BK - Earnings call transcript Q1 2021 | The Bank of New York Mellon Corporation

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Operator

Good morning, and welcome to the 2021 First Quarter Earnings Conference Call hosted by BNY Mellon. 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 Mellon’s consent. the to turn Mellon Palczynska, now Relations. Investor will call Magda over BNY I ahead. go Please

Magda Palczynska

on Welcome will will morning. our Conference reference presentation Gibbons, our of we Earnings Mellon’s CFO, bnymellon.com. at call. Call. will Relations presentation. Todd available earnings Then, our highlights Portney, website financial Mellon’s Good through our BNY the Today, take to CEO you First BNY Investor page lead the Quarter XXXX Emily

there will be Following Emily's session. Q&A prepared remarks, a

that remarks available presentation, and financial include note earnings and please Relations measures. Information statements financial statements all release, begin, these non-GAAP the Investor non-GAAP page we Before highlights our on supplement and press in of forward-looking available about our are measures the website.

speak XXXX, April of With call only Todd. be over updated. Forward-looking as and I not statements XX, will hand that, to on today, will made this

Thomas Gibbons

good Thank to a detail. few and I spend performance minute highlights a you, all I it wanted which operating. environment But Magda. discussing to we're on business hand And will in in touch to more financial the and results over other morning, some first, everyone. the developments review Emily

that we're crisis from we're the period be financial and from lessons and the resilience now are the that As of These of our and and of is learned recovery will past the reflect the coming of optimistic to resilience a system our clients business year, decisive moving previous governments course, me growth. Indeed, of I mind one saw to quick the global employees. to the regulators. for all resilience. word we our And on period of infrastructure, Resilience keeps a model, and action financial our itself. and financial

the stems the from one we many the in several leaders consumers. all confluence The to optimism factors, move including COVID business see of potential I'm that of about exist, from the be remain many positive strength ahead passed challenges the period when cloud. deployment reasons While who the still we eyed clear of vaccine,

the savings about have XX-year and cash twice saving GDP, in amount fund. extraordinary is U.S., is around running available than that's spending Currently, the household for more and which at in way held and the and Now XX% been average. above XX% households levels. is of The rate normal

to stimulus monetary growth. addition, U.S. In further spending accelerate likely government are plans and GDP

is reflected significant level and is expect going economy activity growth assuming in is as keep expectations likely GDP pandemic managed high steepening So assets forward expected, yield the be a beginning to to stronger growth curve. and the for strong

also I including adoption to continues the We future look an of assessing innovation and workforce We're future going of Now quickly workplaces We've position embrace wanted become has accustomed driven companies remarkable to value for employees, clients and drive hybrid and to work the arrangements to intend us that of our enhanced past what our continue learned will year. we've employer what this define as to innovate working like. our best take industry. of choice with technologies our have in and technology our to high to our ability service quality general proven one touch new another maintain of pandemic adopt The for in over virtually working. now levels on new to clients, a in deploy work way productivity. and collaborate and and

volume had year excluding Fee we some money quarter the year-over-year our performance and of we highlights X, pandemic-related exceptional on momentum me against volatility. market Now fee the Slide increased where Starting billion. see businesses. revenue our reported $X.X with waivers of impact turn that, X% to let revenue across prior that on

loss relatively flat of pershing well and interest market of EPS considering of significant on as as and appreciation. $XX $X.XX credit of We last XX% not XX%. return equity activity Operating $X.XX million, was client margin down revenue. particularly provision common of benefited from servicing rates year had is a Asset bad from release positive year-over-year, tangible

strengthened client momentum. businesses reflects buying Turning higher servicing now. new asset business robust continued markets, We and revenue to our

cloud-based their data gain a architecture Vault, for a agreement our clients, to strategy easily platforms to quickly global interactive open powered gain the In and analytics Data manager clients drive to signed data allows actionable asset multiyear our Our and and business that's decisions. mode and continue our platform. first acquisitions traction to with solutions. quarter, by large integrate insights Vault help acquisition

GPF are managed and Gabelli new Funds, that's proud been theme launches to by ESG selected an actively product. We have

service been And SkyBridge's ETF Trust. ETF so Bitcoin have Trust named provider First for

in quarter, the ETF establishment record is assets ETF has under recently surpassed and XX of servicing new also first the our launched building $X a administration or a trillion. fund, During digital announced custody We our asset platform now which platform that unit, a multi-asset cryptocurrencies over growing will way. opportunity current this emerging assets improved to digital The clarity to as our traditional digital well time for demand us an allow regulatory presents us an field. custody offerings client service for assets, and extend integrated including to as

and management. volume, continued elevated from pershing benefited collateral equity clearing market underlying strength strong transaction to Pershing fundamentals. and Moving

and to In XXXX Within to due consolidation mentioned As clearing together impact remain will fees underlying the expect business and these growth. international we were environment this couple and in mask low going management, collateral purging we collateral good I strong the clients blend management, did mix. activity quarter, and lose clearing last healthy rate of fees a with fee forward. organic due

platform on Chinese bonds In addition, collateral we our earlier announced as Connect. now this Kong we week, triparty Bond to Hong accept as

another been value now to of has consensus market has expected existed. example not This With Mellon's demand income fixed solution to the continued is mounting which for grow, innovation BNY clients. only until our Chinese drive

has to and be a new help offering We've of research banking We year one a to in of business, inflows team, This insight We categories multi-asset Management. reach. our top year-over-year. a income, capabilities billion. survey scores new had in across of Wealth markets continues assets broader long-term record digital sales and client with firms capabilities quarterly many drive investment-important as of $XXX cash performance consistent in to our In year-end platforms their and including global as management capabilities payment and very scale investment level Turning and liquidity announced We've satisfaction recently Wealth new and and by strengthen up to well high positive for strategies client gratified all survey clients. specialist the realignment to Management, fixed rise equity implemented investment the of our were changes Mellon's respectively. higher with almost strong. and operations

gold-based digital the AdvicePath XXX Award are XXX This named tool recently proprietary the growth planning through technology winning. across was our that driving transformation. Now teams industry CIO recognizes award

lot a to with them build So clients. for momentum and of growth existing happening new

employees beyond that Moving our something is mind financial investors, on I ESG, of performance, want spend our a top for to clients. and minute

