STT - Earnings call transcript Q4 2019 | State Street Corporation

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Operator

Good morning, and welcome to State Street Corporation's Fourth Quarter 2019 Earnings Conference Call and Webcast. Today's discussion is being broadcasted live on State Street's website at investors.statestreet.com. This conference call is also being recorded for replay. State Street's conference call is copyrighted, and all rights are reserved. This call may not be recorded for rebroadcast or distribution in whole or in part without the expressed written authorization from State Street Corporation. of website. will broadcast the housed authorized Street State only this be call on The

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

Ilene Bieler

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

During the then yourself two requeue. questions Q&A and please limit to

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

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

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

Now let Ron. over it to me turn

Ronald P. O’Hanley

Thanks, good and Ilene morning everyone.

to notable and while results respectively, XXXX, XXXX XX.X%, Turning Relative XX.X% Ex-notables year and margin fourth was quarter both to ROE EPS Slide and X, XX.X%. year the full I $X.XX report ROE the fourth this items. quarter was morning. excluding $X.XX, quarter and our financial period $X.XX, Fourth reaching pretax quarter third fourth that improved, XX.X%. quarter of we to am pleased year announced was prior our ROE XXXX and was were and EPS EPS full

quarter the We also relative Global in third an pretax improvement at XXXX. of to margin Advisors saw

XXXX. factors reviewing effect that touch our macro the some on in had me Before let an of performance further,

Following over recovery dramatic XXXX, XXXX global our results market the the in the steady during year. sell-off of equity of late course from the U.S. equity market benefited the

markets favorable XXXX relative equity broad-based in improved primarily market were year to industry flows to international money While Europe average still and levels by of XXXX, were XXXX. the fund flows flows. driven strong down somewhat, Total full in

America, negative, impacted However, three in into experienced than for less year, interest We lower businesses. as North volatility market funds the rate long well and our cuts flows which markets industry rates long-term remain much XXXX. end NII, of turn in albeit as low which impacted so

XXXX elevated impact servicing us also which year the for in the pressure, results second full from year. still of reflected Our industry half fee level the the moderated of pricing

clear center a reduce pleased the the with keeping the revenues result half of second progress particularly while we we needed to the to it we that I expenses these As actions and management year. and all translated results, of of stabilize into in headwinds, how aggressive that at satisfaction client do. take was made am

of level X% in trillion administration We touching our strong totaling within distance billion, our took Assets the $XXX quarter-over-quarter under in which $XX.X to wins record saw wins of to new and amount trillion. increased a a of $X.X over XXXX during wins record just custody quarter, total XXXX.

of quarter-over-quarter to period by assets to Advisors, $X.X net and market yet supported levels to flows management range strong U.S. higher record At at under Assets SPDR ETFs. installed Global trillion be European quarter-end. our at end $X.X trillion stood and a X% increased

$XXX over net total recorded Advisors net strong by inflows Global to billion XXXX, in relative flows ETF cash institutional driven XXXX. During and

a and management by partially and lower X%, basis, sequential improved quarter offset increased servicing total fourth revenues. positive and stronger equity lower revenue of increased reflecting On partially markets by period, decreased fee fee by ago year year total and revenue Charles the X% the result to a driven respectively. NII NII, fourth and of markets, offset fees, year-over-year total contribution Relative X%, Full year-over-year quarter XXXX River as revenue X% revenue Development.

that fee focus revenue servicing the of able XXXX We second were with to year. first service. the begin during we client fees to pleased on half X% to are relative grow our the increased of Servicing again half

for drive of client clients. included our implemented executive we completion XXXX, coverage of our the deepen During quality service a relationships. client better number initiatives This to model senior and largest

clients. for is reigniting we that implemented and also our Further, more client of know platform client for while deal front-to-back there a review begin to meeting priority to us as proposition scale our requirements. with on-boarding for us believe do. strategic establishment rapidly remains new total an attractive all we committee. We manage core And process to a service implemented revenue that changes decisions has value of the an provides We Alpha client tranches on growth also that business better out We take us. of building strategy enabled large pricing XXXX, executive

target This savings reduce During manage of we XXXX, to we time million high efficiency our headcount gross efforts finishing were too program our our improve million undertook savings. $XXX significant many saves, the launched expense been aggressively which actions at increased which Initially efforts. expense targeting $XXX expense for down exceeded, driven reengineering, growth, in expenses a automation to of too discipline, million, Part gross year, expenses. new last comprehensive years. operational resource have $XXX and year by we aimed to at subsequently we and process firm-wide savings expense tackling

by as from reengineering, headcount down well cost high location year-end headcount as with total process by we over X,XXX. automation XXXX, During reduced XXXX driven X% successfully standardization and by

items our we X%. in our year full result, almost thus notable of CRD XXXX As excluding expenses, reduced a target exceeding by X%, initial

year, in for of focused I IT are be reassessment it XXXX, again. As coming base trajectory of December, the we the expenditure, cost we down we a past XXXX, technology aiming flat structure. notable In during X% on change reducing of to outcome to total the remain our our look This excluding to outlined items. targeting expense initial our the

a also of company-wide, approximately reengineering targeting For notable we resource XXXX. expenses discipline by reduction and during items, X% process are total efforts, excluding

were we management. focused on XXXX, also balance During particularly sheet

result quarter of third As number have recorded total well a average deposit deposit of straight we improved of as engagement, initiatives a as client a growth.

returned repurchases the In $X.XX $XXX a our we to following fourth balance common addition, billion as result shareholders share. dividend stress improvement our CCAR by during Further, quarter. an sheet stress XXXX, test, under quarterly during million common share to of of XXXX XX% the of we including $X.X per increased

will a XXXX, our actions, capital through our during have challenges faced operating on expense sustainable expense we first in focus but be value our for and management to conclude, improvements a made my proposition number To in generating business. reductions of to CEO us year the We My of as to progress we world-class towards measurable while remain in and particularly clients, continue XXXX delivering service return. growth confident have with our trajectory reignite further distinct model. enabling revenue our goals,

let turn detail. owners in the and that, to vision We insight managers you enable servicing Alpha to Eric expect with through the in over of strategy, capital. global asset with it servicer, that unique realize our asset to more and combined data leading reach provider and will our take becoming the manager, me the of And our world's analytics, and us to expertise quarter front-to-back data

