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STT State Street

Participants
Ilene Fiszel Bieler Head, Investor Relations
Ron O’Hanley Chief Executive Officer
Eric Aboaf Chief Financial Officer
Alex Blostein Goldman Sachs
Brennan Hawken UBS
Betsy Graseck Morgan Stanley
Glenn Schorr Evercore ISI
Ken Usdin Jefferies
Brian Bedell Deutsche Bank
Jim Mitchell Seaport Research
Steven Chubak Wolfe Research
Gerard Cassidy RBC
Rob Wildhack Autonomous Research
Vivek Juneja JPMorgan
Mike Mayo Wells Fargo
Rajiv Bhatia Morningstar
Call transcript
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Operator

Good morning and welcome to State Street Corporation’s Third Quarter 2021 Earnings Conference Call and Webcast. Today’s discussion is being broadcasted live on State Street’s website at investors.statestreet.com. This conference call is also being recorded for replay. State Street’s conference call is copyrighted and all rights are reserved. This call may not be recorded for rebroadcast or distribution in whole or in part without the expressed written authorization from State Street Corporation. this be of State on broadcast website. Street authorized call housed will the The

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

Ilene Fiszel Bieler

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

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

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

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

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

let over Now, me to it turn Ron.

Ron O’Hanley

everyone. enterprise. Thank our you, morning continued our across Ilene and we Earlier released morning, reflect this performance good QX results, strong which

progress for work for financial their and in and hard now now third our results invest performance discuss franchise. across are Thanks as business future. achievements quarter financial our our results, measurable ongoing are we I we seeing in to employees even to our Before generating we our seeing want clients I the supporting execution, in momentum the and their the acknowledge

manager. solutions to successfully asset front, across and the beginning. provider and outsourced being strategic continue enterprise a back of is leading execute This just office middle We an the objective our against

momentum our wins, XXXX achieve targets. in this what and see to our means by our our We ability medium-term industry, for in we the and enhanced are the growth opportunities our financial sales recently within encouraged pipeline future drive

We are by organic encouraged wins. our by the of as profile demonstrated year-to-date our business trajectory

For a QX. margin on which history, full X, our continues trillion yet but year Services, quarter $X.X Advisors, XXXX a in XX% trillion of AUC/A to AUC/A record financial $X in we wins surpassing installed a Brown Brothers the SPDR on expanding flows Advisors Global year and have for I flows. acquisition note with example, strengthen, want year also in the year-to-date end. company’s At delivered to Investor while this already stood strongest crossed third not pre-tax quarter. performance Harriman the ETF the to take intended the at announced basis, AUM of with to year-to-date at we moment track franchise Global

importantly, also We medium-term our strengthen raise are State and of excited of the transaction a State value our shareholders. will it The and this for becoming geographic accompanying financial From State in expertise is Street’s by one for assets strategy. and It business overall and coverage, positioning number our us talent us custody. the as globally deepen the opportunities create industry, strategic leadership demonstration and nature compelling the margin better competitive strong deal will will with already Street’s Further, has our it provider to growth. by on The position strong perspective, investment the servicing transaction our financially our this market pre-tax Street targets. enabled servicing of under asset enhance build is profile, will combination presents. compelling a confidence long-term

Turning quarter highlights. third our review X, to Slide I will

and quarter across just including to of X% supported despite points in X% strong expenses by year-over-year legal focus results. year-over-year year-over-year, management revenue and X% percentage on growth, were XX% growth, fee points as well was businesses total as which results fees the robust leading mandate higher was period. volatility. increased improvement third Meanwhile, same for good $X.XX, increased increasing quarterly year-over-year trillion leverage EPS improvement was over continued X earnings Alpha asset to margin, generated XX%. period, revenue solid total announced were end excluding about our and improvement our within controlled, expenses State flat productivity X% a in year-over-year. of improvements July. increased with continued in XX% as delivered a well performance. all to AUC/A fee by continued our notable record with contained. NII and a revenue market strong wins We expense fee items delivered by Servicing moderation general, growth, quarter the X fee quarter large quarter, drive FX increased about ago broad-based revenue Though loan to a solid we markets lines. delivered and year-over-year over a new to at yield to trillion remain with year positive revenue increasing respectively Relative $X.X This organic the percentage Even which to $XX.X expenses up results growth quarter discipline this Third total Street’s operating pre-tax driven we servicing

ETF at to X, general franchise, quarter a the new higher year-over-year Including the where our to X its to revenue and increased increased business average we total performance in recurring but XX% Charles the at Alpha our Global At innovate. As at quarter AUC/A ago. totaled quarter, making annual end, pleased moment wins River, not reported noted third end in – propel yet management and I a total the third $X.X to with equity of number benefiting strategy. continue end. mandate, continued taking clients $XXX under and of I it to assets installed fees client the million number and XX legal million Advisors, how a increased continues to quarter, Alpha levels am to At result, $XXX inflows quarter management market record as we and from Alpha $X.X trillion trillion

For in through in in example, managed flows And three expanding been the $X.X of fund AUM we active $X.X ETF. year, this terms ETF billion U.S. billion. senior and have we By the have years, of asset successful quarters this SPDR our actively in with had quarter loan ETF recent had gathered XXXX end, most Blackstone capabilities. in growth the

actively range in bond opportunistic SPDR made ETF We to addition the Lumi of also launch sales fixed an the managed our for third quarter income the ETF.

part quarter in in our detail. Capital targets third offering a of Eric to our acquisition and return to the during common it remains in importance we related and and second believe of key that, expect the its that earnings the stock me share we quarter. our of sheet let Investor common quarter quarter more over accretion to And and proposed acquisition through to quarter. time. Also to financially that the completed to share related capital with We Turning stock currently to the deliver value $X.X our billion suspended balance our it shareholders we BBH Services creation recognized transaction, medium-term compelling BBH third for over reinstate shareholders. dividend capital, of you the next third year. by repurchases common and turn repurchases is quarterly in Services common our XX% take We the will use a increased a the Investor

Eric Aboaf

reported Thank I We notable results the EPS GAAP items. and will of or on quarter $X.XX Slide our X. you, good third $X, excluding of morning Ron everyone. review begin my of impact

the of strong controlled We earnings which we every pre-tax you growth. panel left slide, revenue growth significant expansion, all margin see that year-over-year expenses. drove delivered strong the On line can across of item, delivered

was we were medium-term of targets. In can to the able another on at strategic the and and fact, items which we down our both delivering year-on-year, making expenses from slide. translation, currency the strong quarter where priorities are demonstrate in headwinds bottom our notable are see progress the excluding you This

was record AUC/A increase and trillion. to by largely year-on-year trillion. Quarter-on-quarter, will relatively levels, higher flat AUC/A growth. increase year-on-year inflows. given with both were market business $XX.X levels market Turning X, relatively year-on-year stable coupled end, AUM $X.X net The driven flows. At our year-on-year to Global AUM you increased higher Period by and XX% Advisors, growth was business levels. new Slide to see XX% increased net a client The volume primarily market domestic driven

you Slide Turning another X, can momentum. to business of strong see quarter

appreciation. good and some third were which levels, offset activity a fees wins year-on-year. average market currency client Third new flows, basis, positive roughly were from point as items divestiture wins pricing AUC/A business. new translation favorable about U.S. and increase X of only impact the sequential of and partially percentage trillion On increased These point quarter, client equity quarter about us servicing markets servicing equity and of year-to-date. headwinds by a record fees activity reflects The by trillion $X.X normal dollar AUC/A percentage were higher in from a over the $X activity. of to X% flat net totaled gets offset