that pressing We to ESG use are market issues. committed reach, our resources ensuring to we address influence and

disclosures, and include the the report we we're clients solutions, have targets to includes ESG to down empowering read and on to doing plans we investors and investment encourage initiatives around accordance climate goals or climate place our published risks with and disclosures the environment. where for TTFD task multiyear of opportunities related it our it financing. first where I Last our analytical strategies managing business, in new how ESG are prepared metrics change financial impacts enhanced on with of how month our as guidelines. encouraging part on Our leading climate-related offering force laid in and you we we're including examples help enabling --

generally I open. stimulus. of where U.S. and and Much the and but somewhat extraordinary term of optimistic, have volatile, and year been me uncertainty into inflows have effort some lower, but funds Now, Federal even The market treasury system longer with pandemic driven in liquidity fallout short through markets the continued to money address rates amount in remains, with monetary let negative. although the term government by and close steepen, cases, the fiscal yields equity the started Reserve economic

continue but many challenge. be short So, term positive rates there a support business factors a that model, to are

Our business With over clients and Emily I'll innovative that, grow. our to to to in for help market resilient, review is continue poised the proven bring we're to it to to and help more detail. them Moreover, results our we be hand organic growth. well solutions

Emily Portney

the Thank Page In unless basis X% and you, of you This of per reported our Todd. comparisons partially and release offset was quarter through for And first billion per the renewable X%. revenue energy share. down the EPS details impairments highlights includes results about year-over-year on walk by document. investment million will $XX the financial quarter. the of of All we good otherwise. of morning, I $X.XX everyone. Beginning X of of a will down share, $X.XX reserve was on I $X.X Revenue about the XXXX, of $X.XX. EPS be impact specify

impacted expected, organic positive share interest As fee and absence XXXX. and grew waivers X%, negatively fee repurchase the most results of activities dollar. revenue by growth continued waivers U.S. driven rates levels, and for Fee associated impact were excluding money by weaker low of market good market of the the

year exceptional ago, the balances we and was stronger had While experienced anticipated. slightly client down it volumes COVID-driven was activity versus than

securities and revenue this simpler includes reminder, no new organic a periods the other for quarter As quarter, XX of line greater had also last of trading, of and and be this entities found Page and XX investment X.X% year a about on other The can we and quarter, growth and organic reporting. gains well reclassified. financial Basically, on a which reclassified variable Beginning total Prior been we drives investments as reporting got revenue income X%. income supplements. the items, fee interest losses. the our and revenue few and line out cleaner and as into reclassification have created details impact growth which than took other we

versus which the a higher revenue litigation exchange fourth was is our had primarily lower an associated back and with XX%. interest stock revenue related high versus awards. guidance, a down of XX% to of than Net costs, price the of higher volumes quarter prior X% the was and on Foreign prior bit due year. strong exceptional Expenses equity increased appreciation X% revenue expenses, higher year-over-year, quarter

improved previously Index. not macro As in primarily losses respecting XXXX. repeated accrual was also benefited million, adjustment quarter $XX an first of CRE for Provision an for release outlook the that Price XXXX and disclosed, from credit of

quarter, and We have results have margin lower was rate of lower market the and revenue Investment relatively ex-waivers benefits equity liquidity of dollar. at headwinds NIR, notable services was levels higher of high March fee XX%, waivers $X interest sets quarterly net was up The was the value, and weaker the billion, revenue increased impact market trend a $X $XXX waivers ago, Pretax XX.X%. rated approximately on on of Page the and FX provided Money fee waivers our which last XXXX was to balances. both result the X%. Management the is strong waivers, Wealth ROE the was revenue. as recoveries interest balances, was a low grade quarter and Investment other U.S. portfolio fee offset year, These volume, drivers items net primarily impact some down higher The given ROTCE is de servicing revenue, gains client considering fee quality XX% million of than map a investment year of U.S. with and minimis flat higher modest and from a and investment loans and outcome expense are a indicated. losses adjusted distribution analysis environment million expected XX. the X% to that market of remains dollar compared we've weaker XX% and by higher X.X% them. fourth of previously. revenue a Investment were expenses associated guidance of waivers. year-on-year. of decline in main million X with were out the Services which $XXX net to fee compared

ratio minimum. totaled X Turning was equity high capital XX.X% Tier ratios standardized due from about leverage and of capital X, approaches. deposit. billion under internal our to the and and advanced both to Tier X strong X.X%, liquidity points the March $XX.X XX down our targets remain Common Page regulatory CETX XX fourth quarter as basis and and with well above primarily

to continue on the of impact the liquidity our sheet. We in monitor balance system

leverage cash the while our to binding support Tier clients' same constraint. will needs, continue X time is management our We at managing ratio, which our

for unprecedented the have portion year, environment utilizing we're ratio Over the last internal deposits of the a leverage buffer excess and Taking comfortable our X.X% consideration, time. substantially. of Tier we could that below X period grown therefore maintain into go a for

flat compared was LCR to the Finally, fourth our XXX%. quarter at

the In apply shareholder quarter in with CCAR our totaled $XXX dividend $XXX first purchased that Federal $X.XX modified which to the terms continue capital to common pay and we of quarter. line in past this all banks limitations of quarterly returns, Reserve, million stock million

Paystack. two thirds third interest accounts the highlight of will net by to by such on QX about rates, as of X.X% decline ones impact comments driven sequential activity. net lower day Turning driven items interest with revenue other the and was interest revenue other My changes. hedging and down the

a As again average current rate the have NIR reminder, they although short-term increased minimal in quarter, deposits this environment. low value

summarizes and securities deposits Turning to Page trends. X, which

fourth driver again balances larger the by and a $XX grow, up were and quarter, monetary ago fiscal mentioned, was to As X% of system the QX or the excess continue was from year and $XX fourth a case XX% in quarter average growth a deposit from in liquidity or stimulus. on As in billion the up billion driven

securities the billion to was the year. On portfolio in quarter portfolio. approximately the the prior XX% or up Turning and over average, fourth $XX

the risk non-agency do and to while MBS conservative invest improve our Within communities we profile. to securities in primarily corporate as portfolio yield, in bonds look investment-grade non-HQLA we securities, maintaining continue

the also call X. margin portfolio on that capital X, Turning earlier/ continued which to loan opportunistically as as Page Act expenses other and overview covered to well Page XX an provides as such grow We margin fee financing. lending lending

in strong FX on services fee partially revenue ago normalization As quarter to spreads volumes XX% down due lower quarter. the declined impact of and mentioned up down and X%, interest low X%. client other services of quarter to NIR XX%. have fourth by as earlier, investment the year was XX% ex-waivers total compared and investment Fee revenue was year-on-year revenues a waivers rates volatility. and FX up NIR strong offset higher the in and year-over-year

trillion impact of new market increased net on and/or dollar of a business. custody back client weaker year-over-year U.S. under the administration $XX.X XX% and Assets to values higher the favorable inflows, and

