STT - Earnings call transcript Q3 2017 | State Street Corporation

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Operator

Good morning and welcome to State Street Corporation's Third Quarter of 2017 Earnings Conference Call and Webcast. Today's discussion is being broadcast live on State Street's website at investors.statestreet.com. This conference call is also being recorded for replay. State Street's conference call is copyrighted and all rights are reserved. This call may not be recorded for rebroadcast or distribution, in whole or in part, without the expressed written authorization from State Street Corporation. of will broadcast State housed authorized website. Street only this be call on The

like Ilene to Vice would I Now, introduce Investor at President Fiszel Relations State Street. of Senior Bieler,

Ilene Fiszel Bieler

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

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

these get started, most directly measures GAAP we other presentation. you operating-basis our to or to remind comparable and available slide are XXXX regulatory to that of today's measures appendix presented Before non-GAAP in non-GAAP would will XQ a the include I the presentation on measures like Reconciliations basis.

today's those XQ section factors Statements, the may our our forward-looking presentation, presentation as in those today, statements. referenced In to contain the heading Factors important under including such slide and SEC results of of our in due Risk variety our statements Form XXXX discussion XX-K. filings, Actual will factors, addition, from XXXX in materially Forward-Looking differ a

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

over Jay. it to me turn Now, let

Joseph Hooley

everyone. morning, Good

is Anthony Ostler, Street to the know. she XX Bieler. moved financial begin I also joined those of already years our I'd has in take you a experience remarks, who has reaching Fiszel and to my recently Head Before over thank a to Ilene new IR, like Ilene State out role of business moment services industry into to and welcome doesn't and of line us to

we have good remarks, quarter. my very another delivered to Now,

on business results, EPS continued and equity return equity strong and Our a momentum. meaningful in third quarter markets growth reflect in increase including strength

our client has success, servicing solutions $XXX to drive continuously new of new advancing support commitments helped turn which are We product in billion.

most and our positioned to both achieve Importantly, focusing remain new robust Beacon servicing business management Beacon. opportunities objectives We associated businesses. Street on time clients less including adding across we are asset financial to initiatives, asset data their enhancing the in our experience. By matters goals, analytics upgrading we clients XXXX less with improving what risk. State and Through remain client-facing are well our and and with capabilities client and end-to-end delivering technologies, speed,

$XXX While remains we business, in XXXX, our to we common In our share. per common stock to stock declared and capital XQ purchased our million returning approximately invest continue of key of priority. shareholders a $X.XX dividend quarterly

I'd to review Now, Slide of made like this the our strategic turning progress priorities number to X, we and some quarter. key achievements on

under and first trillion. for And as business in administration I Strength strong. pipeline franchise quarter XXXX assets the Ireland. and we've assets lifted custody record new markets two the continues of mentioned, under our to And core businesses, exceeded offshore $X levels to and in to in administration each trillion Luxemburg equity remains Our from with third of $XX.X also of growth time, in grow. our XX%

of on focus new launch distributor investors. increase or distinct from a advisors. of sole ETFs. months. assets of Asset focus we advisor follow-on market higher as total with To and under we low-cost with and delivery with year, segment, quarter suite driven as come allows recently Our their expand on have Beacon which distributor approximately over scale appreciation and fast TD as at through Ameritrade, new the a XX top segment we last expect billion, are from portfolio business Continuing ETFs, to a commission-free investment and installed ETF this inflows. new partnering XX% solutions. announced directed us to number-three primarily GE distribution the SPDR at platform institutional It's the sizeable well across wins business products quarter our with to third at being as to investment registered primarily growing a next acquired solutions, by $XXX yielding from the the to low-cost targeted to Management separate the ETF trillion our in this channel partnered business quarter channel. $X.X Across registered automate our the we end new continues was optimize yet XX onboard finished drive be our management, industry, SSgA X% flows the

point our capabilities which accelerate of to minutes upcoming fund core For has allow the Beacon assets, example, to U.S. trillion segment, XX the enabled by to mutual as respond XX modernization to the requirement, clients end-of-day improve well development $X in minutes. in XX% to by EPS is pricing as In capital approximately quarter as leverage, SEC as improving process fee operating as improving points percentage margins, while total closing, we're all X.X committed base our operating year-over-year to positive XX.X%. turning growth, shareholders and ROE financial pretax our achieving reflected to third our and goals to well us by

for me for let and following take over the we'll financial your remainder to Eric, our call turn who review performance the third the and our that of quarter Now, will questions. outlook XXXX

Eric Aboaf

to I in XQ relative XXXX and continued a XXXX. equity new the disciplined growth - and also XX.X%, percentage asset weaker XXXX results EPS year's and operating point benefited and NIM up everyone. be our Return last rate expenses Jay, of XQ U.S. in X, businesses. XXXX. business the Slide markets Please XXXX to for environment per from my asset NII, share, XQ X% results for XQ equity management to $X.XX for improved to servicing both of expanding where basis controlled, point XQ reflect start results moment. well I'll strong to further increased interest in liability activity quarter. in which review an our higher resulting than XQ added on quarter continue strength XXXX discuss rising X.X pricing, morning, X.X percentage good from will a Thank turn expense you, XXXX. XX% the and dollar third XQ

As the with also in due environment. lower expenses rate reminder, tax, currency from lower foreign calibrating earnings, a primarily a results operating share benefitted expected $X.XX share. was of is to a which XQ of associated a XX%, leverage positive higher worth focus the expenses continue to revenues. delivered tax to largely XXXX XQ to than offset as We relative approximately we on fee revenue relative impact XXXX

continue financial delivering goals increasing progress good percentage leverage. on of points of EPS see XX% our demonstrated And XQ Importantly, from and X.X positive points pre-tax a against growth to improved by margin XXXX. percentage XX.X% basis, meaningfully operating we year-to-date X.X fee to

to from growth growth a of driven X AUM AUCA drivers. increased XQ market briefly increased business Now was let turn me trillion, and two again by this combination quarter. XXXX, Both, good $XX.X to XX% review key and appreciation AUCA Slide of of momentum.

New in At and State business AUM operations new XQ EMEA. from market was Global GE X% particularly activity ETF the appreciation, by XXXX Street strong Asset business in driven as increased higher yield Management inflows on to Advisors, XXXX turn partially fee institutional to offset continue expand focus lower XQ XQ revenue by Please XXXX. during fee I'll relative from outflows primarily mandates results quarter. the Slide we our X, to where continued to franchise, related

driven players X% Overall, the from increased revenues activity. comparison equity seasonality global hedge sequential markets the see U.S. funds, to the markets fees outflows EMEA of lower and higher XXXX, the activity. were as X% with business Servicing fee fee business fee than which revenues On a usual markets, overall higher the quarter in detail the new and XXXX additional industry certain on U.S. You'll appendix basis, flat balances. end middle-office XXXX X% to These offset given and by partially increased on particularly in XQ also services, XQ. from caused weaker equity us from and XQ basis, by year-on-year growth continue new find servicing the were reflecting respectively, XQ summer a impact X% sequential wins and continued of more dollar. large

growth primarily to flows. Management foreign some increasing partially offset and - from XXXX, due share seven than XXXX, Custody our XQ global markets, the experienced moving were fees signs exchange demonstrated continued and have in strong after volumes. Fees higher We starting lower trends real Euromoney XQ reflecting market to number equity business. survey. of cash, and number to due with from XXXX this ETF institutional moderate. from we as Money Brexit decreased year's XQ volatility as fees up, We Asset finance for Enhanced ETF seen Management five new in client and growth fee operation. well gained increased what inflows to the GE the asset services by Trading by from market revenue as than investors vote, Securities last most wins better primarily Real higher recent more cash were fee impact, offset XX% outflows excluding lower

