no, Glen. And it's all just about timing and when we onboard clients and put people on the platform and when the revenue starts to get recognized. So just in terms of the backlog across all our businesses strong, pipeline continues to grow. And yes, so your intuition is correct.
All right, awesome. Thank you.
Conference Call Operator: We'll move to our next question from Rajeev Bhatia with Morningstar.
Marius Mers, Head of Investor Relations, BNY1: Yes, just a quick one for me. I guess on the depository receipts business, and I appreciate it's a small business, but the number of sponsored programs continue to decline. Is that something we should continue to expect to decline? And is it competitive takeaways or something else that's driving that? Thanks.
Dermot McDonough, Chief Financial Officer, BNY: So I wouldn't really read too much into that. That's we've talked about that for several years about the sponsor program going away and not being around. It's still here. Deposit receipts is a small business in the totality of it, but it is a very, very important business for us because it gives us another opportunity to connect with clients. And it has got a very good margin to it and we have like very significant market share in that business.
So it's something that we continue to invest in. We think it's very important for our franchise and we don't see a secular decline in that business from where we see it today.
Robin Vince, President and Chief Executive Officer, BNY: We also off boarded some of the smaller clients in that particular business. So the headline of total number is a little bit misleading actually when if you were able to dig under the hood and see some of the clients that made up that decline, you'd see that they disproportionately skewed to the small.
Marius Mers, Head of Investor Relations, BNY1: Got it. Thank you.
Conference Call Operator: We'll move to our next question from Jim Mitchell with Seaport Global Securities.
Marius Mers, Head of Investor Relations, BNY: My questions have all been asked and answered. Thanks.
Conference Call Operator: We'll move to our next question from Brian Bedell with Deutsche Bank.
Brian Bedell, Analyst, Deutsche Bank: Great. Thanks for taking my follow-up. Just one more on the margins. You're mostly at your 33% target in most areas. So as you generate more saves from moving to the platform model and as we move into say next year or beyond, I guess what's the view on spending some of that in investing in the business versus actually generating potentially generating margins well above 33%?
Dermot McDonough, Chief Financial Officer, BNY: So my answer to that one, Jim, would be we want to demonstrate to you that we can prove that we can deliver 33% margins through the cycle. We gave guidance for the first time in January and then we just managed to get there pretty quickly, but we want to stay there and show that we can deliver that over a period of time. We're heading into a very what's going to be quite an interesting budget season for us because we've done a lot of great things this year. And I know the various teams around the firm want to do great things next year. And to offset that balance, we want to
Robin Vince, President and Chief Executive Officer, BNY: be able to deliver positive operating leverage. And so the next 8 weeks and how we set up the firm for next year will inform how we communicate with you in January. But we set out those targets because we believe we could hit them. The positive is we got them we got there earlier than we thought. And now we want to show that we can improve and maintain those margins that we've guided to previously.
And Brian, the best clue I could give you in terms of how we think about that is sort of a little bit more detail is if you actually look at us on a segment by segment basis, you can see us prosecuting the operating leverage journey differently in our three segments. And we told you a year or so ago that that's what we were going to do. And so maybe to allay your concerns in terms of growth and investment, if you look at Market and Wealth Services, we aren't trying to grow the margin there. We're very happy with the margin. We just want to grow the total size of the business, which is exactly what we've been doing.
There are other say the other segments where we've said we actually do want to grow the margin towards our medium term targets for those segments. There we are really growing the margin and so you can see exactly your question at work in our segments.
Brian Bedell, Analyst, Deutsche Bank: Yes. That's great color. Thank you very much.
Conference Call Operator: And for our final question, we'll return to the line of Mike Mayo with Wells Fargo.
Mike Mayo, Analyst, Wells Fargo: Hi. With all this talk of the transitioning of the employees, I guess, half the employees to the new platform over the next 1 to 2 years, how much do you see AI playing a role? And can you give any metrics? I mean, keeping expenses flat, I don't know how much you're still investing in AI. When Emily presented at the Boston Bank Conference last November, it seemed like BNY was all in for AI.
It was one of those bullish cases made. Yet, you've heard out in the broader world, sometimes you have hit, sometimes you have misses. So where how does AI relate to the whole platform strategy and how committed are you to AI? And do you have any numbers that you can give us some concrete metrics? Thanks.
Robin Vince, President and Chief Executive Officer, BNY: Sure. So just to reiterate, we've got a quarter of our people in the Platform's operating model. And as Dermot said, it's sort of an 18 month trajectory from here. That's really Mike, the way I think about Platform's operating model is this concept of if you take it that we are in fact more and more a Platform's company in terms of these large at scale capabilities, often software and services that we deliver, generally in market leading positions, number 1 in a variety of different markets. We've talked about things the businesses before I won't repeat them.
Then it follows to us from that that it makes sense for us to operate ourselves in a platform's operating model, which is the way that many other platform companies in the world operate themselves. And so that is a strategy around how we organize ourselves in pursuant being pursuant to our broader strategy. Now AI as a which is of course part of that, we have an AI hub. We have a couple of 100 people in that AI hub and we are absolutely investing in AI and do believe in the power of AI to be able to help our business in terms of both revenue opportunities over time for clients and also ways to make our people more effective and efficient. And we haven't made a lot of noise about it, but don't misunderstand that for lack of interest or investment because we haven't slowed down.
In fact, we've increased our AI investment. And of course, notwithstanding all of that, you can see that from running the company well on an expense line, we're not allowing that enthusiasm to distract us from the important task of expense management. And this is where I don't mean to be pithy, but it's very, very important learning for us is that we as a company can walk and chew gum at the same time. We can invest in things that matter and we can manage the company well. We make choices and AI is a choice of something we're leaning into and we think that's important for the future.
Mike Mayo, Analyst, Wells Fargo: Thank you.
Robin Vince, President and Chief Executive Officer, BNY: Thank you.
Conference Call Operator: And with that, that does conclude our question and answer session for today. I would now like to turn the call back over to Robin for any additional or closing remarks.
Robin Vince, President and Chief Executive Officer, BNY: Thank you, operator, and thanks everyone for your time today. We appreciate your interest in BNY. Please reach out to Marius and the IR team if you have any follow-up questions. Be well.
Conference Call Operator: Thank you. This does conclude today's conference and webcast. A replay of this conference call and webcast will be available on the BNY Investor Relations website at 2 o'clock p. M. Eastern Standard Time today.
Have a great day.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.