I move the business my to comments line to focus fees. As I'm discussion, going on

up comparatively remained were continue pipeline fee revenue last by strong excluding quarter The primarily Asset despite slightly levels client to waivers and the fees impact lower high activity offset ratios another and improve. market to servicing period strong waivers. FX fee reflecting year. higher partially Pershing higher had a of win-loss

net revenue up were Fund quarter. excluding Mutual Year-over-year, fee down, clearing saw would have daily XX% strong $XX were billion the they about remains we new been and from XX% with of fees While up X%. waivers. the asset accounts up fourth assets clearing about in up flows were continued Transactional activity average quarter.

Although expect Treasury DR. services fee XXXX. by waivers mostly as HR to driven and Services dividends on to do COVID-related normalize we up waivers fee decrease this modestly move as fees in we impact the volumes were and quarter. continued year-ago payment to higher back primarily Collateral Clearance higher of the balances shift and money Management market in due were and elevated products. slightly margin down volumes higher a fund fees to fees

increased volumes XX in offset decline business drivers key year-over-year affect balances financing in businesses. for intraday and comparison of summarizes slight growth services revenue non-U.S. our fees by organic and clearing investment fees. triparty U.S. the was for the Page our lower Continued each that

to Investment on Management Wealth XX. Turning and Page

a and XX market up having were $XX As $X.X fourth of a steady Wealth three-year year-over-year, Investment grew quarter of XX% $XXX back up noted billion ago. LDI Non-mortgage Investment to values impact increased the well assets dollar to inflows basis, Management Management to on current in inflows a lower positive up also in as from billion, index inflows. up over fixed management for levels, a XXX were and quarter, performance the under inflows with long-term as weaker net straight compared primarily quarter's are performance dollar two quarter of quarter Wealth XX%. fourth basis to deposits market strong ranked higher primarily billion, quarter. earlier, our income than tier record pure of fee year-ago loss net quartiles against the X% trillion than market on due a impact client the including of and the benefit of a fees the of assets total by from top strong in strong weaker despite as year-ago held remains due compared revenue Investment strategies management were In market. driven high record more and XX% our top offset year XX% investment of and had equity negative XX% Client waivers Overall XX% grew revenues and rankings and U.S. value more inflows. gains a higher higher and revenue year-over-year the loans $XX funds. we points and first up.

other Page comparison energy turning the reflected earlier. few investment The year-over-year in segments comp impacted expense the on comment impairment outlook. Now primarily was of accrual primarily year-ago A about revenue XX. to The renewable the reversals by incentive increase quarter. as noted the one

waivers, the partially of negative impact the servicing think waivers we offset With second a unchanged. rates about This compared guidance of expect balances. and to we have NIR a As on XXXX, to our distribution XXXX. NIR, just quarter. due higher $XXX to curve remains be for by net XX% implies million $XX modest around on expense for will a we around million approximately down will XX% do to revenues for to full the balance lower to be like NIR using year forward regard full year This of basis

rate regard With year to higher for previous of with to quarter higher than volume. fee was first year, more do ex-waivers, be second the first half the expect we full quarter. growth to the the So in guidance significantly the line the in

going volumes those forward. expect to We moderate

up items. to gathered be previously we X.X% expenses excluding about Regarding notable

Given quarter, expenses the them expect we be higher X%. to now this about

on currency that be now As flat we XX a and constant basis, about basis will will reminder, a that year-on-year we guided points.

Finally, in XXXX. we still rate, to terms effective our XX% be for of tax expected approximately

However, proposals we closely. latest tax monitoring federal the thoroughly

shareholder capital terms Federal allow pay which the with In approximately again quarter. compliance quarterly second dividend of of $XXX repurchase will repurchases share in common our modified to to limitations, Reserve we'll million market in we continue the will return, stock and us open once make

and SPV We're will Looking the stress beyond We Reserve's operating will with CCAR the in that and to closely. framework, return second allow flexibility operator, that guidance can open following the earnings questions? With more they indicated the quarter. management line look and the more the to quarter, that quarter. we under forward which a third please the stress of capital than Federal buffer will indications XXX% in the for should you shareholders latest implement starting capital likely banks for do for up that results framework test third mean receiving

Operator

course, Instructions] Hawken first Brennan thank question you. Please of go Of with [Operator our line the comes UBS. And from ahead.

Brennan Hawken

taking for which returning comments SEC believe. the and those Emily your thanks question. some Tier of to the actually, to returns. approach, Ed, I ask was The X.X morning, on buffer my now with guided inside capital I X about band, was to Good leverage hoping of capital ratio X

help have which to maybe could that It on be levers have all also, walk that peers. to rigid how that buffer bit front? you've dynamics? is referenced above through applied? then of And might that those So a seems you some You us you pull,

a you the growth where -- you underneath the allow yourself position given past? unusual are in a could you in And for that time buffer to of so, go period would

Emily Portney

the question. for Sure. Thanks

system, comfortable are without of been are XX with Having a very clients And course, to said So where with there of we deposits additional absolutely closely. will reserves months, the But that, our in balance continue now. our the our of last saying we sheet. over we're goes the that, the in course it system. lot support managing deposits have liquidity

have deposits A a It's liquidity with our has some it's those off-balance to so is large a portion working basically And non-operational explore that of we Thankfully, alternatives. open of so, very search successfully excess, of and good vehicles. platform sheet those clients and direct we've in deposits. platform. non-operational. seen that been We've to to lots surge move an

has that very been effective. So

We pointing given over in It's my as carefully. hold XXX into we rate X.X% did imbalances. unprecedented this that out chairman our I the basically are unprecedented basis size prepared really there and to well given Reg for You a period really comfortable that the very kind seen, in below in would in Ultimately, buffer given do of mention what of also changes, as significant dipping system, any dipping very feel would leverage buffer liquidity both absorb particular is a points minimums. any correct we excess for the We And comfortable impact remarks certain that's the OCI, environment. as we've of to feel time. buffer.