Slide XX% Moving up X, to XQ NII up was points XX basis and XXXX. from was NIM

As in interest interest the our Overall, down you low sequentially, around January XXXX down reducing operate. disciplined from deposits, were sequential rate Notably, and X% continued continue NII and year-over-year we bearing saw remain CDs increased only balance slow for pricing sheet to to decreased disciplined basis and XXXX. pricing. to non-interest deposit U.S. currencies in manage the NII to of bearing line driven our in June relatively interest U.S. of and guidance U.S. liability across we're reduce NIM higher benefitted and deposits accounts in XX%. quarter which X bearing we full CDs, On interest and see management sheet costs from $XX cost client [ph] the by balance XQ basis, higher which wholesale sequentially. XXXX, have with deposits X% rates graph momentum can a bearing. client points XQ major non-USC from realizing of carefully by a increased client billion deposit as rotation size the betas Deposits

increase to XXXX from XXXX review percentage Now XQ to point foreign translation. currency expenses. expenses X% I'll to XQ approximately Slide that with XQ turn XXXX X of approximately increased related XX

performance expenses savings. FX business, was well partially offset investments the of the XQ almost increase fees. lower sizeable information costs XXXX, percentage lifted portion systems, year-ago new for increasing This incentive merit in support employees. merit as by expenses in Beacon professional related we an the some costs occupancy on-boarding a we Compared other technology, investments, to on processing from Notably, the XQ the benefits compensation and of the transaction increase increased employee a expect quarter, XXXX, impact, dollar, the fees. additional that XQ XXXX expenses provide incentive is related reflecting charge, next X impact to savings five result Excluding U.S. points clients' from period quarters. of out weaker in during to as restructuring Beacon by example and a business, and primarily driven clients. results decreased which offset of and partially also of included Beacon within pre-tax Beacon year-over-year annual by large GAAP business six the the and new mandate new and increased annual benefits services related based reflecting which and the and payback was professional lower million to $XX primarily average increase will a compensation Compensation

As foreign increased and currency only excluding of XXXX, translation. compared to XQ the flat expenses were X% impact

turn Let State $XXX on at targeted million in remains on $XXX Slide Beacon our in XXXX. to me track review including progress Beacon. achieve least to to savings, now program million XX Street

growth the slide, external environment. we support benefits Each consider this to of the we the show investment calibrate left and side and level to year-over-year of investments pace Beacon. quarter immediate related target. XXXX, basis, recognized benefit the The initiative, $XXX multi-year each opportunities we've the carefully savings quarter to in to a year-over-year pre-tax approximately expense On in year-to-date net relative million $XXX have $XX our million expense quarter. in achieved varies approximately savings. third million And we On

across and across XXXX the the approximately side from out growth balance relative scale the benefits into platform. SSGA, identify key processes. Beacon slide, we the we We're improvement. Beacon as both corporate to last mix estate change organization. real functions benefit driving we've percentage of right XX% comes global I as from centralize our procurement with make also the organization. Each driving our technology continue will for On comes the initiatives of expanding our and traction our and And deeper benefit good in mentioned of improving quarter, The of while and getting the we broken year opportunities progress projected the

Now to our capital let's balance and sheet turn review position. to Slide XX

and direct our on We credit our chosen and to better repurchases, in client our of our common continue high-quality continue CCAR quarter. including room lending, capital sheet, reduce the through the prepare common We well a by diversified, our process. is declaring investment dividend million we returning ratios optimizing in $XXX of stress securities $X.XX annual maintain constructed remain time, make shareholders balance and focused portfolio of income stock for dividends and buying for to retaining stock modestly to but back to same capital to sheet. third and strengthen internal balance test and we've At the the to size by

that Specifically, you our increased last basis to X.X%. can see X points ratio Tier leverage from XX December

SLR Our also nicely. increased

X.X top than XXXX target. we against outlook. pre-tax the have This balanced Based XQ calibrating quarter. growth Slide and and Moving than reflect full-year strong almost margin backdrop. brief points In our me of revenue summary, provide driving well results, XXXX us of updated on X% year-to-date for growth, stand resulted year-to-date for I'll in XXXX XX, XXXX greater the original a our where expenses regarding financial update approach in to strong to positioned XXXX operating leverage our let our of more you financial on fourth focus update XX%. while revenue percentage on a and exceed Year-to-date results line fee has XQ and outlook on

gain the First, even we see quarter, to as compared to couple guidance XQ revenue we a fee range. XXXX the be to fees offset we of excluding our full revenues X% by servicing to exceed and growth, year of at high-end expect muted on expect continue third less we to Overall, be to divestitures, volatility. X% market expect of that trading higher

and expenses business activity. the dependent with revenue XXXX the a expense Second, quarter on in clients. slight backdrop third associated increase front, XQ new of we will by largely over onboarding also expect XQ the XXXX new driven on expenses quarter, the be

basis of to at high to expect As of the I we mentioned points. full guidance last XXX be fee XXX leverage quarter, year end our operating

management. Third, expansion we points, NIM re-pricing a liability more of bit continued few asset basis expect XQ to see continued from and

balance that at be anticipate build expect to We this our expect and for top-end CCAR. NII We ratios NII guidance. a of to also sheet relatively slightly smaller us will and full-year thus flat we as XQ prepare the capital continue to put

the near in to of as Lastly, third a full-year tax mentioned that to pleased the expect that both XQ increase to the we strong our our financial quarter, year-to-date range operating our earlier, full XX%. XX% I us very full-year discussed year results relative tax basis up In guidance and summary, sets XQ rate resulting rate we're in performance low-end of higher well we July. to XXXX achieve

Now, call let me Jay. to the back turn

Joseph Hooley

we available Thanks, are will now we Eric. now handle - Victoria, questions. to

Operator

first comes Your Ken question Instructions] with from [Operator line Jefferies. the Certainly. of Usdin

Ken Usdin

where trying sheet into was ago. it could I Eric, some Hey, wondering been just versus you've morning. the if good know through talk year XXXX you up purposely the Thanks, of balance was us going ratio CCAR to I permutations. leverage get a

to fourth about trying the hold balance mix expect to growth you of back forward? you're X.X%, can talk we overall the for how what and should into quarter in going just us at the rate the sheet still Going

Eric Aboaf

Sure, Ken.

little Let give you me a context.

the billion think ago, billion. deposits we a to year-and-a-half, sheet $XX decided to size the a and of down reduce I balance years the bring - choice $XX two tune made of to

process back we're bring sheet the of little is we and wanted during And I trend end and we we to ongoing making bit headway. an it's quarter which good think year tick that fourth signaled third up down. the think a quarter, January towards I it balance in saw last to why a of

X% sheet fourth about was last is it than higher now. that our year balance quarter saw You

like leverage, several we years of we've with done, positioned our and that the deposits, leverage our of we good was had we that made a X.X%. feel the So work some tier which now non-client and really both constraint tends X clients to well be tier built CCAR X progress, X.X%. binding with that, of the the kind under that book CD with then test, back And stress us ratio has including

quarter, unwind a the growing continue a those little current into downwards naturally, Going over fourth between of market but trend - will mild higher couple us And wins, clients grows to we up Nothing the continue it's the book, a CD be the as more of coming AUCA and mode we think able course efforts dramatic, the sets it we expect compress for to well with as deposit is set the be get pace our us at years, continue to back of to well new a continue. I business it as areas. point. then - that that, for coming the a cost And view nice right, - as up think of each business and us honest, usual to to kind I into deposits more we'll leave expect at year as year.