Eric Aboaf

morning and Ron everyone. you, good Thank

pretax us begin of full our recognized results, a we drive my on to Before discuss notable of repositioning XXXX and XXXX, Slide process real year to fourth I'd which and up XQ I rationalization further of take sets million $XXX to organizational in automation consisting XXXX. severance review quarter In several moment estate, like X and items. cost

million as in gain Charles we to in a addition, $XX We related of of and $XX related had charges, our million primarily E the tender expected and redemption the also XQ sub XXXX after-tax costs preferred restructuring million with a Series acquisition and associated securities. of had debt to $XX River

we together, share. pretax million items $XX notable Taken recognized $X.XX or of per

a bit the in more detail You'll appendix. find

quarterly Slide the show results. top we X, Moving full on year to GAAP panel our and

were items of to in fourth the helping and who pretax XQ notables to positive those for the basis, our ex improve show the want you panel, and we quarter to On operating underlying I year-over-year. leverage GAAP we XXXX some see the that ex able bottom both notable on margin quarter-on-quarter of note trends. would generate results both

transition, year-on-year the trillion levels, saw higher X, flows AUC/A client higher which ETFs. now end-of-period net a announced its realized AUC/A increased which driven increase in Slide our share evenly market equity positioned cash despite by for and that end-of-period money levels new AUM levels end-of-period record State us. business a by further growth year is due market to Quarter-on-quarter, the $XXX largely Street increase higher array. our both a The gains to to to mainly the business. AUM across and our year-on-year of client funds and behind end-of-period asset margins and It's and previously we reminder $X.X market range in offset largely XX% year-on-year quarter-on-quarter. driven improve environment inflows client offerings levels during was low-cost ETF to doing relatively across approximately is Turning flows, and partially X% market scale X% strong billion, of challenging managers, by move levels spread Amidst institutional organic Advisors net Global and were a so. was

servicing were year-on-year X% fees X, Moving to up quarter-on-quarter. and X% Slide

were impact. the driving industry is while headwinds of more as year, have persists, do, management And quarters which new clients. course four pressure XXXX since fees, of and executive higher late with remain we showing markets year, have market taken pricing client model quarter's fee net the expanded growth fee consecutive servicing our to will rollout including there while XXXX. pricing front-to-back in coverage confident are driven interest And levels to increasing formed wins, have continue three business of committee, the our continue discussed, newly an now pace all higher Ron servicing are over We by have results strategic mentioned with last of servicing had Nevertheless, in supportive platform. moderate As continuing to stable this and actions new average our Ron to XQ equity scope and a to see in quarter-over-quarter primarily Alpha the priority business. of significant existing that much of we

we've some provide to again this panel right little included bottom page, sales the a indicators performance more of texture. On

see, providing relationships $XXX as XQ additional full for this again wins capabilities products continue demonstrate $X.X As build we new of XXXX AUC/A and totaled the year throughout and grow the sizable existing client wins quarter to The our billion by services. in benefit and trillion and approximately relationships you scale and year. can the

higher to the management and average higher market as quarter-on-quarter equity finance due let lines, revenues XQ were fees with year-on-year fee services the Compared spreads. ETFs, to discuss partially other was were and from X% volumes institutional average by partially equity from year-on-year and cash, also higher up Securities Turning primarily X, me to levels, X% X% revenues low revenue outflows partially higher and offset from fees. X% and by by offset levels were fee beginning XXXX ETF X% XXXX, to volumes. offset volatility mainly industry were due down XQ impacted X% levels lower driven FX trading up quarter-on-quarter and from market business mix away Slide negatively institutional. inflows inflows by products. by year-on-year, management changes down

revenue and XX% and fees were CRD higher processing XX% year-on-year quarter-on-quarter, adjustments. up software Finally, positive market-related and reflecting

in see you'll X, quarter CRD's left and of a summary pretax Slide income. to revenue top five the stand-alone panel Moving

ASC $XXX XXXX, XX% remind up would this one was reporting audience CRD XQ quarter-on-quarter. read I revenue inherent quarter's million accounting the results. across For the standards of XXX which again in lumpiness and revenues, to not and stand-alone generated year-on-year X% any

of panel, forma XXXX pro the of for had full stand-alone we reporting owned for the a estimate versus year. standard, XXXX On ASC an upper also the business XXX right comparison included the we've revenue revenue, CRD's

As you estimated full up revenues generated pro see, XXXX. of in versus in can CRD X% XXXX, forma $XXX revenue million full year year $XXX of million

you cost provide how and on and with we've announced year. we're bottom the the business bit the We confident the remain our acquisition more last time right texture revenue the it seeing in at acquisition. panel, since a we to goals synergy On enhanced of in wanted momentum the

absence points, X% our driven basis NII decrease in quarter-on-quarter, year-on-year market-related declining Turning the benefits and NII XXXX, of balances. offset X% NIM XQ and in was sequential was X XX, partially to Slide XX with respectively. episodic The primarily by deposit increased by down seen

sequentially. Excluding the been in XQ, would episodic benefits NII have up seen X%

straight up and $XX total and third been for Average steady straight Our benefits. generate at up are quarters approximately deposit gathering up billion. year-on-year, deposits three year-on-year. Interest-bearing the to X% X% initiatives are deposits quarter continue noninterest-bearing have deposits

we targeted loans modestly larger year-over-year. and earning in the investment lending with the client XX% both asset average XQ up growth investment On a side, and careful portfolio overdrafts portfolio, the ex