We over installed office product single at provider. pricing as installations offset more of attrition, current in gross typically order garnered we we revenue converted mix. wins and annually client already phases to given coming about AUC/A annualized we typical that $X.X to time remind wins to will fee continue need have headwinds. normal be discussed a would you XXXX to time XX with estimate we And be from that At incur year-to-date, least by have front strong the and offering expect trillion. period back doubled vary but in quarter Alpha and about the the in have not note through X, and this deals XX-month yet half only that proposition but a represents one, reflects amounted in unique to $X.X would will strength the large competitive proportion, XXXX. end, half to our which as to year. previously, I value And yet than we AUC/A benefit that I over installed And the also AUC/A trillion

pleased of broad-based this our new revenue our business to showcases business and continue in multi-segment XXXX. We robust be further the drive and pipeline with net momentum geographic will wins and our help quarter growth

reported benefits estimated These per previously impact quarter. the waivers reallocation year-on-year Both market fee Turning fee year-on-year the to were of market in about up and $XXX XX% from fees levels reached higher margin million, were third pre-tax waivers. previously our million management benefited XX%. asset flows. offset Slide of could management approximately quarter-on-quarter gross $XX we fee quarter-on-quarter, X% only record a results million investment equity that partially year-on-year by and record money market up the idiosyncratic fees institutional on be average management management primarily Notably, client $XX and X, ETF a money to strong resulting quarter and

result a the modestly will million As short-end be fourth quarter, assuming expect they we in lower improvement now rates. of the around recent current at $XX rates, in forward

we Lastly, of strong actions institutional the as slide. franchises continue long-term a bottom growth you can to deliver year-to-date and right of results you our number on to in recall, and as have will have we and taken see ETF momentum the

Turning we volumes client continue to by the reflecting – higher me FX down revenue to revenue in quarter. revenue seasonally Slide lower above X% by the trading driven in let increased Within other are spreads. partially FX remained client the trading and services, generate year-on-year, important detail. Relative strong quarter-on-quarter, largely fee indirect which XXXX, revenue that and to discuss FX of more volumes, sales we pre-pandemic volumes, lower X, was third X% levels third lines volatility. pleased quarter FX offset and revenue direct

well Moving and enhanced business year-on-year custody. to fees third securities basis, XX% as reflecting loan fees client higher quarter down as result securities and increased balances of X% agency balances. On mainly quarter-on-quarter, wins sequential a a as lower spreads mainly finance, were

were increased but fees will Finally, by largely driven lower quarter-on-quarter, turn X% quarter which processing and to next. CRD, third software I XX% year-on-year,

of CRD revenue quarter, CRD X, Slide services revenues, in revenue year-on-year year-on-year. grow enabled. new growth value Record software saw to durable to supported highlight more quarterly I’d professional we on-premise, XX%. standalone are three and million a CRD all with and professional of the continued to like up SaaS Alpha healthy revenues proposition. nicely $XXX and growth The services of in across momentum Alpha performance. also strong that bookings our continued and Moving seeing of categories We a results We demonstrate were $XX CRD by backlog XX% and business the the delivered million

continues are third of during bottom inception, we some value client mandates the clients. to third the X reported we show resonate that our now quarter Notably, XX slide, Alpha Alpha from of Alpha mandates third On the have mandates. Street of total X quarter well new right since the the as proposition highlights We through quarter, live. State with

testament Mercatus, value a platform launched middle extend our As alternatives. data managers. front have In solutions Alpha building we to a which with private market our end-to-end for to investment proposition, connection we provider premier and management and and commitment data ongoing our further out for office markets, for Alpha also acquired will the acquisition, private offering

the a second Slide previously NII primarily offset partially due yields the quarter as disclosed higher true-up as to some the to expect XX, by X% mainly in we in all lower increased of balances, rate and investment would also quarter in which short-term result higher well quarter. to fourth Relative by for accounted rates, portfolio NII X% in to a quarter we premium of I tactical ‘XX more third offset due of low higher which absence and environment. to loan sequential amortization higher something the growth as by well investment about larger third repeat in slowdown the larger the compression portfolio the balances than quarter, came of rotation year-on-year, investment driven quarter note that of and third deposits the as wouldn’t Turning as MBS ongoing improvement loan partially yields. a portfolio, the portfolio of usual was saw

the management total third third On deposits a $X the deposits. average decrease quarter-on-quarter, active by show the in X% our non-operational reflecting slide, quarter. of or the billion of right Notably, roughly sheet quarter balance during decreased we of the average

investment surplus approximately put work. We balance our our portfolio. We $X to of more also cash sheet quarter-on-quarter added billion to

balances our to demand. the billion quarter-on-quarter increased to loan also in good We $XX average response client

Transaction offset productivity a expenses, down quarter items, associated by fee million with generated last business pre-tax by were X%, driven were was excluding normalize. about costs. strong was high and to as combined was our sub-advisory notables, driven Relative together, XX% are line expense growth deferrals Information items benefit quarterly up single-digit than volumes and medical revenue timing costs. down the of by third were dollar investments, on asset to and primarily the continued as Turning operating X%, revenue-related with delivered higher revenue-related headcount. leverage solid sub-custody lower a driven from pleased savings our by cost up benefits targeted driven driving expenses begin of lower year-over-year market data and partially to our continue compensation were the processing expense basis, the to notable programs. for translation reflecting margin fees benefits efforts. $XX our offset to When expenses claims to headwinds, investment of XX, percentage due and notable we down infrastructure by X%, of quarter the primarily Compared discipline a second costs. excluding higher optimization expenses employee nearly X%, offset management footprint item flat than and other Occupancy by quarter, savings technology Slide to we million marketing currency excluding third typical some the year-over-year. quarter of more and expected and year robust ability $XX salary of Systems X higher demonstrate to X% down partially points productivity Overall, headcount, while in lower year-over-year. And higher continued Communications primarily and estate,

our of XX, the Slide on we to show capital highlights. right slide, Moving the

business, in Investment with repurchases offering conjunction $X.X this third stock the second them the we our did proposed Ron resuming we quarter during the intend of any billion a not repurchase completed suspend XXXX. Also before quarter As Brown finance mentioned quarter. Brothers to transaction, of Services and common acquisition to earlier, during temporarily

form quarter we slide, of by in our returned leverage Lastly, evolution third of total and quarterly ratios. our show the in To to left this still million XX% we the dividend the shareholders Tier and paid. X of the increased dividends CETX $XXX a of

navigate see, relative with capital requirements. the you we the equity our with operating levels or environment strong without raise can to to recent continue As

quarter-on-quarter CETX by issuance As XXX improvement proposed retained acquisition of standardized quarter, driven basis the primarily third of of The related billion ratio the points of the Investment our to higher roughly by was to XX.X%. Brothers Brown and common improved $X.X earnings. stock Services