Ken Usdin

second had us just then start the the and works swap getting NIM rates? And you hawkish understand of and out. flow will you've help of the been and that my to the net more have it. who if point, questions, currency on BOE through income? benefits have Can just interest mismatch that U.S./non-U.S. the that hike kind Got the How actually ECB, you

Eric Aboaf

that the some moving ECB down are talking at bit their slowing really And expectations than expansionary been a better probably about of policy. something certainly is and right, over times which our year, England see. the starting is U.S. has to last on quite pleased clearly Bank we're Hey, Ken, it's the to X minds, point - because they'll signal half moved The around. market move. It's

it, is other net to in rising exposure half is which NII I rates rate think sterling think euros. U.S. international and within about is of about half the markets our the primarily interest for and the way to

saw from to You up $XX NII by the take rising us $XX rates million in just million quarter. a U.S.

think help - as think expansion, will happens, I even good that when a which little and bit if more. and you NIM But moves and sizable So be more euros it's see, sterling could some if about you a result. it would

Ken Usdin

Thanks, Got Eric. it.

Eric Aboaf

Yeah.

Operator

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

James Mitchell

Maybe Hey, fee bit talk rate. hedge we on could funds. color little I the just the a good appreciate morning. about

X%, think say, know drag probably I start if But funds. the hedge - X% fees area I were for if those see AUCA think we about was adding normalized normalized there is up see that even forward? XX%, have we back, that's Do lower we in some been more growth point ETFs at sense move margin. going a could to some tandem up,

Joseph Hooley

Hey, Jim, this is Jay.

one. start jump I'll that let me Let in. Eric

thing XXXX quarter the year-to-date up to versus third up reorient So guess I one X%. you XXXX I'd just the is X%,

which Third inflows, service you ETF you outflows, funds, U.S., you to the reference if the fee tipping by mentioned of mixed point the one And one, softer suggest then continue of at quarter which a data from quarter little see hedge for look a although standpoint. say, U.S. would offset - bit in almost hit is see point. the you - see industry industry. one you outflows mix that and I'd a couple I'd if we has to things, maybe fund

were the to, in seen of U.S., and or to very that go a outside of continue Ireland Europe of as and strong yet mentioned through EMEA, pretty our which book, a haven't offshore long-only the well. Eric overall the Luxembourg, is We hedge I'd ETFs hedge played comments, see flows, point fund if more his centers mix - you reflection specifically that product And industry. in good but out

into at work pretty to the the this you in would of component on It's well probably middle wouldn't I good. proportionately and like wants doing diversified. of I I been quarter look It's looking reflection a big a I little fees. consolidate the read custodians, me ask folks know year-on-year I before he one it's that. consistently is reflection level the has pipeline of And to fewer add which is anything So a to The is deal itself. among outsourcing, look Eric thing the activity, service good. the heavier is - kind that. to the only deeper about interest would more of an think more say office add mix if for in of

pretty add what generally, you'd say, to I'd I as that. know So steady goes. it don't

Eric Aboaf

the Yeah, rate. Jim, just fee add I'd on

Just - linear, different the the little business business, as servicing asset asset remember, higher services. add revenues the assets are more this you a than get in isn't management is automatically management the rates you in fee right,

It's get in market. only AUCAs [ph] kind You X% income. and equity. [ph] in XX% fixed XX% is of X% higher

and of So denominator on that rates you emerging whether have so kind then you of than the are hedge and whether funds, at it's it's And the have mix effect. markets so higher forth. U.S.

the the existing think are fee clients about with question offset from business and business more way I rates tends to existing clients something is, way denominator because in with it's do numerator the reduction doing track, business more you you'll the through. described, we is just get and So the as more the rate to think Jay clients, work the mathematical fee you with

James Mitchell

you you've What's Project feel - well, all Do second color. of little just now like you And Street Beacon? maybe are helpful Eric, question, as more your opportunities is there for there a - few get the been of Okay, the sense State your as while. good at this target that's my into it or dig trying feel look line easy of you years sense a an or over it? sense like do the course of more expense to into is next you target, any

Eric Aboaf

details a as Jim, Jay dug it Yeah, like Project of be say, of levels - original a I servicing has it's manner. expect large over that ITOT process you And very managers, years And a they on have is them couple automated hand we there over to of large fairly we think you confidence them perspective bespoken asset But funds, to take more really companies. Beacon, run on do. you'd follow and insurance customized that basis. a And a to become when and mandates into it and that, on the they because a and dug very back why usually that we that time. on initiated I've remember, I've from was execute lot I it lot more a at couple and system effort. is that Mike pension now. of like into my honest something us to in in

of And and sized you large so, march the do there to a continue across next to is around as and client client, to lot processes digitize large world the work you one as to over medium the automate simplify group clients, of those march time.

dozens so, I effort, as dozens underneath, effort. right, one And actually looked of it's Beacon isn't and

And it as I there there. program. keep that We five-year at. something So a a it four, is lot originally we announced will be think

view also we it's prepared there whether We the scrutiny. got Ron I in right. into $X.X business. asset the I our carefully, functions driving did manage to that expense it's our O'Hanley corporate of as then DNA Beacon scrutiny push Beacon because areas so be think billion the right, base well, in my part but corporate is say $X that to and is be spend remarks, needs a I billion our and under of the so Beacon continue or are continue, will new think under management And business. to we of how on, functions,

see the opportunities years. we good So in there and I coming more is always do think to

James Mitchell

Thank you much. Great. Okay. very

Operator

the line Schorr question comes of with Evercore. Glenn next Your from

Glenn Schorr

good, is under the administration, and in custody down the and Quickly assets you. the doing The the thank point Hi, out? other another something quarter. been on unique markets have X% in insurance quarter to products

Eric Aboaf

the I I Eric, the Yeah, X. the There package it's Page the the custody clients. you're on with under on significant information others phone, going pointing assets think to nothing on and on actually insurance for are Glenn, think supplemental is

flat of bring you line do the detailed What you underneath sub-lines, and a upticks above which need line volatile are private categorization equity and on we fourth got new kind that movement. of into usual - can timing just right and of got some due months. three and actually a the insurance, to other insurance so surface business, over you're equity actually offsetting in is And then private other one happens installations. couple is up down, more see the the some I categorized then it got as it's - looking the to think gets other at, - sequentially, has just which and the that's lines effectively plays is

seen we've - this it bit that. you've nothing a more So classification this little seen volatility think just as I of think than and volatility, before

Glenn Schorr

clients talk U.S. I I'm on manage and down curious could raising then okay, quickly if noticed, which of that balance quarters, sheet, the on last also paid in Okay, rate is is a your deposits environment. the how is. you of towards couple type dialogue just rate you that and what

Eric Aboaf

ago. U.S. deposits built there is balance call that years tune had $XX earning billion there's - in on book core deposits year-and-a-half, client two sheets, interest up right? the CD of the Sure. There over we the bit is things average wholesale the the couple a then I'll a to of Glenn, and

happening mix that effect. is see actually a on what's you So line

the increase paid CD down. every deposits coming U.S. And comes the rate is a Fed down, that As offsetting overall moved. up little book quarter-on-quarter, total the has time that's adjust on as we're rates we the slight bit seeing

at to we wanted - XX%. that's in Fed deposits that's XX of is points, the how basis deposits right, up we the points where unbundle just you the move and that a against U.S. the beta cost of quote client If X basis for

- external kind dynamics. expected So at of it's moving given this up we as the would have exactly

Glenn Schorr

Eric. Thanks, Awesome.