On Slide a XX, so underlying Year-over-year, providing X% trends of notable view expenses, XQ the our excluding expenses quarter-on-quarter. that are were we're this notable again items, quarter readily flat ex and apparent. down

consistent lines. several well other see in benefits as as can improvement You comp the and

achieved As initial you significant $XX announced exceeding program this target initial with $XXX recall, saves thanks million And $XXX full company-wide to by expense we in the approximately XXXX target year time effort, the of our a we last an in million. million. year, nearly

year. last on optimization color And us a so couple provide me that initiatives helped really costs of reduce let some

strides a infrastructure vendors. of telecom consolidation First, have consolidating in great while supplier IT negotiations services both the also made big number focus. tech We've and our and been

has focused continue the More realizing to X,XXX. Automation consecutive to declines, more of every led total organization launched this come on about original in X,XXX double reductions as than to greater XXXX target year of productivity. in last resulting work location have we been year, the headcount of quarters our on Second, headcount now of four P&L. initiatives high-cost line

delivered we CCAR shareholders. approximately common, Moving approximately of quarter, XXXX priority XXX% capital, available our XX, shareholders. $X.X we capital and net year during plan our $XXX total the returned returned billion capital we And our million to representing of to to on increasing return of Slide a for of of income full the of as to executed XXXX,

side of with capital right at XX, even standardized is the the to can that both that of return. Moving advanced CETX approaches healthy you see ratio and XX.X% level a

EPS. opportunities are that also we to the preferred the X finalized. E capital primarily by post-CCAR ratios, remain rules Series consciously optimize our capital We redemption position worth our our is reduced of have continue to structure confident leverage which about of incremental Tier believe in We our driven changes and stock, SLR as $X.XX and capital to

Slide Turning quarter outlook now on some our as XXXX. XX, thoughts provide XXXX to the of full I'd well to like cover year first as

the the the share of continued assumptions let our Before global a current year. full uplift forward current a are first interest start, trading and markets on as modest market macro I At our based me impacts some volatility, curve, from we assuming for low slow underlying level, growth as views which businesses. rates equity well

modestly with for to be grow beginning the revenue CRD high should this double-digits. at fees this currently expect end revenue, So Management includes growing we fee of that fees middle This revenue XXXX. will up the low X% range, growing of low and X% end servicing at at range. to

seasonally mix headwinds be CRD Regarding lower single X% asset shift by first down quarter as in low we asset expected the single X% revenue well management expect by XXXX, to quarter-over-quarter would a digits, of fee perhaps as given as to client the such revenue.

XXXX market the it down by X% of continued be impact some rates deposit X% we versus the expect lower in Regarding rotation carryover XXXX book. driven to in NII, and to

sequentially quarter about XXXX, be first the count, Regarding the lower rate quarter by and we to of Fed quarter down the driven impact fourth NII long-term expect of cut, full October's X% that rate course, debt change largely assuming On NII environment. the should the half we expect in in second a there of of XXXX, do significant issuance. a stabilize positive note, that interest day isn't

continue This offset new engineering on which mentioned net technology the X% will notable by reduction, see yield high-cost cost reduction in to on include excluding locations business These in scenarios CRD, in as the X% be approximately earlier. I infrastructure, ongoing discipline continued XXXX, tech and should variable as we as investment This expense in and well our expenses is items, an additional to savings the partially expenses, building XXX in laser-focused a to and X% saves walk, a related headcount driven expenses. total charge to expect our repositioning X% optimization growth. resource process X% be of XXXX of will Turning roles of business approximately to like focus can achieve plan. you in will to by

expect strong guide XX% in expenses this to line Reserve at to payouts in quarter and to And optimization, year, the should we first approvals. recent usually with the capital capital with XXXX Federal high the year-over-year Taxes we occurring first quarter position expect returns, the range. form we Regarding finally, to course, expenses end XX% in the associated of be given the XXXX, holders our scenarios common expect return actively and capital quarter. subject, first be continue seasonal largely of be consistent of range the that for to equity to but in to and and

Page half. XXXX and the the the continue of revenue results we gathering with revenue with navigate environment on recent So in NII to fee initiatives moving growth. rate enhance At course fee pressure same see of drive deposit total fee were the and second interest time, to actions quarters X% half pleased the of moderating total our to year challenging XXXX first straight full summary deposit over three management helped up versus as XX, improve we quarters a of

and exceeding XXXX. year committed bend savings to our doing in by on our down and expense X% executed helping We're ex-notable and significantly items drive program, full XXXX cost ability savings demonstrating successfully to reduction our also We expenses, the year-over-year, initial CRD, targets more curve. headcount

with the Ron. And structure to continue back of capital return to XXXX and payout in approximately that, hand let in for with of shareholders a to promise capital delivered $X.X optimize call increased return billion capital we total XXX%. our me Finally, our on

Ronald P. O’Hanley

to questions? we can the Operator, line open

Operator

Instructions]. [Operator

with comes Brennan UBS. question Hawken first from Our

Your line is now open.

Brennan Hawken

bunch expectations fee in question. on color ran through Eric, a the taking on hoping side. just in a was for thanks that I for dig the the you little of One XQ. morning, Good revenue is year to

XQ revenue that the or that said potential through and the growth you quarter? gave equity include it seen think X% to Thanks. has offset couple of year-to-date a pretty be so the we've what proves I fee a is markets, that in down guidance Does you factors. been robust X% if sequentially, to far which durable

Eric Aboaf

now, as year. we dislocations Brennan, it's effectively in. of combination is large it guidance and between The end the at if factor the then Eric. And obviously, a there's

is you'd pretty think see -- that though, years not January to markets ago. around. think have I and five trading we on We've that seen used light. big rates Volatility say still up. still, equity are uptick four I Interest been, it, call puttering or

and I don't an changed, based think really that's there's see effectively outlook what we So this a lot is now. on

I just just fourth first through the quarter. because River, in described, as Charles which then cycle peaks I of in in some there's the sales basis, like seasonality that's quarter of think come dip and usual

We have into visibility some servicing fees.

I step fees, noted of see. management a we'll down. bit Asset take Trading, will a

that So kind looking we're it's of a combination at.