course, running the certainly above minimum. Of regulatory

Brennan Hawken

Right.

then interest-bearing grows? will growth growth this to attention to or the pay it is that that asset because the looking be here growth it question Which may process That's, attention. more? the on helps. and deposit you one Maybe were I seemed asset up. temporary? deposits when more other That to balance an some indicative? one is interest-bearing more off-balance As big more Or is in sheet. Was great sheet that's as that Okay. you growth the And encouraging lagged at of average a hear. folks options off-balance therefore, just work just sheet. sheet a consider it it the to wasn't referenced? Which money gauge this the some seemed asset though therefore gap. we of quarter basis It growth putting deposit catch on all -- you'll should balance quarter, just be those we And interest-bearing pay one we should

about wasn't So you. Thank that. sure

Emily Portney

Yeah. Sure.

significant and we of I mentioned, So, that think portion we've the just growth seen, is excess think deposit certainly, and a non-operational. do so I

duration. portfolio loan So or any it's very securities real hard the portfolio to into the for that really deport redeploy

sitting obviously that to as points, result, earning accretive to it the of but is So basis overall a dilutive marginally XX NIM, just NIR at is obviously is which course, so. just of a lot Fed

in invest think the just really end short to So project. lower. despite about we grind end of NIR course, did the duration steepening the general, And forward the also the of when of of we And curve the curve, we long see just the use the more five-year that course, in the to didn't mark. up the But much be And extent of extraordinarily and/or long is two is, curve curb shift steepen to that continue go as helpful. upwards, as to the will we where does end.

Brennan Hawken

Thanks for color. the

Operator

our Deutsche next from the ahead. of line take We'll go Please Bank. question Bedell Brian with

Brian Bedell

Great. Thanks. Can Good me? morning, folks. hear you

Thomas Gibbons

hear can We Brian. Yes, you.

Brian Bedell

Great. Thanks.

one and sensitive is just interest fee think net I and rate more revenue down. waiver

it as Just deposit we get it before bit a to guidance back stability, similar it waivers. with move the little you into at or the that bit second NIR in securities quarter. deposits, coming see fee depend excess an as sort is we So trying are through to taking we more full second little a go really of at, quarter? put And year, that there into year to the quarter your maybe second then to the on I'm into the are ability given And strategy portfolio, the we on up? what

that? to XXX that you not had back this but you if said thought that you clarify half in based for balances. Can he going was sure was that the then think the I and quarter, second I got I'm include on correct,

Emily Portney

Sure.

I upon and don't quarter-by-quarter much levels, upon and is so or ultimately balances rate we obviously of is really as as that the other so projections or full and NIR, factors, of of -- the terms same of dependent I all what much are it prepayment baked and would projection quarter-by-quarter into deposit as curve is it give for the is in So year NIR dependent XX% guidance is original which year-on-year. reconfirmed projections. which our down say our just given still And XX%

that hasn't that changed So fully.

waivers. terms In of

function market Basically, two what Also as go rates. balances. quarter this term funds rates, saw repo So a six-months And rates money lower, waivers to of is and three-months a balances are function well short things. grind so specifically actually, both actually that's of higher. we as those

at result, also impact waivers. bit forward than curve were however a was higher that overall positive total As project They were slightly again, million. the just the $XXX waivers originally And to a to revenues. reuse anticipated --

those XXXX half second the I of It's of till the recover look, probably moves, with overall and latter forward that size to always waivers, and But, about the of would those million. or be And then waivers. XXXX. Fed probably slightly it's the at will X%. money way, about $XXX talking peak at hit historical between to curve, And of to -- very we're -- about But we first waivers XXX% remind when at Looking the market the when that cetera. albeit line second balances, quarter. in think CEOs of et the that the quarter and Fed excess funds expect waivers 'XX, year not the the also are relationship we the -- fees XX% be in in to eventually hit half more like rates will by probably We of close revenues. people, most would then talking negative XXXX

Brian Bedell

good the quarter. is Definitely. could you you growth, it And pick good question Vault. said that? very That's data Data mentioned then Maybe a demand to second have of And just color. organic X% up the analytics the on you talk for drivers could with about this Todd, you

could talk But at drivers is yet. you the that maybe Sounds run-rate like in organic contract of in growth a in rate if just and not mentioned not about momentum the you beginning the -- that.

Thomas Gibbons

Sure.

So thanks for question, the Brian.

I go. very in obviously activity. Hard to to we project is volumes you, going lot their at So which But is a and some the provided of Pershing got not to that. we that of benefit this exactly activity Emily were level. good probably really did that nice flows quarter, high, think is first number is the which sustainable the reflected where particularly movement get But a -- guidance, accounts.

them also expect that with lost growth lot a this on had moderate seeing somewhat. we're year. some I I in as do impact And well good previous that that'll clients We purging as with out point So we existing later the balances call us did of said, to there. business

got well will organic our rates momentum growth by we interest But pretty to strong both half. it's sustained be are just purging is seeing So a business masked impact in pipelines. the as about lost second underlying that bit all going of it, as but strong businesses, across the that to

build to And converted pipeline to the taken so we've the sales, we continue as that as pipeline.

with now Data. sales, win lot Vault of -- We're mentioned, payment retention good. deeper clients have and of of I be some win-loss We has improving, our to our number another a relationships and ratios significant ratio Data very a in A We've pretty higher with interest actually to applications quarter flows. loss before. big have are our and we the signed that a in analytics continued for to -- described and we've and client. that building seeing one recovery be

And So opportunities seeing there. picking back lot up it's recovery. on some We've some Treasury its largely pretty also share. recovery We're global. of got economic Services, we're payments. commercial which is good market interesting A

space. able real forward, what do to look pretty the in we're time we be might As payments we excited

we're assets. is off good management. improvement grow. built pick Management that's Connect fact we're we continue and Wealth But in And going capability extraordinary that Bond making continue providing meaningful this the -- core last to payment we've seeing to in clients. middle up businesses, was we're year. had system. The our an that the that quarter collateral Asset an even It And talking China's global up custody, of We're that service to positive to Clearing exciting, innovative and confident the investments about functions, been the wealth. office in across flows. both we

So, in good quarter. activity momentum by strong very underlying first helped the

Brian Bedell

That's great. Thank All you. right.