We also managed our RWAs. down

earnings. of Our to X.X%, Tier the decrease X issuance be driven excess Services leverage end retained by some both higher Investment quarter-on-quarter ratio our to capital reduced a acquisition, balance by also the and sheet points expect the of size stock, Brothers actively common as a in the over XXX we we Brown Post lower ranges. of little target the closing basis deposits improved primarily at ratios

demonstrates am line Slide engineering Turning on continuing reflecting was model. across summary, XX, our with level this quarterly up and we growth pleased fees Total continued performance, record momentum and the momentum saw quarter, in a with top to X% I year-over-year, revenue in fee business which reaching our businesses last our quarter. all operating productivity management

remained earlier. effectively higher excluding productivity notwithstanding related flat the impact mentioned of our expenses items a efforts, of Our notable result revenue costs as

even percentage As recently margin in of to and closer a and rate we to drive this low ROE we leverage points pre-tax are delivered X year-on-year able operating enhanced result, environment. about medium-term our targets

in With aligns macro full Next, regarding rate a outlook. like rate one outlook. forward like the quarter I I’d curve. year, At thinking provide current current our to broadly the left our to the would level, just to update our year outlook

of year the as are equity for to well rest levels third be as the assuming market volatility. global market flat will of normalization continued We FX the average also quarter

fees year-over-year. X.X% to up overall to the of X.X% to be year up expect be year-over-year, with we fee revenue X% terms servicing full expected In outlook,

that You the for flat was will fee X%. be the revenue to total guide of year, recall at to up our beginning

increase earlier to increased So, our net this both due over this continues We higher expectations. meaningful new to be a markets business performance. and our equity

episodic Regarding and in of to the curve meaningful quarter, NII, small is in some end we as million which improvement not the provided we We rates end premium short rates in we range the to million continues assumes in though repeat mentioned saw amortization next third last deteriorate the expect in $XXX $XXX now quarter. had movement same market to range the longer amortization and that I a of we the would from in This quarter do trend rebound NII well. XQ. favorably the as not earlier, a expect slowdown

to we investing operating and confident remain costs, while ability manage expenses, Turning in in on-boarding clients to our business. the new effectively core

headwind end our will full flat back the range be tax that me this of Ron. would up be thus year We costs. leverage the full expect of Given now in equivalent year of the hand need and to On now means business invest X.XX% see with call we year-over-year, we healthy quarter to and in us This rate expenses in revenue-related decline let as the XX%. operating both that, drive currency front performance fourth into and being expansion our year revenue strong increase taxes, And in of the adjusted a expect the to which put XX% NII. to X% for double-digit this solid towards expenses XXXX to lower of translation full us, margin year-on-year staff position year full quarter. in our in covering a as ex-notables pipeline a to the and sequentially some spite well year the is

Ron O’Hanley

our margin and third conclude a to progress targets, we Eric. recently increased strong pre-tax our achieving demonstrate towards our financial medium-term target. had Thanks, prepared measurable To including remarks, quarter continued

markets to Digital we appropriately ahead, well invest As we for our as to accelerate. strong drive year particular look proactively in investments and a future include as staff need recognize in private growth. the business will strategic and State see Alpha Street growth as we both These platform expansion

our also stage growth, positive delivering today through of can that, do expanding our here call across be operating stand investments and businesses. aided so the by our we will questions. now momentum strong are have for we to business we the As margin medium-term make pre-tax horizon that while confidence next each leverage year and we open we able these for seeing operator, With the

Operator

from ahead. go is Instructions] [Operator Blostein Sachs. Please first with Our Alex question Goldman

Alex Blostein

Hey, taking morning. guys. Good Thanks for question. the

with give a start around can am question if it will not you sure answer, can but we management. maybe asset I So, a I shot.

we continue obviously strategic speculation market surrounding to So, see alternatives SSGA. to

that of lot been has in on sort supporting you secular the well. about side your the emphasized that seen the the of management changes scale. vocal the strategy very We of in industry growth Ron, sort just asset a are that as have past servicing fee and have

any capital the So, today? high alternatives shareholder I would management enough or succeed scale too you the too you kind get a guess are here? strategic sense with if are get majority asset to you of ultimately sort structure do of of there SSGA more and if that entity in think a that the marketplace mind, are done considering, do to need minority And obstacles has or in to anything onerous to rules make GB just remain

Eric Aboaf

particularly there. that business like is thanks to Well we the mouthful the and above if least this particularly a if ETF etcetera. our begin and have continued by to improve Alex, grow it’s and in I growing It the continued performance and ETFs has are we average, of – saying average business. – I business, mean you what like The will you in at said think market terms fixed at about now income areas, continues not its secularly

years many the the it’s that insight an business is gives laboratory business. of an – of think different a rest a test to a out attractive us now, strategically we It’s us for that bit perspective business and it’s a marketplace. So, helps from into portfolio us been the for things

we on am to continue speculation say to we its And that our would performance. talk be something can comment about, speculation. goal we I So, participate continue to have overriding if assuming other believe in come that going to you. improve to that will to not the certainly than business we

Alex Blostein

nice maybe side, Got in account [indiscernible]. and even on servicing the it. of are you, of the a obviously, but just one enough. for into follow-up flattish fees momentum taking really Fair Eric, wins, servicing terms fee quarter-over-quarter

XX lot us So XX just it sounds of see And like revenues it to help of be benefit yet months. the with $X.X and yet will you then to trillion the as installed? installed of of attached we a that, Hopefully, timing is kind on to maybe next to Can frame sort dynamics business. the within well. be size pool on revenue the hit on the pricing the

your continue I normal – the kind you think in comments said business. see in headwinds the to pricing of

long-term. of it’s range think talking I Is about of sort kind X% X% changed? the that headwind are Thanks. the still in has that we or been to

Ron O’Hanley

– question. the let me Alex, for thanks

order. Let me in answer them reverse maybe

how how is logical. that that will, time. the go duration market, course back we normalized deals And engage the of we headwind think a They see we some I to are of over that norm. big are X%, to of more now marketplace. to feature like our historical clients, added I how Alpha they is we understandable. feel headwinds continue in part reinforce controlled. We they of of And that pricing down help which is the have with are to the lot and think, offering, is these functionality We feel well a about

of We – going as that that are it’s have first individual wins or quarters average they for comfortable deals expect the rates think the individual are you last you impact that but get that the in don’t that see this on matter meaningful broadly and I as pleased, quarter fee confidence – very certainly range revenues. to the quarter, in business company. think you and for gives with a we that have don’t I quarter we see they or could the going are to that, We us into on feel that this range installed,

of wins need the gross that at creates which as $X.X AUC/A that plus rates need of clear. We amount We current time. implemented have get been around well, billion the We or wins. right we over then about revenue fee have

say years put part continue terms feel that couple what year. but of maybe comfortable we is of of building. while that’s for sales, of with this we and wins, would another I had $X.X have to in until not see why pipeline So, the at reason the the we continue this I in have a we momentum have And wins we us substantial referenced is, there. And think AUC/A next the least year, lighter out we need benchmark into been the we trillion pipeline pipeline momentum to embedded

Alex Blostein

all Appreciate Great. of that. Thanks.

Operator

question next your Our Hawken, line is Please Mr. go Hawken ahead. from UBS. with open. Brennan is

Brennan Hawken

way deals? asset of start for was with cost forma on for sensitivity on historical XXX my your inclusion M&A these help point to for think you to sheet had then could question. about the how Sorry, a impact the and to pro that to the I sensitive be like call basis And rates? you what contextualize the do BBH, taking or to I’d mute. Thanks maybe acquisition would a could Thanks. talk balance about of you expect types right conservative, expenses the investors, savings also is Eric, what’s discussed range assumption shift in that would

Eric Aboaf

Sure.