Brennan Hawken

just breakage percentage points when fees markets In really XXXX on all rally early of done clearly we and servicing then AUC's some the hands about elevated some because a leading you really of the equity seen, that under over rate hard that are custody. think purely seen when fast really into have and fair. equity seeing not That's we've job all pressure these around assets a And guys that we've contractually basis your markets were you really to of fee trying robust Thanks color. get that. in fee for past, good your

the of them activity were are of pegged some inflation, levels Some and like. them

help that? the people us near you going optically think here -- pressure because for the so Street it we when In for of way, about about up, fee being markets than rather rate mechanical thinking fee go think -- model way the the some to out past, should calibrate those how factors hasn't the be trying that servicing rate go fee to just know think that the to -- State up prepared equity just okay, term I then we is worked some with I just So can flat. in

Ronald P. O'Hanley

it's Brennan, Ron.

that. mean have on you've at client seen I that past, you're relook base correct, what there been markets that's paying, followed has cycle And they're has and the Let when by a we sharp-up in the me still fee begin a a by possible. renegotiation. equity been

time term been at base, bidding. the I client this think bidding the either the firstly, comprehensively And instances, different or out level at level. now control a much through what's clients we've wanting situation. things. partnership higher is, between our us in of to general, is In of We've have their some at we take our tended of get the proactive that's more these ones and been to

conversation, that expectation same would in would of we've I suspect there'll be but seen some that be my the not So certainly, would -- I the effect past. expect kind

Eric Aboaf

I'd quantitative business Brennan, of fee a of off or just months within remember, a is, quarter schedules of what quarter this add Yes, based have are our servicing most kind to multiple in you. for side the or the average averages,

S&P up the that a point-to-point depreciation, And this worth of But full if you take X%. the is up through on it just only number Page -- it's in But indices, our I the think basis, -- was XQ and S&P think period average if on I was the was that X right and there good down up think average end-of-period, year EAFE deck, XX% XQ. right? top table was On about actually so The you the to have, of slide is it market feels average, you stock a which X%, a great. the and XX%. remembering

effects. fee in are So just averages we what through. the the you those that process. those clients And I about also of as And on, think the but servicing -- billing think the as are of encourage from modeling the as what what to factoring think really fees, about but about both you a about addition, think we it's calculation the focus -- the servicing part

Brennan Hawken

off to bat apologies and straight weeds That's jumping on in the great thanks you. color, for

Operator

comes from Schorr question Glenn Evercore. with next Our

is line now open. Your

Glenn Schorr

if a where Curious touched what's could efforts, talk and have Hi, but bit, talk it your -- optimization you you on little are on if you you you've through and Just might the transient? could process to deposit client. thanks. growth curious you consider working Do repo any client through been on the it that. by environment is of related going mark-to-market get X% and good.

Eric Aboaf

It's Sure, Eric. Glenn.

Deposit Let say, And we that think were on is to with XXXX, or about for been in something intense quarter I do really how we now. sheet. effort it's initiatives in really began me start. our fourth clients focus X and then I'd our quarters it late an balance of X serve response to thinking

sometimes sometimes market money Now Manager. you say, sweeps as it's cash deposits, it's into Guest

it's the we Sometimes do. that some of sponsored repo

results So tend serve cash. of don't what's It's particularly areas. deposits, of be them on largest think a are north their side year-on-year how discretionary. in that's on to of $XX it's thinking clients is probably to those different about discretionary the custody billion buckets. series come there's basis I more -- of on The initiatives the interest-bearing three and our buckets because with of the working a

asset it's Sometimes managers. the

it's Sometimes insurers.

it's pension funds. Sometimes the

that's been piece. probably that's biggest So the been --

of the the think, time for corporate custody we often corporations, not introduction pension have XXX(k) a of partners I Because book We've or over -- our right, pension pension plan plans, but plans the do only and from benefit up suppliers also, remember, of corporate defined treasurer. into we built the deposits. an have because

little smallest broker three think of And bucket I buckets. of the or always we the access. natural third this of a but deposits, then CDs that with that's is creates been so bit a probably supplement the And

taken. -- those build build balance So oxygen, sheet, effect, of us to portfolio, loan investment the our continuing material are initiatives trading lets in to our I They've provides which our been, for in then we've kind terms our us think, book. of book, enough

particularly of higher how And kind think or lower, of what question there running And the we've to in some been you I period in do been the to began there an I your is much to so the intervene think the dimension and and is, that indication. specific kind banking that half read you of fourth system, third that's both second gives in I more starting of little would have because of bank. hard have kind the not, into the reports, a easing in we but the quarter better, of of think seen initiatives It's then part that how don't Fed quantitative about deposits the quarter. bit different. system, H.X of Fed different, probably of and and when

Glenn Schorr

appreciate more maybe one that. $X.X wins. the billion servicing $XXX I And year. the trillion in just the quarter, for on

X% you growth. at organic that, that's If over look

the I fourth specific help is number, not is. if but obviously, I ETF net Now wins it's a in where a of gross what's in see quarter, to I in the with press releases, us net. help maybe just don't through ballpark in can one know if But but not you yet funded there what's us pipe, the the see there? want composition of some think range just share the of you then question some

Ronald P. O'Hanley

are tranches. installed. of nature true It's typically, It's owners, in our won Ron. the a is installed. it queue of be something, in It's some which base, asset Glenn. tends meaning something. to win to when It'll More given be It's that Yes, in things we asset mix install and -- one-offs, be we've of we the client just managers larger there.

others. conventional very than have funds like be earlier fund are in a of more could win large complicated it business, mutual we But the the year. some Sometimes very

a around fund boards. the done particular in sequence it Sometimes their wants client

in some of there's that So there.

conclusion of the You can the probably draw later. business complicated more that tends involved to get

of in portion River accounting there's a winning there of be winning custody all increasingly, is, that's we're our there, a in meaning that or just there. business the the other front-to-back, middle some The office Charles but thing in there, nature is not we're though, some assignment, might or

of oftentimes, think So service is way earlier that's about what had another And it. a seeing to for where client installation we an the install existing year. you're the an in

Glenn Schorr

because impossible, margin funded, the in And appreciate okay. below ones by it and piece in average coming level? is be around a average average would I it, That's not the level, I higher the interesting. just like know is Got range or that going yet level but piece it. it of at

Eric Aboaf

Eric. think, I quarter. mix as you And could it see, quarter well, mix rate where timing. could installed It's again It's it's as It's of it's be it's Glenn, fee -- a a high Ron a of said, ago. it's this it's a -- and high mix.