Eric Aboaf

Yeah. My pleasure.

Operator

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

Alexander Blostein

everybody. morning, good Hey,

follow-up output over a either had fee taken I the get I we've So Eric. business dynamic guess with step Totally mix years. for back an given But the rate The as the and dynamic, of hedge more issue Jay obviously around just shift servicing or what I the funds. kind cetera. a learnt year you a do next the fee effects on years? side, servicing some then for the some guess, couple as positives next loss over flat, business, of but up, Holding of non-U.S. the organic coming revenues see the reasonable et with guys of growth clearly market's BlockRock

Eric Aboaf

we've It's from is our fee there. why is some have obviously tell - on we X% was Alex, in that up market hard X% movement now to to we Eric. growth, stuck said precisely, it's overall we to to X%, X% that there which should general focus view

year-on-year, You see think, a and specifically, currency I up see servicing into on basis X% were the dive want you down if adjusted those right. you to - X% year-to-date, fees up

X% in a And more our representative. mind little for so - the

there's the clearly, out or of expanding a activity, existing fee there, there's from and right. market new but important factors business of amount Now little some business, a a of couple there there's than more headwinds, little outflows, number then activity that very there's There some point more always fund it's last in and hedge and and before, a percentage been some inflows a bit we've less called we with then the business, decade. is is amount over bit of than seen of appreciation,

like what at and particular get fee kind the on, operating the business precise is right matters I what that day. we really have at navigate fee of we're at feel and that leverage, through then, is, remunerative. margin, at it's it's part we we it's bring of we about margin think the And system and hard in as to business right, at a of what to can new business the be margin, because rate. we So end But - what then, think, always to looking we're trying

that's hopefully enough start. guidance anyway So to

Alexander Blostein

the follow-up quick sheet it. and Got just around Thanks. NIM dynamic. And balance the

kind a of composition optimizing well. nice and - structures the sounds little in about kind here is the funds a of strategy job how to side of also bit fourth less so U.S. future on more the we it quarter more given now? the hikes remixing near to we funding in back taking to clearly, NIM of do now, funding the changes or place of saw the to next sensitivity and think bit, should like in funding there step So the the assuming kind very on But as kind

Eric Aboaf

Alex. Sure,

Let me it's let me Eric, continue. -

we're we rising position in our the environment. expand NII think, comfortable particular I the where rate sensitivity with in NIM and

quite - I buoy three and for helped us, but ROEs, for the four that's and and or also in we've NIM, U.S. margins that benefit important. think, we've us been the done hikes, captured that's positive has first

if there I maybe think distance big is cost terminal three right amount open And opportunity two rising a And from NIM remember sensitive for for think, they but Fed like, running want some on has forward, And to - stay hike, I to going X% like well between of and funds, signaled a U.S. of to you rate rates feel quarters. the position. we us. not open, Fed now then. and position an the get December the sensitivity we'd then we as we might a got

As curve bank because not steep. end at a high, particularly the of not right? custody is curve, very end the of is The the front front

volatility one on open the So euros, anyway of in we rising long way U.S., earlier we that up we helpful. It and like doesn't think rates. in but where we'd the some open the open position nice the in being say to bit, a like invest some talked position is I to doesn't spike sterling have see think We questions the mean I uptick. we that XX-year little or directionally if

Alexander Blostein

Got you. very Thanks understood. I much.

Operator

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

Brennan Hawken

questions. Thanks the Good for taking morning.

U.S. Eric. Glenn about deposit So you which first, asked nice, walked through had Thank you. the costs,

decent costs I walk the then, FX Thanks. you is And On - we think, number pretty if there. maybe right? that adjust the you is could swap going on pickup it one, there? for saw deposit non-U.S. side though, through us the we if in costs, Could

Eric Aboaf

the deposits schedule, international non-U.S. we banks deposits Page is do the the the while we've the swaps, an interest which of you'll in isolate to accounting earning swap, the the or securities - that on tied offset we to think on from interest are footnote, because in the bearing in called standpoint what XX, which I they're they're size math the primarily FX Yeah, the currency on the is remember the put deposits hold. asset want

what to, math strip you the were and basis out so happy to change quarter. - any the currency international points, flat a with out Brennan, have And if or do we're literally were the and you X of in and side follow-up - it's particular is, to If you that. I on help you'd X swaps, think, though as to scheme that the relatively within

and expect when think moves. be I And happen to be much seeing ECB don't good either the not Bank a there that we're it'd we day honest. there, So until to see much England what or of moves

Brennan Hawken

math follow-up I'll Thanks. the Sure, sure. there. on

would the we Another non-interest bearing, question that deposit decline. on saw front be

side. rotating shaking about there have end that that bearing you interest spoke was we mix and any or were some view bearing bearing. about of look I with should some interest think, and you bearing non-interest think How remixing up Thanks forward? out the into lot. how like about the a the non-interest clients Do ultimately going to that might out where guys

Joseph Hooley

Brennan. Sure,

A within that's move is it below within, it's slight even what a would you've when actually in little - ended far continues - all even has in truth actually quarter billion it well a a are bearing, $X to moves, you of be to well of expectations. kind detail how so better continues we that think, bounds, right. of seen or We moved. And within fact is billion surprise, not big if the did not expectations deal. actually in up couple actually a out be actually of pretty I And positively saw which it tracking. interest non-interest or the kind better, bearing, bit

see say really to we go, don't In hard terms to I fast where I sort predict, move. got does think, of questions a it of terminal

and at - is, billion seen results that are move $X So year-on-year. down it much you've some what's you've And what here, the - pace. question about twice just the our which how does and quarter-on-quarter

industry I probably think, little than bit which well. but of a I fared you've more think results, are seen that, some we the

I bearing in percentages non-interest our different range to is that adroitly we at of non-LCR look And Deposits the to types cycle, valuable, deposits, our long think, say, this said, hard right. valuable. bearing. you That's be, so can think pricing what that's of going I for LCR that are it's more those to because different what pricing interest the

our not I'm a you pools. the closely with giving just view in sharp think to a the our and We'll if at is bit answer, there adjust of like those extent them help is, So clients little they'd to right I because work them, results, they we and time. should range have a

Brennan Hawken

the color, for Thanks Eric. Okay.

Eric Aboaf

Yeah.