Let me early the it’s leg the other and Brothers And Brown side into of Services. obviously, then P&L. with we will part deposit the start on Investment

gotten are now – we in. have We our regulatory now filings

year obviously a We end target are with the and to close. continuing through closing are – process working

They clients. because similar similar and think management-oriented asset betas book what we too it’s and to early in of get sensitivity, a would I it pricing deposits think of it’s well sensitivity I and of adjustments I Street asset have probably model the is at and think asset terms range little betas finely, I say of but In State similar is just similar the the have overall. expectations you that deposit

rates. think different, at Brothers here more deposits attractive bring and I because usual have bank what’s is of than either we flexibility constructive to program, in Brennan, the Brown sweep

be to our leverage by securities the a you also And you we the could leverage of careful have, we so it us or balance preferred and – sheet the that size of enhance way, that which in – constraint that need let have amount that led the model asset protect the to could, us have ratio business. sensitivity, run adjust though constraints in to the

to say, continue. and will manage ability probably think overall, one that an a And or NII through it’s the a cycle deposits leverage. functionality I program I that us same So add and the that’s new with to and constructive in but ballpark to would rate they either bring

In terms did the a hopeful side. on of be I I the conservative say was expense guide, it’d bit

reduction I a guide expense XX%. think was of about the for

kind lower I before. on we’ve of, achieved end of So think, what the

that expense And why but too lower the think – own we started we’ve But guess, the because – all end in bring past, acquisition there past what and it’s on, bring savings happens at that’s the integration it’s to this we deals and I in an been and I functionality in fully to is targets. and of offering. every think from finished We see. said need we think I’ve will made integrated deal to, business our our sure I forcefully created is compare gets I all that the different. not hard to always

I think it’s early.

we can those posted. as we And – hopeful of I early will I like we we by where January, we to think certainly will guidance stand estimates exceed some think the it’s but to I’m meet as little we be and But I keep can, give want those. the – you see far. certainly I lean will guidance. too to in always to cost a certainly if And

Ron O’Hanley

about it’s we’ve Ron. this just would about Hey, add is that It capabilities geographic and emphasized reach acquisition. talent. and I to is Brennan, What

synergies, about about we exist I some instances, at the here, think them is we’re thinking Brown just that you mean Brothers. there as synergies over will. So capabilities as combined there if is better where

Brennan Hawken

on expectation color. color Thanks and know some question, fourth whatnot. when Great. provided for invest expense my I to for the you needs Eric, second Ron, the actually, to made you then that all probably it’s And early. quarter reference

much very But the XXXX. hear of budget probably the broadly. starting cost to investors. on minds is You’re We on just about for it inflation work

there upward we seasonality some recent to competitors off then for it think would set in a level of conference the use that you jumping next Should the Is and XXXX. to lift? ‘XX? bit people a about probably adjust point that One quarter year? fourth Is there on prepare be at just appropriate principles for to and help your raised pressure provide a the maybe of expense some into then could point guiding as begin general

Ron O’Hanley

competing is board. because me but pressure, we’re banks, as some Yes. to you’d okay? just Brennan, that customer Because expect, are the Certain there seeing technology in there, definitely start firms. it’d that, employees types on say cost other not we’re across where technology instances it’s the with for untrue area, we competing be let of with example,

we So see But we also business. are definitely continue to our improvements seeing that. productivity in

in. engineering them We’re

forward. do in performance how We about also going and an we offset ability we we for the we can we’re But that – pay we mean, it line. key want some, don’t incentive performance, as just proceed that. careful through underinvest So do if to all see be think I staff. to see to not And

So overwhelming want overwhelming Eric, thing seeing of seeing we particular probably out are there where but fixed an kind we’re to you raise watching areas of yet. And for. the are the talent, something. not at cost it’s something – add to need we’re not an

Eric Aboaf

obviously, pressure line more to we And have the Yes. add there, Brennan, have I’d you incentives. a go Ron salary a we items that, expenses. of little covered attrition. also little the through but comp

as that seen trying year. we to net next – – out need everyone so go we think as they to that into we’re I

tech see is some it Obviously, the we of again, and cost to means a to bit do. But little And more work those work transactional costs. That’s have creep plays on out. offset side. you programs always that. more of some it think is of just while do. engineering there I our There to how

just are you and say what principles me of as too in edge before, that we and really a which hopeful say like continue be about sort. guiding on to in of and go think we step use how I – into December. a full November margin the heard then Is solid swing How from and our with really or through that back budget process, you in if do comes started is healthy we tailwind you’ve leverage? that do we progress year? an expanding And the equity operating or each make positive to don’t market do something live we

progress think towards each make at And our medium-term progressing so I year. it progressing pace and we can got where commitment of a think to to targets as you’ve

headwinds seen interest year. notwithstanding rate You’ve the us this

this making targets. We’re towards those progress year

to that. that, and We’re need like feel proud to of we need we continue

Brennan Hawken

color. that for Thanks all

Operator

from Your Betsy Stanley. with is Morgan next question Graseck

Betsy Graseck

good morning. Hi,

Ron O’Hanley

Betsy. Hi,

Betsy Graseck

Okay.

side, Street recently, why two questions. I tougher that operating is period had think success. the had So many where on very expense here State time good And leverage. there you’ve there questions been a positive more the of delivering One, are one so a then had reasons

could X.X we be now going will temporary, many the past when Thanks. up some this like many guess I’m things going share we questions through the So the back invest we of spend bit so could seeing for can’t it’s it to a color is with frame more opportunity that, there any you to growth. opportunities why over ramp a reinvesting – been to that’s underinvested years would of just specific in. quarters under tell this the investment we’re going the more get this was how you leverage you expenses. to Or a bit operating there us. about, need point but on we’ve we it’s hey, should wondering, we’ve recently I And future I reason persist once "normal"? and to message used part if we’re and take, got hear period? be that of is a more a take is We that specific to positive

Ron O’Hanley

Ron. it’s Betsy,

invest every by inorganic to inorganic an I as But quarter-over-quarter, So fairly us in River, engineering particularly business while That’s as time bring or technology basis. on – effort have Brown been continuing flat business. the Brothers whether Charles about certainly even keeping area. in BAU And down we’ve down. emphasize done aggressive our a been underinvesting the recently, organic. talked we mean, to more obviously, or also in it’s not we’ve expenses, to expenses we’ve been tried

of building terms of Alpha areas future bring and accelerate areas growth. the quicker. investments, to already and in in continuing where invest to we just invest In to momentum more see the were: three and that we and there invest market highlighted one, of kind started we’ve just is to that more more And opportunity

clients digital private third whole activity a stage seeing both is next to our of business. And ventures our own of markets. digital continuing also then a of kinds Second where that’s of is the go the of and there, supporting you’re in their and space lot to combination digitization

underscore that to there. what with talking the at term. we’re that’s So and about to the remarks I again, said what prepared margin And I expansion do end leverage operating medium positive commitment will of so a would we my short over continued

Betsy Graseck

growth to in of generating potential our list X And next That’s three over threads, revenue great those too terms are of top the X color. years. those

quarter? little is likely a year? loan a key quarter, that the we you of So a a demand quarterly-oriented will of just there bit it But kind And sense we be that think growth? to more specific just growth see growth was sense next the seems to as question. on continue it there get makes in drivers Thanks. investing I saw as that lot for that Maybe kind should that. that look want Or of that to of to this into we like

Eric Aboaf

actually. It’s Eric. this it’s opportunities than quarter. higher bit We Betsy, saw of a both, little usual

billion We of discretionary a I quite little our of are loans. bit that sequentially, were That’s loan $X bit some – a They balances think billion. was $XX up. talking base on some lending we financing, as fund the and capital from call classic literally continues demand clients. higher some alternatives finance it to of private market obviously, boom, do, then was our equity of a

We’re some and for support forth. so looking

it than print. think higher was quarterly I usual So a

one I though, book this think with that is some confidence year-on-year, what thing are is comes which loans is The we in low we double the conscious digits, we’re nice. of, loan RWA. can seeing grow

years. we and is opportunity coming of us optimizing forward. sure optimizing be always positions, in about to in cases, background and think that lending other what that of But for other we’re cases, mix doing add. an risk-weighted how do we we asset of will it and drive the think going part as in the NII the quarters to sell fund returns In make we by loans And so those some

Betsy Graseck

Thanks, Eric.