Thomas Gibbons

Thanks, Brian.

Operator

question comes with of next Stanley. Our the that line from go Betsy Please ahead. Graseck Morgan

Betsy Graseck

Hi, good morning.

Thomas Gibbons

Hi, Betsy.

Emily Portney

Good morning.

Betsy Graseck

you to doing build kind to A understand a is out? be what are you that of physicals? side assets, to that the roll cryptocurrencies on little us side? the are anticipating being questions, kind you're aperture the the the digital the be how pace bit this Okay. wanted couple -- the opportunity to technical this wide you Could that of of around able you're on custodying And and Just on going remind -- out the thing. going

Thomas Gibbons

Sure, take Todd. it. I'll Okay. Betsy. It's

so about contracts money Things asset and digitize couldn't talk is traditional So you going put can We digitizing that and it easily think be when securities to like eligible asset past make an trust that efficient. that efforts, do in more into and make repo, be we other more able might corporate can mobilized. digital well quite of we as you there's can we're for the to much, about it bit what do a digitize them, fund the what our as activity, they're which talking and smart to much the businesses. market

So it. that's of one element

developing just and now. digitization is is to in think already finality, we're thing we bank it currency, digital really which in that central XX/X could is involved with other The a see trade approvals of there'll going a We're be regulatory currencies. form, which the for consortium

gets and So we do be me, -- there currencies, is those customizing will already it that And highest the well. as and we digitizing digital would really be existing excuse is be currencies. the are we fiat them the around thing wherever cryptocurrencies, there'll but think --

end across prototype, building by shown offering the have as been and with working we on of institutional expect things we're year, the to three clients of So have out we a be all that interest. those capabilities

underlying of have any that So assets. if the the those you yes, digitized be cryptocurrency will, for one we would actually or custodian wallet or the particular

Betsy Graseck

Okay.

would be custodying somebody out be to else? not you So you're sub-custodying physicals, actually going the that

Thomas Gibbons

our point. not at this is intent That

Betsy Graseck

timeframe? the timeframe to Is or what's a getting then, 'XX for XXXX market? that And

Thomas Gibbons

the some XXXX. of that for towards earlier be may you'll -- bit out it a little some hearing be end We it. But things of expect elements

Betsy Graseck

I them working Okay. about this the And the climate And how prepared comment then the to footprint? your clients? remarks, speak? of other will was on climate-friendly asking also it's I it just working in is clients, you this want your do around question, with your so you to your if get you part can with Is that touch mean, had you anticipate about do? thing more base help Todd. own Or is what

Thomas Gibbons

Yeah.

active. Mellon an carbon at very a our it, BNY Betsy. is own other we've elements waste, doing footprint, and we of We One carbon Climate as So we're there's are we've very recently really what And around what been -- report, two for enterprise, And which we specific example. Considering February, published activities. to gave done published examples in environmental-related carbon-neutral.

an of We have financial that financial that And the been as And institutions period the only given -- over A-rating by have been is on past we've the five time. that of named gotten climate. have them for rating CDP, been institution eight-years. extended an we're one we've really

what a and footprint. So firm as paper carbon doing managing and we're that's

In terms also providing we're we're is of clients. what services doing to

of on trustee function the to establish cloud-sourcing we addition, and is have that license a But in client data out own ESG the trustee on clients goes cloud-based one things their customize with and asset application very we that that in can a we the For providers. certainly our And the servicing capability bonds. example, use space, allowing need. that. interesting data The And solution. we're the what from analytics brings you of clients along reviews And a techniques Green come basically help offer our largest of portfolios.

data there's have loop feedback got securities might XXX data information on providers. connected of are constant constantly particular then We to a in amount application. of they that to X.X enhancing the the that kind million they're to so We the security. And providers a

So about that. we're excited

quite space, on attractive them for servicing were an a in it on based was quite we usage. clients And Investment space, permanent And the that addition a just have as we're We building ETF now. that, we're just And few ESG products. we few awarded know in ESG. our Management in contracting to

So it's can that forms. own just those right commercial One help The element we the two is for is company. thing really number in goes businesses. our doing the two our

Betsy Graseck

Okay, you. Appreciate that thank color.

Thomas Gibbons

Betsy. Thanks,

Operator

Alex ahead. question Our Sachs. Goldman of Please the from next Blostein go comes with line

Alex Blostein

Todd question capital. well. around another Emily. and Maybe Hope doing you are guys good Hey, morning,

guys, you that currently? little the authorized there'll heard you us I have that So Obviously, obviously buyback kind targeting as targeted while be you for against over XXX% well. you have something help significant that's of Can a payout, calibrate third to technical kind just willingness us in your X some done the the below get to help Tier think go quarter restrictions X.X% given maybe ultimately of volume through comments threshold. that relative probably you But that the could and guys leverage.

how So through could just kind think to done. get trying much of you ultimately

Emily Portney

Sure.

last do remind are had fourth to to billion in this up given ultimately, quarter to the the $X.X quarter buybacks third in So, want year of you was the Board that mentioning just approval. correct I approval folks, of through year. we

could in of of cetera. couldn't execute or Fed's allow much third And buybacks SCB unlikely tend the say, framework, be would the et going we much in as to pretty wouldn't I just the we XXX% say, Given that And literally much which of second earnings program. entirety billion for the $X.X as that the should of do, through more in catch probably we up anything we do. flexibility, in limitations as assuming fourth XXX% the the I return terms that on do should will execute actually ADB to -- we as are could in the does of to does implemented quarter, it's to we Fed quarter that return hope we But certainly allowed. in quarter, of excess excess