And so installs sometimes quickly. this more

slowly. more Sometimes

it's big So encourage model. just just put band to a you I I -- know around hard to it.

Glenn Schorr

at we Thanks it Cool, will help, take well your comments guys. that. so outlook

Operator

next Ken Jefferies. Usdin Our question from with comes

line now is Your open.

Kenneth Usdin

these Thanks, good versus wondering dynamics about happens outlook, I through Thanks. point here, being us rates what split just the talk continue color I excess about dynamic happens can expand follow-up of the your expected a on how so the on last you're on your little just from there a to on sheet? deposits can give the the roll to in when some guys. the NII more also expand balance much from To balance still Eric, growing also from year of you how NIM NIM? system, and guess deposits decline against initiatives, what still sheet but strategic the morning on the just the lower side you next year, And bit was

Eric Aboaf

Yes, Eric. Ken. It's

volume right the You're question question. rate the that you're asking -- and

let do in me -- maybe that order. that So

amount frictional those deposits because volume in with those wins of are drivers perspective, that see that we in the this I firstly, two come residual think deposit typically that the system. accounting custody we in the business from and the a -- have

some that based kind So rates and of on the those of the the we will come installation. win have

think Fed as seen deposits some of based a data banks I we've clearly one an bank-wide all that what in couple uptick the some quarter-over-quarter the seen a system that of I think of and statistics. well other in the -- the you've the as in on results is you've the of bit other seen and the our

back or the I'll get banking I going over Did to four, the to about. be its is, in go last for process that -- off and easing deposits to system slow Fed less leave to to just with one level the just more of the effect to over new you or year? think six five, what build the a question then Fed that and -- in activity we next is months we there us did think happens the

think the uncertainty. I one is that

some So deposit amount of we modest growth. expect do

of expect -- in as or I careful into amount the on of we're our interest-bearing some asset we seeing And into that deposits clients significantly still we've from uptick about and deposits. there fell noninterest-bearing the the it actually think comforted holdings interest-bearing going the saw you're it because third been underlying -- volume is in deposits industry. XXXX and of on, what to of think by continued an see a we treasuries deposits, quarter But from stable of in fourth row that three noninterest-bearing have quarter XQ noninterest-bearing in I'll quarter first been in quarters forward, fell the XXXX you, remind and then XXXX. of rotation

like hesitant We change. that that coming yet, to year. think we've we're we change hesitant do of gotten to So call sea we're continued will -- why is be a there think in rotation which a some a just the to and sea flattening see to but quarters line, that we're

I rates think as long effect everything a year rate standpoint, expect it's a on basis negative still full you'd again. a from have

the So still through. plays XX, say, long investment guess long effect rates, have that the XX have should XX, negative playing portfolio rates tractor through as And pop up I to negative. of long rates unless bps, I you a a

call been are or short you X and as of rates -- it's some as quarter, ourselves, TLAC as impacts, them right, And we're -- playing about example, you've lap transactional and perhaps, debt, kind long-term going we have first some so to to reset, X we -- replace have an the got take the to think have effect we that have quarters you those You have because then through. right, with going so requirements. we

it get expense And also -- higher to the how common, we P&L so higher available I because the get net I have effect, more have also is income, in with end -- interest of for up a but accounting we a -- us. but

I'm hoping there. most of anyway, I it So covered

Kenneth Usdin

the balance sheet just And point your just structure to more, Yes. preferreds. one question on

redemption. that did You

do really in and SCB were Or able more finalization before you're balance You capital of to actions? -- about the do now getting that getting to decisions that said the quarter, structure you last final. lead you continue any Could of you does even SCB? finalization further sheet ahead make the

Eric Aboaf

I'd to fair Ken, is one beforehand to look actions Yes, there full we in conscious after just question. do. always have decision just of We're But at by what always first discuss. quarter. telegraph the capital -- obviously, any periods we more that It a opportunity. immediately really don't are of kind where CCAR interim an tends little we have you, that we're or can the to gets tell CCAR an range us around something ability about delicate

let I and about rules leverage the SCB know think and how our looking that's weeks, then me of the actions, -- the for the thing comes the when to And it annual that change leave then don't we see to -- we for start at -- up importantly, but coming just process. through. take timing in think in gear we'll CCAR need we'll a the are that. capital our these where but ton kind So I It's at, matters obviously, we

Operator

Alex next Our with Goldman comes question Sachs. from Blostein

line Your open. is now

Alexander Blostein

of number. the FX like that some are morning it help some where kind NIR this look kind into in X us how negative here, was I you dynamics it evolve know terms looks good Thanks, all hoping Eric trends. of of that non-U.S. side you and it that? But around hey, through was dig from guys deposit bps could you just quarter that, understand are quarter a little the if to one-off anything noise. deposit that a create the of expect cost to I in at helped If there's everybody. there's bit can of costs,

Eric Aboaf

It's Alex. Eric. Yes,

best here look page I everyone. page the of for couple and that a to then the probably phone sheet side. there's And last non-U.S. costs think that sort U.S. probably the detailed the we the deposit financial table through through average the eight are quarters is the have, going of balance addendum a on X elements on side are of you there for those of

the the Most side, cut a currency think, down, domicile view, of fee but it's indicative. pricing side. October And On effect adjusted our the that's and that U.S. our and XX of forth. really a I Obviously, quarter is that through, full coming the effect you deposit of mix so the for view, rate of that came this see points. U.S. basis not is costs on nice