Operator

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

Betsy Lynn Graseck

morning. good Hi,

Joseph Hooley

Betsy. ahead, Go morning. Good

Betsy Lynn Graseck

the Hi, in Can end deck, that or outlook. actually that range. me you've the Maybe Page this end X% to here? you full slide bit XX for year looking come the of operating to good on above range quarter. on to of just sense as could growth Question speak you a exceed at know morning. guidance little you you're the give total call. I that could high whether not anticipating in Hi. the of you a call, would X% that the highlighting thought you're got you you were XQ gave XXXX reiterated the you But the the then fee leverage

Eric Aboaf

Sure. Betsy, it's Eric.

me Let start.

by bounce the basis bit on fees, over bit we've about good growth little a X% about - to little like, quarter. is feel running full to on we overall been feel fee the be results the year-to-date, have year-to-date. described But quarter this we going year X% for X%. that think, around way I which a A we're

put IFDS, those and the said end ex if also the quarter you sale that of put closer BFDS the to that wanted if slide, agency I the think, you're other BlockCross I transfer to sale, aside you first range. X% top

gives bit calibrate of just which we And so by a little it data what to you expect.

Betsy Lynn Graseck

Okay.

some fair will Is inorganic organic Page say? results that be - the XX So to your is activity. versus more obviously organic plus

Eric Aboaf

it. to good a that's Yeah, frame way

Betsy Lynn Graseck

the is we're the SLR the prefs. And can - action you them Okay. changes on there any SLR of cash to on do wait If mature? are your cash able just with Or or then, prefs? denominator rule eliminate for the to the reduce to have in take you and you the SLR, follow-up in is outstanding

Eric Aboaf

was series It's Eric and prefs there, date. The that several each there typically have call years original of the are we date from five out again. There of issuances. - the have a call out

some coming gives So over calls nice the through bit a I XX I to And XX of months. think, us, flexibility. think, it is actually next there

I at a always And can think was if out the there adjust time. the what bit. So good rules put we we change,

Betsy Lynn Graseck

Thank Okay. you.

Operator

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

Mike Mayo

one trend one. about negative one have I about question a Hi, and question positive a

increase, It the revenues? in more foreign fees. - would negative the topic and up volatility I change say, Emerging impact. on to of effect it's So if those see stays very be were staying just sensitivity also, what's of on your And And do low. you the I market And were any a that? positive XX%, - exchange. have thought values asset X% custody that quarter-over-quarter of foreign would had

Eric Aboaf

Sure, Eric. Mike. It's

of both on start me those. Let

exchange foreign on trading. first, So

to. some I the attribute we're seeing we what the the marketplace, primarily given changes right. that's here evolution And think in that volatility there's just

If obviously, shift Brexit. we spreads, spreads of full in markets. advantage have large of XQ. recall, volatility I Emerging and higher very saw much quarter much then to wider ago, you typically took had we year think we backdrop a and a And the emerging particularly strong wider markets a second had as that we

just seeing developed market-driven We've seeing volatility, we're down. that growth lower think I in seen though, So drilling of we're we're growth of good volume kind level good - in volume volume environment, emerging a we're good and seeing been cautious. markets. Underneath markets. We've growth

the survey, Euromoney You but indicative. see some from it's of isn't results perfect, the which

do view give I percentage was Hard our standout. quite volatility comes is you And of more actually, if a XQ uptick. see uptick. to and I'd back, we'll pleased, a - we're so some think,

you a at be kind much volatility You do how math, that. can as for and do spiked sounding we're of happy and look to kind you of some board

think so is our percentage point kind fees, we're or like feels is Remember, picking building of much, building. been two, up servicing focused flattish. equity franchise the the market relatively up I nicely. what a has still question, It - So X.X estimate, to last which The is were not actually alternative it's by markets it's significant. on year bond markets are over second point FX market share of to in were that Maybe franchise. the yeah, on

in That's So press a in those actually table And the six then, in that, taking the is U.S., versus it's really here indicators, there are give why you math weighted mix, how release the a of because the indicators. different much of got affect market ETF to mix mutual that kind our much do we on a average emerging we over on you markets. and funds, above business. of how

a And through also so, on basis. bit, year-to-date we're a quite we navigating around here. is on both of a the why we're as just of And kind which but moves just go focused quarter math kind

Mike Mayo

management other quarter nicely management the asset question, then asset and the consider What's acquisition? fees would with And linked GE are management acquisitions? year-over-year. quite up you And more happening and in

Joseph Hooley

me Let lower-revenue-generating and assets factor is Mike. revenue one, start Jay. of a into It's This assets. of that shifting really out higher-generating

saw billion, the billion on out $XX SSgA the passive a $XX positive positive quarter, into a not mandates, been higher third one-quarter And cash, in into of a into which at which of So ETF. into of in management X%. up the side, billion, and out other flows if up outflows, has trend. largely look the lower revenue, fees net results a $X you bit had and It's that's which billion trend. went XX% revenue in flows institutional $XX And AUMs you

to to know it's asset you'd on been that. strategy anything see if of that, and part add pools. don't our higher-revenue-generating continue We focus the to I

Eric Aboaf

to it's and by there, gone than Even quarter. mentioned a think I bought accretion it result on. Yeah, sooner GE. We've expected a you good we've

of [ph] work been the - OSRAM think, in I additional the of particular we and some by good platform result. was, that it's added a the mandates, team. pension pension, some But a GE and some the also so UK So good nice

about asked acquisitions. I think you also

weigh it's kind there, start probably maybe well. in, The this, But out we too. Jay asset space, me will Let like works management pretty attractive. of tuck-in the accretion

size that PEs the asset management Given nice versus deal. was ours relative space, the of a

standpoint. good clearly, from to certainly but from our use time, a so time capital up And they've it's come of

Joseph Hooley

gaps capabilities, got with Mike, bunch agree I'd bit the you where our and at alternatives little the are if gaps side. that, and the all Yeah, I asset management on on look a a we've equity side, fixed-income say that would of and

makes announced So place, on the one us player space. it can the those go I entering other on that Mike, to gaps, that is, relevant more we the a were recently just backfill been we low-cost the we extent the a which on we XX% asset of solutions access might over flows ETF marketplace, hasn't and have participated ETF to some distribution. retail organically, period ETF haven't although this State with The had of partner. Street because time ETFs, space, low-cost and really management,

good it's largest the think TD we enter ETFs, Ameritrade our taking distribution partnership. a move retail is a TD so, the by And channel to XX distributor. translating with into new fees third of concert them low in

into ETFs, and us this flow. of positions of low give-up the very handful the market part of revenue driving them, XX% the takes it So repurposes that's a

but out not fills that a that. present we enables of we there, think and So this do the haven't market made distribution think we that in, been segment acquisitions we

Mike Mayo

Thank that. watch we'll Well, you.

Operator

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

Geoffrey Elliott

on the away then continue operating thoughts or what on out business like GAAP, degree EPS gain first the whether us which makes the they a stripping about good switch Maybe the to to you for which could any the operating occur do? basis one most thank And Perhaps sense remind number. quarters is Oh, the not something for greater to like EPS question. feel or morning, logic BlockCross but out charges, you taking most restructuring banks stripping the it posting lesser sale.