Eric Aboaf

Sure.

Operator

from is Glenn question with Evercore next Your Schorr ISI.

Glenn Schorr

NII discussion. afternoon. Good if I on expand could the Hello. wonder you

in and rising non-operating behave how Just year. they model as now talk world think you Thanks. excess are we about behaving the think you a right go deposits have them as what next modestly into you

Eric Aboaf

there Yes, Glenn, hard it’s is easy question, to a really answer an them. good not because and

What And cash true. we’ve transaction right, volumes. back, a not it, that’s others with us I deposits the over of very all need say AUC/As. leave is think in. say, can I’d have some that you you to would we like deposits amount clients clearly years, growth of the in significant And amount to excess the question, is is excess. and X the though, with increased go flow had is our typical had AUC/As, have, ask call if X the last certain What years handle I

bit necessarily pulled on for reasonable There want off, a our the we a we’ve there down you’ve push that too quarter. to increase so And be last couple this excess. think, some, good because don’t I side. we want We deposits clients. over to core And far amount do the is so of is deposit that seen is seen, of the years as

It’s not question, that the go for be about. from but with course that are It it And talk balance Fed a the be a will which in stopping while. slower – reason the all reason of balance context either the expand actually part to the rates. will about tapering sheet to of Fed’s deposits? is the, you think, I think happens the part expanding rising say process reverse policy the will its X is X-year your eventually, expansion sheet, happen. to Does tighter think monetary with If that a continues of expansion is of I next its I what or what right? is less I sheet. that under balance it They it just of a even to

in would and driven expand an think and they rising of and be the balance banks Fed need system I which in AUC/A driven a positive and other partly the then the the its be mean environment – partly NII having the cash by well. would continues to effectively rates, as are positive rates, going to to surplus as be deposit of to just so by our and I certainly we’re levels, sheet probably balance And which sheet signal right, healthy core, rising think

Glenn Schorr

appreciate expand I your a thoughts. if wonder I just could you little that. on bit more

mentioned You private of areas. is markets key one the growth

the that. custody the the Thanks. and for can You’re one now right Mercatus side pioneers What can’t you? market? what of do for of of does And on private you expanding do world

Eric Aboaf

I markets think And we private area, some which Yes. see why is opportunities. is broad a

activity equity. is fund is There private hedge real fixed If you loan-oriented recall, markets. there is of is There There estate. markets. classic private in private income kind more

one private functionality but to our those and quite excited that, we the that’s into a we’re not clients, that to around make, brings front-end the of about pick across not it. And but about each spots spots can directly partnership. plugs we each is pick of the reporting some our choices of well. to of we need end market operation so value. comes with make LPs, you other data private valuable. think so communication set why feeds – where that to is in that front custodial if I geographically And functionality reporting series a that’s to there their provide that support And own and products, set as historical it’s our we only use investment What think and that those areas so Mercatus we a as And is

Ron O’Hanley

is I what an this Glenn, largely market. that, Hey, that market add would to still in-sourced

themselves. these So on fees, out and cases, The are be on race able than portfolio. to a particularly competitors about it to this just of know stakes in the And demonstrate reporting, but offering seeing requirements better companies. doing them particularly their investors investors what’s imposed the want for for on terms what are private including being up in not bottom demanding slugging It’s a it, that’s in to U.S. ESG institutions data isn’t are to with but companies not their private just reporting. and in some Europe, you’re reporting outside public that going portfolio,

this all helps do be us a to So outsourced we to that and Mercatus drive will think this model. be – impetus is all and going further this more to

Glenn Schorr

all that. for it. Appreciate you Thank

Operator

from with is next Ken Your question Jefferies. Usdin

Ken Usdin

Good Thanks. I of morning. Eric, cleanups just want couple here. a

improved, what was premium wanted you but you that was so make the understand. said to but number called understand that it So like episodic, can the just we quarter premium in third

to said would it improve. I think continue you

this to want So was delta I understand the what just quarter.

Eric Aboaf

Yes.

premium get said, ongoing excess headwinds reduction quarter, as I marginal think taken portfolio. sheet been million we’re pleased able And best We we print on quarters, of sets of to I that piece negative, us conscious that’s to and I the don’t underlying the And headwind way direction premium it, an smaller quarter. investment just some negative of lending reduction some we underlying size we’ve took the describe what the our compression do, each with but of quarter, gave range said, some less been the couple perfect we comes why third amortization, which as in it’s NII future portfolio. the for that a a remember, yields. a level. don’t do last then all the we think offsets range every less that. and same continue that’s in improvement third to fourth as pleased also the expect purposely. balance that And through what is the a a amortization, we’ve indicator with I’ll we’re as quarter is premium has describe this said was and Ken, in that But the I in well. And do we amortization. necessarily that think up We the that past $XX around from, yields about up. at asset expect repeat. the over to from some not But little the We portfolio expect think And in prints quarter

Ken Usdin

have second to us So give the quarter? the a do versus you number XXX in

Eric Aboaf

you’ll have I to help think me.

the XXX NOI. I for in for of the NII think we range in That’s had third quarter. gave fourth think XX. I total quarter was I XXX you the XXX to second quarter, And

below I’m message we get I into falls where that’s great amount what the trying the but detail, is of there a and out. kind think are could pieces surface, next of to

Ken Usdin

Okay.

quarter? fee market what tell were can market money management on asset fee waivers money you in the us third So the waivers, and

Eric Aboaf

In that current we about at $XX money million third front-end the $XX the in be fourth that we second million. $XX fee And have that’s quarter, Back the market levels close million, the quarter were why were to likely thought to million. of just waivers quarter, Sure. is around saw. they we rates, $XX which stabilized, said

Ken Usdin

in And what do were you million in that third? about the other the was the that what fee $XX second have waivers quarter,

Eric Aboaf

tracking for material. is – I most our for money our Global driver that’s waivers think time focused we think of biggest market GA, the have the systems we are the business, Advisors fee I one in spent

dominates. think and – the I

focus So I to on. area think the that’s

Ken Usdin

Eric. Okay. Thanks a lot,

Eric Aboaf

Sure.