I think so betas see that of right you through range of kind flowing And line. sort the we've in that XX% seeing that been

like negative, that as well. given period, as actually for It would ECB as as fell future. -- in beta see that of just move not what non-U.S. it's expect. Part to international in it the We to the are The -- had domicile Part foreseeable ECB was you seems interest more interest -- doing a the those on there expense moved messier. we this is and temporary markets other normalize went interest positive to effect. one but and well, expense our that NIM we begin -- banks for be going a from that you naturally a a fell, was, little move, of actually remember, that credit than

and that the And expense, of footnotes, what bounced we have -- then then the that side. on that And costs have should FX being the around and in in is we which beginning P&L earned less beginning so to less costs we're that so goes had reset of deposits I also through and swap banking to a just asset swap the NIM bit line with kind the interest-earning the we on be industry change. think because of

Alexander Blostein

out question back, very we you when guys I slightly you and you year. bigger profitability. nice that's year obviously, when the were guys on pretax or margin. it, Got the in in helpful, and so for kind I margins take step may X go expenses XXXX, case, a had you destination percentage on next a thanks. what's medium-term this targets to a And talking to have more year, guess That's what base be move I'm XX. picture a shooting slide still XX, about pretax back because pretax do the curious ago, then here guess but point of improvement a total

are kind this guys of You year. XX-ish

thinking So I we percentage which should off of about the base point guess improvement? two be

Eric Aboaf

Eric. it's Alex,

a through against side, which equity market with that bounced they largely the point, worked I because thinking it's we been think certain both me start those Let markets. on the something When on obviously that at set markets back. us, has we've up the

other was that the to to way. gone But going go to cost when of of think to NII a it's that, mentioned last margin. a time points change in pleased, late also Now of expected quarters up, actually I more we effectively a it I we're right, NII two get in us to outlook. at and was need year was And few kind where -- that has the conferences NII, place one in our take and

just said, That information. that's

should the we of margin, see on for through is XX% our level. making handle if how we're XX% set that XX% I some business I that at of because And those, guidance this you pace. clear plans margin need the the targets headway now. I we to on XX% targets those think to you time We year, operate got expansion three us need a at leverage And a think expenses towards leverage. to we've think And this tantamount I about work that pretax when our and -- fundamental run margin and range. and we think think that at you'd think ultimately tell I drive margin we and kind we've of to of continue that the planning of was part down. process. up Operating and XX% to to need we been and at And drive this get XX%, expect get business, is kind in handle still to you, those revenues kind or driving

set So We we're and are and they targets. that's were they're standing think we're important, where well those by headed. those --

Alexander Blostein

Great, much that. thanks so for

Operator

next Our comes Brian Bedell with from Bank. question Deutsche

Your line is now open.

Brian Bedell

while miss, that fees for you back, and that think, X% I in X% Can to back just pressure, if asset just moderating the But is, concept servicing -- servicing servicing XQ? detail to that folks. a had we've morning you sort the the headwind. broader of had just that question XQ, component Eric, did down you asset and fee the one that come could clarify, X% been pricing pricing good identified, thanks, in pressure I to X% Great, of

a Just profitable the from want separate XXXX I -- talk and a know coming shift capture, and they cost lower from I thought your about they're -- revenue servicing into headwind that common -- as towards ETF the of them. believe, are is and lower mix about just to that's as that's clarify get shift mutual are that just albeit that because I that, as when mix which away funds,

-- So how maybe to servicing in for if you as X% that XXXX the could fees? just that dynamic shapes that up X% about talk

Ronald P. O'Hanley

mean outlook back that's on Why don't there's pricing and look in a And if because Brian how begin think there's which combination of know lot a -- for of and I pressure. pricing kind what terms to ability been our to live that's about cetera. result a we've growing, business all with, in business deflation come on I this scale, this, historically time you asked you et X%. in of been we a and right, business, immemorial, been and the of there's pricing enduring

fund too. also few is been I not last new. It over then, mean the certainly mix underway years. since accelerated ETF that's shift There's the been move mutual

factor So concentration the shift -- to here continue. ETF is other and we increasing mean there's expect that mix in providers. I amongst

than providers such asset. is get typically the very marginal But obviously, paying share rate have less they're amongst market nature the We those of ETF up fee the as large a larger, that providers.

this with. that's but we nature the of what business, and to deal -- the is have So

that's we continue can -- and this think only believe the on saw and our is think into that fee face become and to how can be we But the pressure, do which why model we will important. and environment. more and build that we've business but that continuing pressure that said intensively in that of not XXXX and live XXXX, The in profitable focused of business we abating. continue that's operating we to kind meet lived So ongoing a has starting that, in we is out more

Eric Aboaf

is Eric. this Brian,

Let summary little quantitative kind Ron's estimations of there. kind of of bit a a of me add the

we been about been think, described I always historically, XXXX, on he year XXXX to Two two last ago, of was up And as pricing, tick there's said, That on then or per a percentage through point and a XXXX. pricing headwind XXXX, saw over period. that XX you the couple I speaking. X% last of And think was of pricing time quarter kind years how so think marching we've if that So decade. roughly of of set X we've year, kind over renegotiations that to resetting kind X% then also headwind, of headwind.

is business outlook this year, we've pricing visibility, approximately we about into what's and first second headwinds, got of coming into so X% some visibility good quarter. X%. factored and quarter our from the into And As our book look down think

and into that up other does flows it's point been And right, fee Activity out To you're factored is describe servicing little tend a way of activity, basis. out, where come around. full client and to of relatively clients. mix our in so with your flows, Kind the how we neutral. on on comes that's outlook mix transactional activity a year bit work

to down quarter effect then management for two. past neutral point slight just more in quarter, history to you I X% fees. positive first guided that I'll on downdrafts where in remind a you on in were a that a of and asked that's fees the CRD. And been been The aggregate fees -- finally, it's So what or relative in to X% noted was for I aggregate

how by omission, and be flattish, expectation. didn't expect they'll But those fees we current servicing so cover And that's our I see really because out. to we'll play

Brian Bedell

goal XXXX know just on be. want Great, outline are part you're into Maybe guidance impact or material where in you of X. how a terms XXXX. other that revenue to and progress reiterated there? in line cost that as you time do your just an you sort think to making the about you words, day to the that's of $XXX guys great of revenue million million maybe terms I synergy that thinking mostly then from color. you in $XXX relates had -- is of CRD, for that's In XXXX it that And update on XXXX