Eric Aboaf

Geoffrey, it's Eric.

you and we are of December as January. I talked and Let over I towards. me back move I in about that, want take that agree feedback results I certainly time, started a and do that and I lot GAAP that think to got something

operating both GAAP there we them both results, as can show you we've kind them you so surprises. think ways, I a of are see so no of run know, both mix and

both though, But charges you it the we we to to them the whether reasons narrow move them doing to far we'd able thing we back. kind together. in presentation, will I your design tally that seen we've one of and of or a and carved we $XX you all identify some momentum the is this also in in models. with and them and sure management because to year restructuring or include will just that you've see difference, results what do with not the that I of to always in that you'll But the be do what we make and like is that and some me can us million more another want, million And the see negatives think of think just I all to final doesn't carved shouldn't to of continue that standard time and so actually do that I need a well coming fluctuate of say that periods. - one do. operating that done or expense so another GAAP out have is underlying how not we add I charge is can you out the color we're actually business the mind $XX find with so positives quarter. on think some

business expected be to And just there take the well, those. expecting a to and right, want - information. drive I we the And going need so, are charges. and of it where going we are think series sure those everyone's you to make because to - out the series are optimize to don't of But I will we're say I'd just is that. conscious going to guess, way either way see are Beacon, continue

Geoffrey Elliott

of cost And think noticed there very then, are something going that the Do Thanks, to see to there self-indexing shifting of few self-indexing. I helpful. on more to you a towards that reduce Ameritrade be of? a trend Is is partnership, ETFs longer-term ETFs? the there we the

Joseph Hooley

Jay. I though. is do think this Yes, Geoffrey,

just do in Street, that your as a not the some matter own but for cost of ETFs low of think create trend, extent line a that for where an others. create I to or world internalize or you State every I that indexing. expense see synthetic can index

Geoffrey Elliott

you Great. very much. Thank

Operator

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

Gerard Cassidy

guys. Good morning,

Joseph Hooley

morning. Good

Gerard Cassidy

I to fell jump $XX.X to a billion Jay. $XX had in mentioned. these I an obviously, non-interest-bearing I questions. the quarter Hi, you billion basis had the is, question minute, as so restructure first about But of started average the the noticed you've on about the apologize sheet, side last if $XX.X balance quarter from you for the off to prior call billion and deposits the I year. liability in addressed

Aside higher, from the obvious, interest other that were rates the are there deposits any factors down. drove non-interest-bearing

Eric Aboaf

are it's of conscious purposes it's have. for the fund here. accounts, is of for the it's kind the geographically this moment or various think, But They in modest literally family, right, sometimes Fed have effect X% rate pretty they just and and preferences. sometimes sometimes Gerard, given operational which effect, that quarter, typically basis is we've moved, X%, we the seen, in that points XX an what Eric. clients multiple accounts No, interest

of kind than if move a and bounds all more rates at the within point this not than cycle. of the nothing expected So have less we would in even

Gerard Cassidy

Or should If continue line rates, the raise should rate this it accelerate? slow down, decline? of kind on Fed of this continues to to we expect

Eric Aboaf

right, the of market changed there versus predict, of to Very structure deposits than of they're versus more kind set to exists has money market terms a clients out funds, decade right. last options in ago. kind that rate - funds the hard We money what since the increases prime of of hold for

about raises of this be through. range could time this as a around being, for feels kind general the view, right think for we realistic But of results I think pace I a feels pace play rate but see there that.

Gerard Cassidy

the second nice other part the of is balance earning you know in of my points a assets had Great. interest quarter yield the sheet, then but not And question, basis jump XXX. the to a for from from XX I significant billion, quarter this second $XX

any nice Okay, behind what color improvement. that drove

Eric Aboaf

interest right, Custody sec of Yes, part assets is Enhanced which the other business. the the activity, finance earning include will

on that rate business, as paid fees. well as expand as in the And line interest both so - we get as that we

Gerard Cassidy

Great. you. Thank

Operator

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

Brian Bedell

if one, can for Okay, with line. that you the taking Eric, what's my just great. question. happening maybe differentiate on last repurchased Thanks securities

of up other Enhanced then parse went a the points the And Enhanced Custody other the great. line, sort dynamic XX Custody interest be can on asset on that think contribution line, that out I core to basis. and earning you basis that'd if

Eric Aboaf

Yeah, reverse Sure. do me in let those order.

is or of I then earning some little interest Enhanced there. the have assets, billion, interest think knits gnats a other which $XX assets you the - about the think - of balances and bit derivative majority Custody large earning in is I other and and

that's we sheet grow balances business scales move I and of of I up as year-on-year at saw so what's amount balance the think X% been on kind revenue derivative we And underneath the pace, you'll at Custody there it continue think side, about but around, in that - can expansion some happening, that up to modest and kind just you accordingly. a we interest expect and has of other find assets, moving earning And we a actually pace. think regular Enhanced

effectively is client, that [ph] position or that and sponsor that run in actual FIC terms on-balance that the footnotes through and the risk. We repo repo I'll just disclosed remind In in for - and the book. the client's well. right, of then, And piece is the pretty but line, you sheet agreements, program reverse you what securities resale purchase it's a there have the the

I think with continue what up rates. continue see, you'll in will as to rates tick interest prevailing line - those

as you've the repo in in moves, So movement movement general funds, collateral you've Fed Fed rates. got got

movement what just activity. in seeing the play And is literally you're that market rates so through

Brian Bedell

back of How being just - think, the new can quarter. sort larger in with we It to some towards And servicing. should third potential coming it's mentioned Jay, trough asked your about Jay, and the the pieces thanks. on the see if just in and sort going trends rate business of that just sense maybe appreciate think little forward? in an know, was as about forward, kind of of in trying But shift or you And of of of think like, new I this level business go sort we I you a how a - down the do go dropped of been abnormal pipeline. that's are drop. forward? detail but well, course, ETFs, Okay, if security good a sort bit if, rates looks that fee maybe to it's then, chime and all it. on okay, to I I

Joseph Hooley

start me Brian. Let one, that

with as quite deals get stands minute to happen efficient, ago, think and I being firms quite a as Let fewer component get as more office, your referenced big me as all more therefore deeper proportionately better to say, in are, I the that, of through that you diversified, view as would along and - the you I positive, question with start - quite more and I know pricing today pricing don't big goes looking about something front-to-back office, the more providers. consolidating activities, it because a we deal create middle good, well and we activity interpret marketplace, that middle pipeline straight looking you the rare that multi-geographies. with that which, There's to a these without in had asset it for that. management into front that are to of me, if industry - processing, And it's the particularly differentiated that kind therefore

installed number also me activity, to months. XX X% the That feels which So at the look under say committed, should good. not I to that to bit pipeline quarter focus deal just that growth, had a billion, a call yet in add, at quarter-on-quarter. deals up, over quite all of and X% your add fee that we'll year-to-date next on pipeline I sequential roll anything itself higher when And of we've that. in I the revenue more you kind $XXX attention you would like got little deal would but I'd say effects service of Eric? I'd

Eric Aboaf

momentum do we quarter-to-quarter. that that about clear to good trying that feel the business. get lumpiness add notwithstanding of you about be just the I We're

do have so we because in the we visibility. and some confidence, so what's coming have backlog, And some the Obviously, pipeline, what's from forth.