Operator

with Deutsche Bedell from Your Brian Bank. next is question

Brian Bedell

Thanks. great. folks. Hi, Good morning,

given new running the on pace that legacy so Street, a sort can Brothers one headwinds. view just ‘XX, servicing maybe you’re required if pricing ‘XX strong State and the Brown to give more us side, Eric, at that the growth in the wins not step-up First servicing been is and fee double asset asset of including at on just you of have than maybe offset

question the So a in organic in in servicing here side the and factoring growth not ignoring asset is, should of I pipeline? market guess again And ‘XX step-up any I we that of given XXXX of expect it. mean, short in kind

Eric Aboaf

Brian, it’s Eric.

a early start think I and to little ‘XX. ‘XX out it’s get to and forecast

would growth We’ve is that and of able been is $XXX the performance we’re million year. I’ve to quarter, sales by to with our I what I ‘XX. to going of we every in I drive And earn book, clearly say the and – pleased you had delivering keep components we this first our before, sales this think and be trying quarter said to part signal wins. was wins. saw that in and very continuing we of ‘XX AUC/A need to

with that. We’re very pleased

a pleased wins third you because at of keep you second year. with step with the six the year. in that. We’re still year’s the year’s typically probably We in It’s implemented it And wins – a third. something quarter if again need the that a then some, back, have in to portion a like quarter. calendar every particular it’s About following after year like remember, gets gets two-thirds reported is of

business a and in drives implement are what we we So up progress, then that keep what where and that’s start need we to then saw, we to growth.

trajectory. so say we’re And I’d a good on

continue and to successes year’s to like this successful. we’d with pleased be We’re

be pipeline, next expect to We given year our to early year the still it’s for growth forecast and but after. actual

Brian Bedell

Okay. and strategically State the SSGA, longer for you BBH clear continue case then, That’s business. for And that term. good asset just enough. fair as enhance on business think in made whole, just a back in other – it. Ron, you your investments a to obviously, But you’ve with been away And the growing as core of and Street growth and obviously, leader organically servicing CRD that lead you the

to And about balance position is guess would leadership need a would management or Fed’s treatment you going to pure-play stress more the think SSGA Street of longer be maybe preferential you business also, asset capital the CCAR? you that the prefer term, as of So for for State it critical prefer you through and I that? really on within that have test

Ron O’Hanley

and Well, far think the mean, population. Brian, the are total both U.S. away the you businesses, about narrowest and of of portfolio if G-SIFI I our we

investment really better we about servicing you you I it’s under business, businesses, businesses, because really focused think broad if two institutional so pretty – two support our that that if to are those So single helping there about to put they And they underneath because fall business, achieve think would investors purpose are those outcomes. markets with. of begin

then being out we of focused. all ourselves So start a the ask very position from And time. we

and at activities, for the certainly relative symbiotic the that satisfied this you And the to First, with our right capital-light these businesses? at somewhat and owner between a this perspective we point, that it’s two are given look we as believe relationship we we performance think And it, investment second, that business. are given having as and capital helpful actually business businesses participation our is and is related it’s in a note, from servicing performance, enhancing.

we to when together, as diversify So care it all you. like of take and diversification, to us that add recognize the business, you shareholders you it’s not up we but for can

all these that we make time. at to business, we’re continue that this the and we as businesses and have to owners are sure We grow of owners, looking the can good

Brian Bedell

That’s great Thank color. you.

Operator

The next Research. with Jim question is Seaport from Mitchell

Jim Mitchell

down like the trillion you that outside of from outflows to of and net equation? that just efforts start to BlackRock the the the large morning. to gross get reduced on side annual outflows of your enhance good is. to one-off Maybe Can bogey Hi, really servicing kind attrition $X.X client side, of speak security growth

Eric Aboaf

it’s Eric. Jim,

what of three-quarter Let existing also the our other create sales over we’ve and do. clients, is need. add what sales me side being there are a incredibly part and here they options, time, we spending two-thirds, opportunity is well close our being sales come needs, is serving because they focused start. our clients. they long said on of something other when when from they consider big or of to that And their our coin what funds both a in that’s serving staying like And them clients when There history

sometimes got. in our rebid what we we’ve and involved Now to clients M&A, are need

to industry. very that active portion over Net take very programs expanded of work happens. of we’ve that And And Promoter years large NPS, part X We’ve we the we clients. got a that of our when so set the Score that’s last a have now client do, on

to us And from So our coverage the that operational it’s clients. our down portions the then of to provides C-suite real-time feedback program. on

our preferred think our and is June saw be. clients and them with premium, back our that you you geared towards our Global can we’re in staying one making of Client how describe and close are sure as do I each supporting making as sure satisfied bridge us division, and they

and core it’s done deep few we are with. would got to the have grow drive want growth, elements, those something and work able on. That very deliver you said, been quarters, and in to our some like culture are I have the we we pleased say in keep last So, – of core we have growth which to if we

think an would we about side, retention this well. that’s feel new and be good And quite will We to I us to say have as that been that our and rates – year And always successful – we intense successfully. you seen area has of effort do the expanding have got selling both I then clients. existing to keep and other and on

Jim Mitchell

question from there that for growth How sheet on if balance think very enhanced at year like driving the the the years? growing perspective, any correctly, on maybe capital balance the I Is balance And reading a do sheet helpful. constraints X have That’s significant what’s second look growth it the over there. that perspective? Okay. the just you am business – the we had If I about seems custody. – outlook and next or

Eric Aboaf

Eric Jim, it’s again. Sure.

whether securities of consume We sheet, on have and or a you or balance balance got think earnings book, how every provide businesses, lending they need our look because for much they our I for example, to assets on sheet always certainly that about versus for could in us. do business the the basis we finance careful all that be opportunities at the standalone asset more custody loan relationship within to it’s enhanced asset the for then client business. that think the a custody, you context have returns. business a give serve to them and them, a or it that much, decent way very because and client borrow they And about take for there not is to serve also to did where finance mix and always but a be securities with enhanced do FX reasonable may of can risk-weighted

businesses, we that of these are capital asset risk-weighted Brothers because disciplined is would Brown in we we to I year think ratios. doing acquisition, we but the what close and are room within certainly end I land into deal, there want So, the to say want being the we is our our going a bit as about position, right, close

one continue while to see I the think seen quarter just some I last quarters, – heavy in think in so will discipline. some will see And growth you you you have of to couple two the very quarters, next

going bit You the a we to sometimes the will think do of next have flows. you and I time, finance. the in some to work revenue ebbs see securities of portion the of over bit can can capital base, of will into I little a given we there some manage And but I beginning of put indication the you our like franchise But an what those. to continue balance think where we more is And of have that the be say grow some little year. seen expenses, fee areas sheet as that quarter-on-quarter I imagine would on continue we

Jim Mitchell

Thanks. great. Okay,

Operator

Chubak is Steven Your Wolfe next question from with Research.

Steven Chubak

Hi, good morning.

the discussing a start wanted just I made to bit conference. actually ago Eric, So you comments some off BAB at

seen has it’s how servicing you it historically? new least and about You framed you business what whether of that have regard relative you your store with terms we outcomes based pricing that what us pressures, improved update in and given around new wins, just at expectations thinking algorithm, same-store the growth fee algorithm I can are seeing hoping have to talked sales evolved growth, to the was on on And just you. strengthened maybe

Eric Aboaf

that or business, new couple headwinds, been tailwinds, a you structure. Yes, it think comes referring activity four-part net we It’s Steve, either that neutral negative servicing positive have have are we of and then growth of market mix fee – equity right. company client that from described is have last I inflows, quarters, has the the described and algorithm to I we a that be as that pricing as can

think I the say fortified. that there that way is update still and think to I would I structure been the is

different the around move think bit. I areas a

would tailwinds, market very I think we don’t market. year. equity flat we we like to market equity see every equity a but that to going are strong I year, tailwinds think to up have see seen this

monetize very can And So, we uptick. we up expenses tailwind equity you part pleased year, take the we that are with. of our market that positive didn’t this the with was way imagine which is

second is activities. one client and The flows

was positive a think this couple a couple points. a of years of by back, I

saw both were packaged X a – think as on the we as I funds Europe. years ago, in or inflows outflows saw the wane in year mutual especially and from we in products U.S. less

in think and activity I flows confident we of less client the felt tailwind.