Alex Blostein

NIR bit some Got more. it. That's helpful. And then dynamics a maybe little the we can of unpack

to optimize I you terms room flattish you're I the guess amortization. your then was to a missed it, the sheet, around assume or pricing you for we're I if one, not balance know for the guess comments am whole lower quarter for in that a on but are NIR your deposit of little deposits in what pushing So can full terms two premium don't what bit there it there's think in question targeting. there. year Is of what clarify do I guidance, grind to guys guys really the to as year? clients? I trying roughly rest clause, it and wanted the premium questions lot I just does of And

Emily Portney

Sure.

first deposit. just So about talking

U.S. And well that an You deposit as the rates are remember, right, dollar as flat. average are across non-U.S. dollar. to relatively that's

for that We close the for charging are and in rate to I yen. this the pretty Japanese know but -- if get mean, this to. much not in example, I there the probably -- ultimately we is is I charging of look, trough, course euros US. don't for the We're guess

earn for start you And necessary. for do if more or could that charging negative in to is certainly then that if about We start rates you in charging money, don't course, Of deposits. actually went U.S., the we deposits, if earn feel you start unhappy ironically, NIR.

intention So, but the the moment. at that isn't

-- your In of terms

Thomas Gibbons

that. Let me to just ask something

to for And guidance, that So to limit possibility have think seen on any being we've provided. talked really bit. maybe They the about rates I a go Fed Alex, little time. negative they've of mean that rates any sustainable them negative repo

nature of limited if are we were through the go through to scrub we to the down. as value think policy dip -- very do and them. probably But deposits that we that obviously we've there the as actions gotten, So that

against them. Now capital hold to we've got

to them more winding there's but lot are we whole We down, a down. grind not

Alex Blostein

Yep.

Thomas Gibbons

second Emily one? certainly, then And

Emily Portney

Sure.

based a MBS just into the of our we've On MBS down prepayment upon just in NIR projections, already slowing rates. in rising prepayments trajectory space, account taken the

about slow XX% to sizing, would it So we MBS by in probably terms by just down XX% prepayment to about the think to of expect speeds year-end.

Alex Blostein

you Thank very Great. much.

Thomas Gibbons

Alex. Thanks,

Operator

Wells question the Please of Our Mike next line comes with Mayo ahead. Securities. go from Fargo

Mike Mayo

Hi.

world fee that? good And behavior? seeing that retail some or purging have you you volumes what had like a through are talked servicing growth into moderate. purging? about expectations that You Is You that of kind window in the that should around

Thomas Gibbons

take Mike. Yeah, that. I'll

it's think I -- combination a things. it's of a So

elevated that interesting business subside saw January March, institutional a the first February. quarter. the active in expect little it's more is a But probably And what's from in would see institutional in And some we does a somewhat and side. we as trading levels business We've we been retail the more active have the space. seen the and little probably in was retail a the was But to you as is know. we've lot of activity purging seen seen as activity in that. So retail the -- high of side that very that well

Mike Mayo

Okay.

that? I So as work, to they you're less return as do the back on? to mean, or you retail quarter in seeing a slowdown related trading went trade people anything think

Thomas Gibbons

eye around the that. doing you it's I little to supervisors agree there And system. at it's on their massive what But is go is a very cash because think got not a keep We amount to sure more? somewhere. sloshing say, what I'm an they're Mike, their of remember hard to desks bit got

the pointed -- They're it rate investment and XX% sitting of going I let One lose holding cash. doubled in in it either average. national savings out to households XX% value spend just or are cash. things of that got the GDP with the We've

but -- we're our probably is going yours. guess So that to guess see lower it's as activity, as my good is

Mike Mayo

one question the on just And Okay. fee then, waivers. last

but I Your mean, can shareholders customers hopefully, the you're $XXX mean, -- benefit I this coming must million in fee mean, don't love second this goodwill, is I waivers building up. long-term from you. is that. quarter

deposits, other hope for there goodwill. you charge to going just have just not or options certainly mean, [eat] any long-term I So and you get it to or

Thomas Gibbons

on follow start you up Let can Emily and it. me

up ending cash even ending money of in up funds. market or a in lot the is So, excess balances

considered we to cash continue -- see this build. we So

are going though fee So million to $XXX it's awesome. interest balances just that's that waivers, driven think when it's lot recover. be of of excess don't rates A even there we by

we've short And little the it the things a on of reserves recently. a the that pointing can of a kind to said, market end in speak seen is in the news of bit turns reflected can system good on possibility rates time the firm lot bit has curve. Just last do the excess we've like improved the think That recently being which this forward we earn cycle. upside it up provides still. think to the we been actually contract. through we went obviously little a And the around little will we of bit And when Fed

even the trough. that interest a And the making now is We using could at the that days trough. like environment. being we said to XX% recover bit are obviously the quarter. it the that still we'll be rates to waivers, acted we're So significant a we during ran We worsen or when we've the that will fee little think did think a is very it they But we gave with with thing few operating between earnings. guidance think got we first curve from lower. are ago, waivers margin, NIR And even done and fee close it. we other assumption that by forward to That a close hit

And so start the of now business model to to off is level. this going grow

Mike Mayo

you. Great. Thank

Emily Portney

to thing the just I Mike, portion that remember of add is, are distribute. want large those waivers just to that really only just that funds we a

where fees lower that kind of just the Asset Management. it's recipient versus So the actually in of competitive waivers we're offering

Mike Mayo

that. Great, thank for you

Operator

ahead. comes of with And from line the Usdin question go that Please our Ken Jeffries. next

Ken Usdin

Thanks. Good morning.

to was quarter up Just follow bulkier the had Asset I the had last sequentially. repricing nice onetime of line. mentioned It that wondered, some things. of kind fee and Services And you just on X% see improvement a

a This you there's that quarter, bit of activity. little mentioned elevated

do kind just clear line any of should anything new of the Thanks. from have repricing Just wondering perspective, outlook a expected -- trajectory on we we an of year? know, of onboarding kind sight wins and meaningful about this

Thomas Gibbons

it. Emily, do you to want take

Emily Portney

Sure.