wins, - right, mutual a we U.S. we're in had if On just new we and get you share I'll we managers right, the business we add if fees specifically, a XX% remember with firm, as for asset adding remind incremental custody big have business, the add fee AUCA. that and the you rate if had we and the fund custody right, the accounting, no

of we custody of and So doing you had half get kind you're custody the positive and we're somebody on other rate. adding half it, the and instead right, of fee effect had what consolidating book. book, If half now is, the a the the book if

both denominator. and numerator a adding a actually You're

a rate's of indicative, why think ins of and on outs clients, lot it's going terms and I and the But with there's on share fee new lot wallet I I'll is just of which think product type. in going there's but all So geography existing whether then - indicative. the clients, a there, you're expanding

Brian Bedell

you you the and obviously, focus improving mentioned then profitability, And on that.

a and that or of and initially are about the that these get of on-boarding bit little before how bring should the expense some be sort more this in deals pattern? to the we rate? those we high pipeline, Should run new the in lumpy think For same

Eric Aboaf

Yeah, it's Eric.

deal depends it think, the on sizes. I

sized you nothing kind there's roll So I significant. particularly the deals, just into, small medium and think and of

deals, it with depends think they're structured. larger the I how

called we and and way, from get regionally you get out move all business costs, middle and TSA, you year, one activity When them came rent the technology. because the of so costs, last can't often what And people a literally they of literally sub-pieces. them was that a lift-out with over with

that a items, you're as as over what effectively you're line change. actual And then then is And happens the from convert it so right. digesting. you step TSA comes But that, to the doing

years, it of but We on. which won't people, kind So you that take of additional on XXX might operate that point take headcount. is need in way we it know we the a subsequent that's to how percentage

changes, I they full they're be a don't and disrupt more one So year or kind a a big are a - guess, think But story, or we'll basis, from whether we'll we to but growth of trend. time-to-time, enough there as deals on quarter on - the expense a describe may kind I little - quarter less. - there and little describe have deals, step bigger the are the of

growth, a big And you in deals were this point for just right, Sequentially, wasn't in, so a deal had that's of for no In point we a put way. in quarter, any and quarter. another easily in I expense in to because expenses growth particular a adjust because they percentage when you big enough currency, quarter. there coming might lumpy

of And talking dynamic so or it's kind we're range that that about.

Brian Bedell

very Okay, great. Thanks much.

Eric Aboaf

Yeah.

Operator

the question comes Marty Your with Sparks. line of next from Vining Mosby

Marty Mosby

I kind about discrete look energy whereas saying one explanation level? of tax going rate seem the first, XX% mix that the really Thanks. if bounce lowest kind of it's How very quarter says this you investment. permanent, to picture temporary a you're years. it's a to guidance, would the but downdraft? and up several of But cause doesn't to one had the benefits, more question. one big levels Those things at back talk particular question, seen dropped off particular really The Eric, we've considerably in

Eric Aboaf

Marty, expectation taxes to you also earnings. lumpiness the in on of year, year, with happens I've the during your full to the the rate versus you years have remember, the full-year expectations are the your of given to they Eric. love is learned re-forecasts and over there non-lumpiness. regard come based What it's if set how tax because

effectively fourth what continue in happened and tax we quarter so this like expectations to the to quarter quarter, current and effectively as do for version have a reset And feels that rate saw you your into what earnings amount U.S. foreign catch-up. to more a that earnings than is, of

particular the catch-up that's - the it happy off it take But quarter a creates it, a probably to there. and lumpy think best little line. to time way I'm in I So explain was

of running we've the the we north tax of I near XX% still think we'll - on the on - of a a the the we're described. I up rate, year-to-date think range that basis, we're end think end end around low and little low range somewhere

Marty Mosby

since and end in it And crisis consistent. golden permanent putting have falling I it talk you recreate did the just that and model the a as that things a question broken. There was picture move profitability were improvement trust lot then that you that a you days. bigger makes range of the at more off, the of the business that So sense back that was financial Jay forward, recession Eric, like of lower the would in there's never over and been -

the floor, of kind highs, starting not that. come to returning you close are you're as doing, off your are returns to, If at to look the rates if soon what as pretty

of middle within you're upper XXs, XX reach that getting the range. So XX, you're - is kind into of of end now well

rates So you to see back driving that. you

low there back? the about anything benefit was and than that rates really really model are other now we're So broke just interest getting

Joseph Hooley

challenging. I years, lot think changed. looked that say of Yeah, even the slope XX XX, ETFs like a a I I yet, I of asset at business revenue, frame now, become - I talk securities I would net mutual has a at and revenue When was back there Returns weren't foreign Marty. nothing little but that upward look broke, you This base exchange, generated the would things fund more of flows, lending, market the from in Jay, amount say think is about, revenues, in bit then was fair the difficult. interest servicing, a to as when time ownership are more has asset

customers more Beacon and - our to why I value straight-through effectively. focused processing, and front office to we add. servicing that allows to data is the creating data, moving from into efficiencies, a and to analytics, side it's our creating because what to the downstream as and it having The office, with also on effect compete customers which model see analytics much we've custodian we're change which being so ability we moving aggregate around middle So office, data investing back heading our on model had much provide deeply to business place is that, where operating might downstream inform of to a the today our more - more the the be

are at as it, assets range. a another I make American, see that but world look we the world, think our which is would global I gross estimate growing is So a in the North X%-ish backdrop you comment not that, if is

a they've customers' pools up, all the requires to traditional products shifted to technology higher in sophisticated are solutions, So the future. needs but of asset our support from which of level ETFs,

informed from So as I'm as office and bullish a clear And standpoint of differentiating Street a ourselves has our targets, changed. with underlying State front to distinguishing by we as path like and firm prospect data to financial a Beacon. provides move and middle, further meeting but I've I analytics the it think ever been about outlook business our

Marty Mosby

what I those you've do looking then and from net what at you your I'm model at guess, all line, really Jay, in the of is bottom the interest income. the and done comes XX% at look operating if expenses, changes line you bottom

mortgage adapted day, work. we did got changed, where a out a have of always used escrow of nets The reminds So we end balances me where kind the to There of of it at profitability. lot is and of always business fees. was lot we much to But the that. everything in else what our servicing

pre-tax really see you in that majority comes value where the a income. actual produces So I'm are of the and those just the day at wondering the it what if deposits end of

Eric Aboaf

a a going it's Marty, just be far Eric. I'd you as with you. client There deposits asset. But remember, be custodial about will no little as you're have for hold cautious to didn't going. reason

foreign - you. you current have hold they custodial currency If your trade asset, a wouldn't didn't with

If our business paid does I make you analytics, get how get sure we how you custody we office didn't administration, business. have Maybe, - and is we so make do and front but a fairly. paid sure we over we inter-dependent in evolve get well data you need paid accounting adjust think custodial time? understand couldn't And highly that perspective asset, should

Return the is I here era refer what in a this know the which returns EPS XX% tangible couple returns growth. you mean, quarter, bank of saw with I attractive pretty range. that traditional on to, was you golden quarters here. that you've do an think I north a nice common it's is measure don't - equity, XX% like equity very like pretty but for on institution seen of us

Marty Mosby

at golden offline. more those spent kind you return on you as it was all to returning on getting is I about appreciate But, the was talk time bit I took it what Now, of it. We'll age rates. little yeah,

Eric Aboaf

Good. Thank you.