a wins. year think have we that’s this and get the nicely in we expect given year referenced, after. think implemented market That start business, and new you next to that got to of rebounded I year, actually the as current terms dynamics. strong Net here now continue I year will

been takes I the time, well backlog. are intensely said, day. that pricing, question just controlled first work on has on morning I think that then have but think every this we So, we pleased with and And the as I

structure of that will bring and little – framework. different think a is year different elements Every So, I the mix intact. of the

Steven Chubak

I of Thanks the rate just other color and improving versus Eric. curious to BBH deposits onboard the increase? maybe helpful the for speak return, for on the sheet at the I percentage a or additional of provided relative $XX than just more my deal disclosed curve, informs attractiveness know option. your capital dividend having follow-up, the rate taking which on-boarding deposits, time how of and color you of the billion flex the buybacks that to just larger And like of willingness forward you forms backdrop, suite it was some sensitivity, off-balance just from

Eric Aboaf

Remember, our ratio a is not aperture right, capital ratio, the leverage little risk-weighted equity me really let And measure, around CETX, constraint measure. Tier up a open which X Sure. bit. our common a of is core the asset-based

need So, leverage within to on we ratio, the bounds. of kind just be

really are rate we at. within decision is the what sitting levels and so And NII around on reason deposits

is the way not zero, or two hikes, when think call have it, the prevailing of balance flip I rates, about three deposits Fed around points tends the Fed near basis to around short funds sheet. positives rate you at are breakeven XX current That the to to levels, at funds. think incentive on

You prefer be or start at XXX you you around sheet. and to the funds would points basis on in to the neutral right start a Fed position be the of deposits more way balance

to seriously it’s somewhere instead holding now, more instead we – benefit of so being the call them rate it, begin thinking from about of And that where in deposits hikes adding off. three area, two, of

margin decisions that be in, us And And helps because – have sheet third have But the the to it will our would we and balance rates are careful will and the side. trade so some And we I just just will the and like we sheet balance size. with to NII, that manage the decision criteria seen to which think is at our quarter and additional bring we conscious get in EPS. the off quarter about you the point, make will next where that quarter first prevailing year. we question second

will in that know well, continue deposits it sheet. do like judiciously You clients can. think our best it’s where manage as fact, to this we we balance quarter. bringing while not And on we saw – I and And serving we the to as

Steven Chubak

so for much Eric. great taking Thanks That’s my questions. color

Eric Aboaf

Sure.

Operator

with Your Cassidy is Gerard from next question RBC.

Gerard Cassidy

good Eric. and Ron morning, morning Good

Ron O’Hanley

Hi Gerard.

Gerard Cassidy

now have with it those of also, were wins how the somebody when under that And there are couple internally from from this on Eric dynamics? at can yourself? us do out or you it the the look two numbers in guys going go chosen they like a to of quarter custody you are compared break in share to wins, companies prior years? coming with look and And can either coming geographically? your competitors, asset just doing shift you Is

Ron O’Hanley

Gerard, maybe will I will begin and in color. add Eric

standout, look from obviously, at in this you the an quarter, AUC/A general. was If legal

an that an And had have we a there not – us. – American some it’s also. In Alpha-driven existing but client that it case, UK, part, new most for it. mostly nominal We did to mandate. element the is a So, to to was relationship

of will So, lots coming time. our activities way over be

was where much Invesco, global look quarter, we and had servicing middle a the expanding we office. relationship an which you there would – have at standout U.S. again, existing more If front are prior the the the based that into client, we consolidating side, of been of have on and

say there than it’s the have over would been it’s that client years the kinds wins new as what mixed terms from I seen we couple in the Alpha-related beginning. have been And nicely would past expected – So, we of of geographically. importantly, been wins, has of more

got us client with growth servicing that, a new enabled So, drive new upon somebody business it’s there they us make incumbent sure if then and what’s is have to obviously, to client, it’s traditional the else.

So, Alpha. discussion what we have are we strategically will on the doing is

business We then say, move servicing we the will now want Alpha over. to win the and

has – me say little and a cycle will core of – a that in been lot just a if couple if am the wins, not the been it’s that been wrong. so getting EMEA. there – this of seen back here I was But terms In I Eric bit relative activity after correct actually And you and go X light to the past the have It’s U.S., years less relatively we of ago, EMEA. activity it’s more of in couple EMEA over U.S. years, a much would

until recently with in So, rebuilding done out do the more and sales that in changing hadn’t and force had that that, been a lot U.S., been quite to had a done like things EMEA.

– truly Pacific, position it’s to and are we to So, And are it’s recently, in is of be about they support see Japan mixed. we the what really that have Brothers able activity growth Brown even leverage starting we will more more excited that we because to nicely Asia some there. leading like in

Gerard Cassidy

of guys if a X% management. for in servicing already, follow-up have on you And apologize question and addressed I servicing as year-over-year revenue good. Very you. this XX% the growth management for fees, basis, Thank a and fees

business that You of client How the higher flows, to was new growth attributed mentioned growth, growth. that market much market have levels to higher contributed this levels?

Eric Aboaf

equity in usual client Gerard, of it’s activity. up the also we new amount from driven And called divestiture On the net markets by direction, varies smaller and was the of proportion then business. X% smaller business. out a have Eric. pricing you little servicing It a by headwinds, the other tailwind, a fees, of large proportion bit flows and

history I to two-third, think expenses here of And are what have that’s our I pleased as managed. with been not notwithstanding kind we able it’s particularly So, we flat, but is that. one-third, hold am

tailwinds side. the it be tailwind. was that business priced. new a net way tends On think, nice revenue the market very management to important we that just tend fee come side, also in the part on business are to The of performance and very had, the I But

You see it in flows.

margin We business. taking up saw in also the there, us you counted in revenues. asset management But our

either tailwind other P&L, in managing been it’s while environment or of also flow side management, remunerative asset so this equity we for creating us quite – are the tailwind a are pleasing. an the and And quarter the that’s we for market and the

Gerard Cassidy

of to BancAnalysts Eric, weeks. in about the And you. Thank Association we looking good. Boston forward all at you are seeing three Conference Very

you. Thank So, you will see we then.

Eric Aboaf

See you shortly.

Operator

is question with next Rob Wildhack from Autonomous Your Research.

Rob Wildhack

guys. morning Good

in left is going side, quarter, a forward? and you much one sort that Just side? do how any been on more savings expense to you productivity increases expenses more How highlighted recently. do the can continue the there productivity other offset much to on that’s think this some of trend And

Ron O’Hanley

kinds Rob, it service for progress as see, of is more. see assembly just people-driven as years. we opportunity a robots. we eliminate have productivity at a trying in AI, just It’s bunch And we line the the now like to couple that hard automation, with opportunities. work. actually And do against substituting easy see It’s of and activity-by-activity, a making really we substitute manufacturing not other substituting of progress more reconciliations. And are despite we been to that,

and it of requires to we opportunities So, more we – this. see several work, see do this ongoing more over but next work to continue engineering, as the and years ongoing

Eric Aboaf

into about But of not was what add I And And the revenue, behind would are year need to we we revenue, that’s to really we just our but adjust leg talked Eric. starting ahead like investments. of behind a Part doing. as also revenue, end the and the we invest Rob, to outlook strong bit. little that incentives we reward performance. just it’s

processes, One honest, be and development of automate is actually engineering those work, so forth. to work right, processes investments, to simplify

is that work are benefit. we so, And an years X into even is several quarters quarter now, beginning actually part some now, from that what of engineering from there now, fourth from year of doing the so a

that’s hard in comes as it so takes real Ron where gets and as it said, well. done But And work together it phases.