due is transaction businesses and all our -- volumes servicing servicing XX% asset was up in the -- to of And significantly, fees. double XX% just, volumes. quarter-on-quarter. and levels in assets servicing across some that And transaction So, digits we uptick asset up cases base based remaining were is on of did see terms a They nice actually sequentially. X%, asset of asset

the expect second our volumes also we're size in As in strong, we that resonating bit stats to with Todd pipeline there's across we that business said the making are investments deals clients. business, very do and half. average the also feel the is Retention significant bigger. that, very pipeline a the strong are alluded to, in moderate that Having strong, are fundamentals

was The that been able with clients totally to structural same we growth for to that time. we've happened was of really terms RFP repricing. that the In that offset quarter nothing observed a our that modest pretty There's been retention, further to clients large tied -- new at business that did always with just It's we experience really be last repricing few the and headwind efficiency. a the repricing. existing lumpy a going business bit

Ken Usdin

it. then one Emily. Got balance just for that, more Thanks And sheet question.

the as anticipating are forward Fed your terms that how the act How the to in? flowed balance changes potential accommodation, in we you. have certainly the versus you banks end go sheet? with regional do Thank that would of deposits traditional of think balance on you QE? and In to more flowed deposits lend in of your incremental terms seem retention And sheet just

Emily Portney

Sure.

X% or think as the actually very to up basically balance we So, on so -- -- about ultimately, ends on much we increases hard we depends sheet. when It's reserves, our think tell Fed the economic and roughly backdrop.

starts those think, that would we recede quickly quarters As I know, monetary two growth large to And have pretty do seen, of we Todd, non-operating. to did last start that. don't interest the anything a to excess, you when that policy do if think portion rates and normalize. normalize, add I the to deposits, mention, deposits is the that especially we've and in in so

Thomas Gibbons

Yeah.

seen million increases. $XXX I something think spike. a balance the of to if which event, you really back go We've close previously COVID led to to

in the of our was into built But Some amount naturally growth of we relationships as businesses. that that excess was significant what call with definition. that and comes we fit a intentional,

between probably, off. billion to would imagined billion billion increase somewhere have we'd roll $XX XXX that $XX of So

Ken Usdin

Got it? you. Thank Okay.

Thomas Gibbons

Ken. Thanks

Operator

from the ahead. Mitchell comes Our Jim Securities. Global next of question Seaport go line from Please

Jim Mitchell

think seem implies here. sort implication And are guidance I Maybe does going to current I yields if at NII stabilizing that of that your it good kind levels. securities of Hey, hold like the morning. about just, on NII, is of sort in assume,

to kind when the it, balance I necessarily. know forward, five-years’ what to point? about but not try we I if assume assumed you've and But two -- important. think static of if level I a inflection think isolate So of could sheet that's going we What be indicated rates

that. we've to And to basis Do we the XX start to translate see I now maybe moving other at two should structure five-year into that we the to what the go need points yields going mean, of further than out see three-year? going had not level way? higher. rate You're

Thomas Gibbons

two I add? Number then key of and short elements can curve. Jim. don't the you Emily start think Why I So to end one is really it, the

got short-term we've pricing the example, LIBOR quarter, from significant down are one-month three indices. X once off of LIBOR in and assets that And this again, of three-months basis a or So for basis was LIBOR. points we for fourth saw average number points its quarter

the that -- a the duration on to we that But of and going keep got half would on the of offset basically and around move years has end there's steepening curve. saw curve. we and slowly that roll be offset to of mean up there been longer that benefit into two get off out will that the is short come five-years benefit reinvestment But a the by it the significant the assets and we helpful, it. the so part it's offset what been then So --

Jim Mitchell

I help you? assuming what end from That just here. make gets at stable really was sense. through, -- starts are to pretty think it trying rates the What longer to kind short

Thomas Gibbons

does Yeah. is I what of mortgage-backed securities. mean and five XX the because extends the years, that it duration

reinvesting level. yields higher declines. pick of reinvested the duration to in into the because constantly stuff It gets and premium we're go stuff up would and maintain currently that exists amortization their So -- the And portfolio.

be would here. it So helpful

Emily Portney

helpful disclosed realize that that. you in Q, to just for sensitivities we some Jim, And the be might

Jim Mitchell

level I of that but the curve Thanks. got rates what sense the middle about would talk can it. I helpful, just in offline. trying be to we get a of of

Thomas Gibbons

Jim. Thanks,

Operator

question Wolfe Research. Steven go next that our ahead. of from Chubak line Please from And comes the

Michael Anagnostakis

Anagnostakis This for morning. Steven. Michael on Hey, is good

for appreciate you the on excess of Just portfolio? guide following how premium securities And deploying detail the deployment gave guide. some color can here. the on NII much And the am us as of contemplated up in just well. that is that liquidity color you some you're Maybe around NII provide around from I where

Emily Portney

basically full going But, basically prepayment XX%, XX% our the talked forward quarter. the about not NIR guidance year for portfolio down rate mean the deposits we our based are speeds about where non-HQLA being to Sure. quarter. just the within I marginally it's last they remaining pretty if curve, much the a increasing And bit are flat securities MBS curve I still to when coming where on down. -- is and

key the are those So assumptions.

Michael Anagnostakis

Thank you for taking my questions.

Thomas Gibbons

Steven. Thanks,

Operator

line RBC. with that ahead. from Gerard question next the Our comes of Cassidy go Please

Gerard Cassidy

you New Bank that Good about Emily. York for York, of one. and working you be? other digitalization to new over cryptocurrencies opportunities over event as new out for been morning, York New are guys again, introduced the talked number of can this on, with about the And involved big of you you about. the years comparing years? you I How new compare year's that if it Todd. when the that this at ventures that you've morning. the frame of that? has already you've non-traditional in Bank digital When assets think think New Good us your products of like Can think custody

Thomas Gibbons

Yeah.

XX% noise gold to it's custodized a tell. early the think that it's so is of Bitcoin not gold and think only frankly. is I asset if still got, I mean, of you important, about all that

ourselves decentralized opportunities. to lot coming. work getting position can players going that I fintechs finance and So think it's are of do well be and an important think to think with do I a fintechs build hype. I do is we

I think payments. see to you're going it in

to see It's custody. going this just an opportunity see at will for of are is you hard It how think point. going I to to grow. it that it big in -- say me you're

we choice. give think the to need I investors more is that thing important

to assets to just And hold we into able need to want other they a basis, way that currently to is non-traditional so that. eliminates be help if to able do forth, need reporting lot the them a things, valuations enables critically to be that they in important. counterparty and them which we get And do assets, do to faster, exists, which high. to want they of that them risk mobilize went also on able to If is alternatives help and also do be consolidated so to to a as and

very coming And ultimately I an are underlying for number comes, it's think is ETFs crypto-related. me full good growth really important are part very, a early product speculate. capability. small a think We so there out, big they I How little that obviously of it on think it's the to of base. There just become,

Gerard Cassidy

I see.

go the ahead second touched -- guys Emily. And Okay, you thank you.