Ronald P. O'Hanley

making River those time we more we having affecting revenue frame and expect nature has and Brian, it's important and of that the actually impact or Ron. I absolutely would progress. synergies that say in that the business even both core changing Charles the to But how of And the the play greater outlined, our clients. the material we're our impact conversation around are in with described the cost, earlier. relationships out been we we terms it's of

noted, we signed Alpha we front-to-back so-called deals or As platform in X XXXX.

positive. there have is many a changed ownership, So where outcome the to think our those carry a fundamentally servicing not will we to a I year from outsourcing in in process with signed nature full The and over change of which, and of how ways, on partner clients, that a And even -- client we the one-off with front-to-back, in business just we're our clients nature product likely true these that the dealing of trend business provider in a remains deals, the essence, cases complete very means comprehensive it's front-to-back. relationship strong. the with pipeline

Brian Bedell

That's -- through see revenue? into more it the these terms as of as a is great. in XXXX progression And or more XXXX hockey a deals you linear deals of stick of

Ronald P. O'Hanley

build platform an right? expect of providers platform, of and plugging of a a -- out year the get these the the into we've increasing share and Alpha, we economics. and where XXXX the I it'll grows, as and continue but less And we I of how of small we more and bit mean any economics. more and see our you'll added of uptick linear number those with at various rate platform those become that will think I'd are kinds out typically see momentum It I as to XXXX largely importance linear, be over are mean like to the that partners platform, announced part you'll more increasing be build and an the starts platform. over platform the it's them providers on platform -- And that

Eric Aboaf

to trajectory you'll revenue think example, is leading like that, if the Add up. of tick of have indicators, on about bookings, part Eric. started -- see for the to the it's the synergies, what you Brian, some

saw a were on up You those basis. XX% year-on-year

of Charles And so drive that's begin to the will specific revenues River year kind and what this year. next

of of in And revenues. that, think River trading actually the and with that in later system kind speed connection. Street revenue I of the cycle we the happen the the synergies activity in sponsored or make kind link quickly because management around can which than we've year to to either into tried of to State just repo contrast Charles some client connections were revenue particular, earlier the at three order tends connections the of base

probably do sometime year, fulsome we'll this more helpful. think we half, are it sounds and two I year information into years mix a be and share and deal to and there'll would that So kind a maybe where be as like this try of we're more

Brian Bedell

so much. perfect, Yeah, great that's color. Thanks

Operator

Morgan Our Betsy next Graseck Stanley. with from comes question

line Your open. is now

Betsy Graseck

-- wanted the good Hi, Eric, dig little bit a I on some morning. the Eric, wanted I in of just just expenses. to and around comments to

expense that should years? think next say continue then mentioned you expense of so we it that, so come, I or and to rate the few just anticipate X% hold I there's it change line the something to come? remarks, to it's wanted understandings grow, of with to you of we would expectations to prepared get get reductions, this I is down pressure, duration pace the can and your more change, in expect you, the the but during should the more grow think Or of you just just while is I steady wondering, continue your that XXXX, it around core for the to more

Ronald P. O'Hanley

XXXX beyond our begin believe necessary this continue at manage to is point, offset and the we let to say giving ambition that expenses make. that Betsy, that there's down, need would productivity guidance I by not to We for while investments more on me improvement. that, room we're

Our than we more automation what us have we've accomplished. underway, but in much of efforts front are

business, to. you you're I to So through we've driven able a in we in the and would new And expense it. we part like that base part that. to And is leader -- is scale improvement have about certainly there brought only able we automation, be way assets right? have that. to servicing to business scale continue it's be those the get you talked take ongoing what by I talked to that our XXXX been if productivity would the industry, about the at that do, continued see business in, also to that the the need the that if but about think the we that's on going We've able in need was I brought a on amount that's think of driven by on think of and to path mean the to being to management beyond, process about pressure, to about just if -- likely confidence that redesign level win could clients, pressure this be client fee of just this we

Betsy Graseck

If we get...

Ronald P. O'Hanley

Go Betsy. ahead,

Betsy Graseck

to ramp like down you the get flexibility do a come that reduction? we environment if where just again, feel I was slightly to up rate going you have different say, expense rates

Eric Aboaf

I That Eric. was it's going go. was probably Betsy, to where

because a I them and in operating right, line down, want fees year slower this a we're bring X% That's think conscious you X% where that some to we're leverage hold expansion. on real actually signaling year. create environment, quite to need top growth we to margin expenses,

in think is And answer that the is then is single down, of to so revenue answer. right low coming I part if the question is your digits, the expense growth

reinvestment and to it's some then interest -- expenses the just at We'd equity accelerate into or something, rate-driven else go deeper precise downtick, markets the a our I ration your we and revenues a a of that pace. something efforts. perhaps ways think at if our find take other whether optimization question or to we it point and different on would do

where You're seeing of year, XXXX, that go And the of January what we IT, and deeper doing we December. announced example, there. felt like, described for the in in we think the environment gotten through about in X% middle We'd appreciably different. down just were we're hadn't

And so down. we X% ended up with

deliver not kind environment the way were if action I think find favorable. we would of to that's a incremental the

Betsy Graseck

you. thank appreciate Okay, And it.