Rob Wildhack

that. Thank you for it. Got

Eric Aboaf

Sure.

Operator

Your next is with from question JPMorgan. Vivek Juneja

Vivek Juneja

remember questions the you of for Eric. else something and BBH announcement us Hi, additional What Ron. – time the talk what I acquisition, are the bit Hi, this period? payment that price of on color tied give the couple of gotten is presumably have it on purchase over earn-outs. price, a these or for driver And you would the getting something Can part about little and are and above A folks saying you you cash that? there that. over or you of that on is call about what’s is can partners some who to a purchase

Ron O’Hanley

an not is there payment here. so Vivek, extra contingent Yes,

here. our have was as let’s expected put it place, we and we about But So, that of what talked – aside. accretion put in part

everybody – with in retention. put place pool retention success-based And quite plan client basically, well and broad It’s on-boarding have as factors it’s in is into the based. well, staff being BBH deep We an – retention. incentive as that’s staff the in There fairly is there management terms senior in client of there of of terms out out targets participates there management retention. And targets all a desired that.

growing which BBH So, talent. around it what aligned people client was our and we keeping base really about, meant to is our best align are

Eric Aboaf

Eric. it’s Vivek, And

see acquisition You will the costs restructuring those line. in

They to real our combination, here. purposely are in execution modest. do in or deal. are it they given the And but are the and acquirer any bounding us financials. we is including what a there in would it benefit – other a But you So, expect

Vivek Juneja

Okay. Great.

And is maybe this sweep much BBH that is you, mentioned Another the more much previously sweep where program because banks what’s you Eric, would renew how to would not capital it much you one the that BBH that not risk if on – of how and need who are of on? who you have want constraints? alternative at of – take to couldn’t, too, So, of that? to how deposits those for

Eric Aboaf

program. for comes come lot Yes, certainly, program our and part Vivek, of The any is of diligence, bank we there, acquisition, expenses, at it provider. there and modest to wallet opportunity, revenues the a – the looked together of sweep is enormous every one we it how as this together counterparties. share not how bank part of when comes sweep the It’s

said top the I XX banks. But billion, is think what swept today I think across about large $XX bank about important. we you away $XX think XX if swept away, are billion providers

know actually done sub-custody well counterparties, business We often of we real about engaged and do did we on most those have constraint. in extremely talking right. And with each we we have or who business and capacity do are of arrangements. bank those with, terms whom of counterparties the other You not a with side – we

of there so there that is And have. is a kind relationships we – set of a bidirectional

little sweep see actually of risk this – is don’t So, opportunity little be extremely a to U.S. more, I would point less. lot core that need at patriotic we a U.S. say to don’t of and the say and sweeps I an to valuable cash see of dollar sweep an currency. more a and deposit is dollar the What in the

And certainly are banks. that’s valuable and – so to they so global U.S.

for a some I it continuing we upside good with have and so optionality us. And think got see up, set we program

Vivek Juneja

Thank you. Okay.

Eric Aboaf

Sure.

Operator

is question Mayo from next Wells Fargo. with Your Mike

Mike Mayo

Hi.

If your provide investment next more simply tweaking That on like of the can budgets phase anything phrase, going like something than more significant for into sounds growth. color that. business year-end you or

Alpha, investing How on of is overall you if budget tech that bank? the the you tech And markets, Thanks. talked change is such tech know cloud areas? from of I give growth, this the and private color budget. maybe the about much digital next How it now? but increase where to the to the talk when space, looking So, just tech you areas of which strategy you are much phase about you are or other as more

Ron O’Hanley

Mike, it’s Ron.

period investing has as have earlier, Eric As several these we we recent behind I this have invested noted, been last said through our all revenue And years. along most growth.

opportunities, been have of And So, not in. where the in gates our is growth we been and the how off to investment necessarily second, it’s can what this coming spending. fund growth do our BAU

the area think the growth. it cyber us, under has whole this I past in, – are you about probably several there And isn’t whole much it run mix butter area, the positioning area, it’s if resilience anticipate bank. of a what the where It is investing investment of terms for have growth, would shift you But I other change or pet total – the bank of see of mean, been would of a say everybody kind changing from meaningful really run meaningful BAU the I perspective. seen terms where kind of than fall thing. years, here in that on not In their Alpha a we us balance from bit a peanut resilience additional of a really, be a the thing amounts. imposed all we going that over much the is little little we of would certainly to project. think things really is a gets something to change those about for

a space. in of the we kind primarily. in are we growing, past, gathering made of why, So, which particularly, those space, investments private would have would in be for to ETFs, example, disproportionate European mean What I there Digital add and State all are – active to Global in selectively Alpha but I share the ETF and the made the and what low-cost ETFs that, we invest we we in market continuing Advisors. investments explain that Street

us a new throwing it. and about can you expect with things have it’s we us things a to how little at more to anything growth that’s that lot about able that to mean established I So, we investment, but that us, or think shouldn’t that growth. of don’t be be already we know to expect we about give are money that accelerate

Mike Mayo

Okay.

much butter much. peanut looking workload the are of transformation? it or you digitizing at in And the at when process? you have talk the this and the does you How know you in spread like terms your that But – So, public, today you, private? look of around about that the talk I much play about when are how digitization, shifted? how has thought Ron, back as your you Where cloud predates of function, office operations, too cloud by you part but

Ron O’Hanley

in I I and the mean, Mike, think we this have other cloud, been about we context. very active have, in talked

River be example interoperable. we I will architecture That, and meant were Alpha, use had beginning an – when from to and which by doing entirely you that of are said what open going to cloud-based. If definition, Charles we it is be in the an right we

have we gone the to cloud. quite aggressively So,

We talked Azure services our Microsoft security partnership, their which about one have of the this was first with products. area and in whole

we So, there do is it the as we cost about part it much I certainly very can to advance that it, element grow of – and is business how how also and a mean, revenues. we a is being strategically think

Mike Mayo

you. Thank Alright.

Operator

Rajiv Your with final Bhatia Morningstar. from is question

Rajiv Bhatia

Good morning.

from one strong. me, Just there quick pretty flows that headlines question some are hedge fund are

there? are So, growth what seeing alternative can And your funds business? kind you comment administration you of on

Ron O’Hanley

further back are effort and enjoying Why mean And case, technology using new up, Hedge that. to don’t right. more the and would we flows for is of benefits floats pick go of to in have There expect you been in accounts want another I that alternatives strong we fund – Rajiv. Mike’s be Eric there it, will into will, so-called see this fairly Yes. see if invested you of are going we provider. outside have I smaller, of push positioned and an I And those example to and we types. this and you smaller flows. that see more will a into to begin and think be democratization alternatives, significantly where the all

Eric Aboaf

for are classes the funds And the add all markets, Rajiv, it’s hedge private asset attractive just Eric. will us. I

why franchise. the And the X, And X the average growth so year-on-year, markets, you a the company. point growth opportunities, are X of servicing we and going the this are private saw fee to we into we year or in fourth and adds next private the quarter reasons In over trajectory percentage higher the X% for growth more company. because that’s than investing see across last those year, certainly years the markets year the of that seeing one

Rajiv Bhatia

Thanks. it. Got

Eric Aboaf

Sure.

Operator

further at questions our presenters. And turn I we have over the this back call time. to will no

Ron O’Hanley

Well, for much. And thanks Thanks to us. joining speaking call we on with further. to all you very the forward look

Operator

again This does conclude for presentation. Thank us joining you today’s today.

disconnect. may You now