Emily Portney

little as also it Yeah. about one was going which thing, retention I add is much new business. just it's about to is as

Our securities clients traditional are demanding as integrated well currencies. assets, digital and capabilities across as

Gerard Cassidy

Got it. you. Thank

the about always have us and the constraint, ratio talked the is ratio. told guys again binding You it leverage you not CETX today,

you You not where pointed that. X.X%, part to far But leverage then to your the we that we they it a At well? point really growth, you do would below ratio ratio the leverage which regulatory actually your back down buybacks? you growth? is ratio should we play maybe problem. that say, get what from we've down? deposit a some minimums, falling help And at ratio, of dip QE, sheet balance understand too Even leverage ratio would what as is the a Emily relief the got well above tapering, because point, have down, get slow And linked the should but may come though the still to into away CETX have meaning as on would leverage that,

Thomas Gibbons

So yeah.

Emily, you add. can start me Let and then

If as we've for on buffer leverage it, about a think ratio business the you put usual.

could and we go higher? a And the I income things so, to bit reflects the normalize, up the start based spike little interest of of as view it business on of usual. deposits, our runoff portfolio? interest but isn't $XX securities routinely taken buffer a has comprehensive in buffer deposits potential in a to when Yeah, -- interest for But due really the probably already part for billion or me, questions, spike I indicated the And that our for in to excuse now for this other reason frankly, have in Now as earlier decline in the it mark-to-market a may. is spike one deposits. place. on think And

high. amount, to also that the an So that's And OCI on enormous enormous that from ratio. be impact that has the coverage

to would made environment sure, And said, ahead this dip you're that. thing I in going the we where X% If fact are a we've it that not in to into bike, given So then not buffers. we go year were already unreasonable us we is makes I'm ago, sense probably our and for a an environment. this say an

Emily Portney

need hard a The room. deposits in -- considerable only today. to increase towards plenty just, add were might But even are would where we going from is thing there, We've there going even I of if certainly like be X%. in comfortable we got you it's

Gerard Cassidy

you. Thank good. Very

Thomas Gibbons

Thanks Gerard.

Operator

Research. our question Robert Please from comes Instructions] next [Operator Wildhack of go from ahead. Autonomous line And the

Robert Wildhack

guys. back go morning, and the second. cryptocurrency If to digital for we Good asset could space a

some taking a we of that of we've with just forward market of service? announcements evolution there inflection Is it part a because think quarter. the clearly is more kind of natural few steps in You're or the you that point made your hit this

Thomas Gibbons

to the it's year. say of in clients We're evolution. we natural discussions, The side and this in assets. see digital last Yeah. beginning getting the Rob, institutional with was started this the more and a would side. of year having end institutional interested And of working I toward more deep more

our across of started we them for a working broad with business. And so, solutions part

Robert Wildhack

thanks. Okay,

Thomas Gibbons

you. Rob. Okay, Thank

Operator

Kleinhanzl Please from with Brian go question ahead. the KBW. And final comes our line of

Brian Kleinhanzl

pricing is Thanks. Yep. transaction take you assets do here. on for security how those and volume we at? the levels want steady term, Where questions XX% volume. the more here? turns as from One basis underlying would percentages? pricing XX% to held this Two with to exhibit for longer asset the Are be here? mix on you how think you off them that So And state you're get transaction trying have

Emily Portney

Todd? Do you want me to take that,

Thomas Gibbons

Sure.

Emily Portney

the So I business. XX-XX nature mean, the the just of is split

we're based So direction. stream asset price costs. dynamics in just XX% much that years, we not of and transaction the like the is about levels, asset any on XX% or that's it's are so on for servicing. to based move of pretty revenue how And really trying About is and

So pretty it's norm. the much

Brian Kleinhanzl

Okay.

I sensitivity question, rates allocate drivers we money services The asset of interest a Thanks. driven at are about revenues go looked and services interest by forward kind on been above of there as and mean, what impacted issuer fee waivers, is any revenue we to both rates those by second clearing basis? part and way market think The beyond.

Thomas Gibbons

Sure.

sweeps of we balance off or through are balance deposit it taking sheet market take sheet both those businesses into So funds. either significant or and businesses on money

be the them. interest It's but it associated we've seen the cash What payments. cash with issuers so over And with we the to Money some broken you because there's to an put waivers And past intentional in activity relationships. be meaningful is split a what exactly And those in if impact. cash that -- But the make into that. is, and meaningful there. trustee to a accounts out were trust of related get on the there's it's that's the both money rate fee build sweep it's a because and they'll to of a don't where much payments fund. year will a do Treasury value, accounts, is market think build we that I it a to very operating typically, no little to paying the needs agent. of or that is come margins, expense what value frictional obviously a we and And contribution NIR. business, think deposits advance out need the as issues to in it Services contribution in the market little corporate that tends that about two important made day or less we the

ahead. go of that's to issuer we impact seeing stages year kind very over Brian. now that specific numbers services where and business. Operator, break sequentially to But that's the so late why don't year. business a meaningful the And contributor And was down And fee waivers. we're of that's out

Operator

today. now like conclude back Todd any that, the I our closing that to With does over session additional with to hand question-and-answer for remarks. or would call

Thomas Gibbons

up Relations soon. to for you Thanks out look to questions talking you our And forward care. Take of follow Magda all No. interest. any to And all and may of reach Investor course, your team.

Emily Portney

you. Thank

Operator

webcast This you. day. Have Standard Relations BNY webcast. conclude this X conference A conference of today's o'clock and be the call and replay Mellon Investor available does at on will a Thank great Time website Eastern today. PM

The Bank of New York Mellon Corporation (BK) 16 Apr 212021 Q1 Earnings call transcript