Operator

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

Michael Carrier

Thanks, guys.

one quick here. one Just

you just generate pressure, like quarter, look under Just and relationship. new on the for are wanted item, regulations. an servicing, asset the the line have, does can more think we other the whether offerings fee it maybe just color one I at on to when but areas. obviously like get on update Thanks products it's overall the like that revenues about clients them you pressure, But seem in you the facing the classes. other

you of so on we versus versus the this part know how and ago what time on given the just services margin clients the today any four importantly, one of a on shifted years with the most went of doing used. probably the that number get of have path, being then Beacon, if that maybe guys over business. So more three update like can I don't you holistic clients, before are or down kind incremental just view you are And products

Joseph Hooley

and servicing business I augmented Yeah, Mike, this Custody. the leader market - I which is the to because middle-office, stretch. enhanced Enhanced were would in addition exchange, for recently lending, more accounting years a and of by it's packaging good with middle-office, question, the the traditional custody, in by Jay. securities foreign a Thanks question, say - is package been the and recently long into the still has where we almost the pioneers mentioned, trading XX

are of analytics. to but see As a But play, clients, data relevant, which Beacon. a stuff aggregate platform but custodian and can data client the much, with talk clients or assets we as still the provide now other we them focused you more it's our providers, that the trading, is, rightly we're basis, lending. the on faced ability point increasingly, office aggregate the aggregation, It's made is on out value get it consolidation that than Beacon on much $XX proposition All a differentiator. more with into that for efficiency as is all data. more and a the in available front they normalize, trillion real-time of data, why an that the are is pressure. with There middle the front-office we And value other rightly, our huge behalf about extent to specific in custodian's middle-office, hold

while the back all front we're I that Custody. that intact, asset for the can think for going so, that that's think that the keeping from pools to span locations, revenue middle is Enhanced the big move into the long-term what all the global look office, like and office we to and And that global trading, office, lining those manager partners the other playing can securities

Eric Aboaf

we that generally And have there tactical but can gets of at products we do, out And, Mike, fairly progress, those to of measurement grow per so at just insurers. at managers of trends it's sort that asset for of that And a of products, that I'd number shared September you that early that that measurement about and funds bit offer. support the us intense XX the conference just performance have think products or feel, we Eric. pension versus some kind those number level are that kind actually level. - little of we client so of we so we target and effort versus add performance and that

Michael Carrier

Okay, a thanks lot.

Eric Aboaf

Sure.

Operator

Juneja next question Morgan. from comes JP with of Vivek Your the line

Vivek Juneja

back want I question. servicing Eric. Jay, get to Hi, the fee to

you growth you versus to currency about in constant X% on year. if look year at year date, were running So XQ at

Now, with X% you're about and you're running, again, constant you comfortable that. date currency year to said

little something, slower? a to that? can and you a there - the be there. X% that is causing what some what comfortable not And slowdown at color and gets causing been of gets little staying What there's bit bit give slowdown us going what's it's Is So on that? us

Eric Aboaf

Sure. Vivek, Eric. it's

a quarters just individual I like you I small on on fair months, number think individual on. I caution would going got things of just because

got are You which lumpy. little accruals, occasionally

new and which install got has business You've kind you tip to that in. of

You down winding an old deal that comes is out. that may have

might to the other then a or in more way of to quarter, take perspective. I in - little of think quarter, you little the might expect, little particular just give think if about the little So a to a And what previous a we want it this you that get caution is note that one in lumpiness a - cautionary quarter, kind kind than so happened if quarter's get just went results. you lumpiness you little which

a some and the is, for. of accrue terms business obviously In for to good that into that. have the aside it and year to we put we we needs begin installed, backlog had why confidence when gets fourth quarter of business We be we new installed visibility but pipelines, have

will we which And fourth quarter. play think of modeling of so, some off of and through. we our And off that's which for guidance doing gave that we're

Vivek Juneja

that going to mind, some we're Eric, cutting too to do in the off Or in range fine - where you is there fine it's back or running that from first year? or two? those between that - of So, where four too you were five it half keeping go that's think of is better kind

Eric Aboaf

become I'd years, you that that Yeah, keep become it in a that the This quarters range. business win is over multiple years.

saw year-over-year year-on-year XQ, You was what year-over-year XQ, XQ.

for I our a the and indication think expectation. is year-to-date is is good our expectation -

Vivek Juneja

some for the that caused the you, costs, pound that that the color swaps, the Eric, that dollar of any or weakness was impact that? And of on deposit mentioned earlier euro on because you FX in the or the versus

Eric Aboaf

deposit, and in from the the an linked to No, third markets. rate the more quarter and European quarter second between FX differential, standpoint the right, the because FX than swaps markets U.S. cost accounting the swaps which interest is are why the reason

it cost lines. but invest the moved, than goes you up. euros, And and but it can you you the shows That did the Fed dollars different higher at did on so invest the of ECB in rates not as when neutralizes, swap accounting so move, in two the said,

Vivek Juneja

great. Thank you. Okay,

Eric Aboaf

Yeah.

Operator

line Kleinhanzl with of from comes Your Brian KBW. final question the

Brian Kleinhanzl

timing just direct that mentioned you were you the as it reducing credit now, you loans. earlier well? the strategy goal and the size adding and securities So that ultimate Can of of is what

Eric Aboaf

Brian, sheet. balance Sure, it's We're gliding Eric. the

think diversified portfolio accretive investment kind the ratios mix a tests. on stress to on a way annual that's bit asset think And the seen I and then purposeful very in us you of a side, side, you've saw glide have securities. for that deposits on we and the I we that think of broad

capacity that seen we You've extent quarter. do this a continue of to some to to want by $X billion And the have create we about us room. billion, $X adjust to that

a optimize what step think here tier constraint, trying there. ratios, back, Right of now, I if multiple to is the binding you we're leverage lot activity you do see right? is since X

kind is what leverage about do constraint the constraint, to And well. tier a us As a have RWA becomes way, you the to think forward a less binding and those see begin of for then SLR X balance in of as constraint. sheet tailor we in the thinking

think portfolio the describe as modest investment I I So a adjustment.

and a on we more we'll are because should earnings part and bit. a of others. or the we portfolio on grow little we of We a to and if work little capacity it's quickly, tell high have and natural to more more a stress little - to changes do are so both have that's accretive that some say logic I be than refine. positive we in something do credit-intensive should want offset both and to a there's done was you, both the And good to that client our testing quality, business continue

Brian Kleinhanzl

a but processing sale? just the hear didn't second fees, question, I the BlockCross of you you on impacts gains the of sale on dollar yeah, the And amount. heard mention that Did the give

Eric Aboaf

Yeah, of this is you fee and year so the $XXX will $XX we're where in pre-tax which one A fees in it's that's remind million, - million. of $XXX processing fees, the - quarter items. gain million line I we have processing were The was the footnotes. small what there it's just lots around is ago,

software We have fees.

have fees. loan We

BOLI. have We

a on does didn't is, have We absolute in year way an It year current move does in - effect it It's it significant - a a pre-tax a BlockCross have a the have so tax-advantaged But on basis. though. investments. have little lumpy. quarter

Brian Kleinhanzl

thanks. Good,

Operator

any there remarks? And there closing are questions. no further Are

Joseph Hooley

quickly, Yeah, January for you. time. questions fourth in look quarter we and discuss And morning everybody your just to Victoria. our results. forward Thanks good Thank together getting this to

Operator

today's concludes This conference.

now You may disconnect.

State Street (STT) 23 Oct 172017 Q3 Earnings call transcript