Operator

Mitchell from question with Research. Jim comes Our Buckingham next

is now line open. Your

James Mitchell

Hey, and there? it of ratio good what to CETX morning. XX just like X a Maybe do more drove reduction first question billion the is on jumped Kind points, RWAs. in that standardized, there basis look

Eric Aboaf

Eric. it's Jim,

in of I we've think our to both. because capital this constraint is of where one another. trend almost you're And both right the on now binding shown think did They're those capital quarter And effectively you to be I ratios. standardized ratio and a each on we need pages that top scientist advanced. understand really the

a we'll and try, do So follow-up if let necessary. -- me I'll

factors. very -- is volume-driven more simplistic you So remember, with standardized, relatively some if

standardized in securities the our kind ratio sorry, the our to standardized market our and the so and the lower -- I'm And activities. sequentially, lower of fell and related of because occurred, standardized And SEC RWA of actions. actually RWA lending in improved volatility particular, FX that that's levels activities in

downward So standardized. driver biggest that of the was

take ops growth of advanced up, little advanced down And investment RWA the sequentially. which came to D. risk and our advanced you RWA bit about think why loan If portfolio out because increased of is Ph. RWA, and went your advanced and want ratio primarily. growth a the

but a So bit driver. and those apples was that it's were little oranges, -- the

to in live reminder perspective, -- we manage a it's -- world from we of obviously, we we'll I just our it both, good and that both. -- think a

capital can and is, notwithstanding for our CCAR, I levels, think cycle higher obviously we've taken comforting this real actions things and our going take us I that from sets gives with are sets there. payout, flexibility it It us capital well up we found -- actually and that all what well forward. we healthy us at

James Mitchell

Absolutely, is positive. nice CCAR, up certainly standardized going is for what and a that matters

and but of at XQ X%, question, XQ, bit guidance your get back and just to maybe look to kind push -- second I of it. for maybe in XXXX. X% following If up then revenue of almost X% the fees on I fees So processing fee normalize little on to annualized just growth just and a growth seasonality

feel when is like doesn't it target currently level. above you So a very now ambitious X% think average about the S&P XQ

have you in tailwind a So the pretty markets. big

the You equivalent of or to AUC/A growth about to $X.X installed, yet be from have is trillion that's $X growth. trillion X.X% X.X%

X% X% fee something than you you that, it we're reduction know that? growth. market have fee I and rate, tailwind, from please in You talk down but free me the be little the just have there and like about Is better to talked only there could a missing, the about feel income seems

Eric Aboaf

maybe I'm it's to do earlier a we're the on up if want be -- And thing actually questions, with the because, be realistic expenses. also of we Jim, come to on trying back one revenue, we'll we'd to of like realistic realistic seeing. right Eric. to forecast honest, to what we're

that effect. But that business. a let is if both or matter go a changes have could me realistic the forecast. dramatically, I down, have you sense. so this through something And -- pieces, just But so up we'll in think And an obviously, this

the on So end lower to middle X% the fees, X% servicing range. of we said to

clear. pretty that's think I So

be on equity U.S. the and digits. averages you up the here, in about single high think matter in probably think I if the average, it, markets the will

little comes So obviously there's need points of other that'll be couple business, but to the we some the provide X% fee headwinds bit be there'll way a of percentage There fees. a tailwind new that still, net amount that of that overcome. in may -- also

to range. lower end the X% And of so that's X% or middle get to why we the

to in And some fund very stable are but our tending example, relatively are in quickly. that actually space, some We've are driving hedge like in noted, are, fees, EMEA remember, or some even businesses there there for management be asset servicing of cases. that are clients sometimes the or others downdraft

different And so that works in directions.

we're and there So the puts conscious always some of. that takes portfolio are within

and the of on mentioned the square can end off step in of prepared that upper lower I quarter I XXXX in that said my management we think with that you range, I think first remarks. fees,

Trading, I right think now. trading is trading

I kind trend downwards last it year. over you've think seen of the

I lend up who finance moving borrow it's doesn't feel like stable funds from in It's hedge business. from leverage moving think the best, or SEC volatility at fast. It's fast, not or right? up those

see at you actually it's a If And industry I look quick for year-on-year. the that. down data, don't turnaround

want so so an margins and gear don't automatic forth. to And to find opportunities model I in volatility business trading a and wider to recovery

think given then you fee careful about and say, we've there's annualization be guidance other. line, you processing our just River. have processing And Charles the clear like and other I on fees good, And and software the of to

I in XXXX full about even naturally expected think just quarter, the higher look ago And processing in if other that fees there's and little been have at year than you $XX full full this more were up I than than XXXX. quarter-over-quarter. a a or year, would year year think

even XXXX look range about possibilities think because to annualizing back either to want or XXXX there's a of there. may and you So both XXXX just

James Mitchell

all color. to Okay, the point, appreciate the

Operator

Our Kleinhanzl next comes from Brian KBW. of question

Your line open. is now

Brian Kleinhanzl

coming quick you forward, guidance been that the positively, guidance, mention any there on coming SCB or that be through, has into ratio could that to changes A in if those of would came through thanks. you guidance was that factored also incremental be the the gave? all leverage did Great, question

Eric Aboaf

Brian, answer don't it's cards, Eric. my and all what Oh, going know all to be cards I it, are hard the CCAR if question because going can't that's like. a I'm show I to show I cards. my

so a tough And one. that's

do we year. know is now last what think capital of the we amount I returns

this on amount some still have view we're of coming but year, We guessing.

of if swag perspective that. presumably factor that your factor And point. the at least would it's more we year some think that estimates shares, in not at I I'll last take do or into a let you EPS -- you capital add what been and -- a start earnings a your But into we've modeling with does accretion wanted as probably of to as should and think what think least year return a gives the because you our estimates -- that about should from I so levels that do guidance. at you little retirement at to in I expect the is last line our to starting

Brian Kleinhanzl

mentioned X% the you level towards historically? XXXX to been Okay. expect X%, do And that headwind new X% a normal? back the then of headwinds that of separately, Or the still is go when pricing in you has

Eric Aboaf

Eric. That's now. hard question a to it's answer Brian,

or contracts. a some be we They get 'XX, X-, through. where have tend those. of sense year X-year clients we'll XXXX to better to this XXXX we some whom are is of because to There'll what and come with XXXX need we pricing in will be think that adjust that later I X-, start in with to

services clients. deals of or I think different broader of XXXX array a do factor trade some discussions whether a and middle patina we with different to in have may sometimes XXXX. not be more of balance there'll the in office come be There'll with about that of differently. deals some with types they kind front-to-back those Think them,

So think sure tell. give to for it's some indication early at I kind certainly, just I XXXX. point of this next will I'm year,

but to we've that growth this come the probably I don't want to X%, a so to expenses is want business it model this now, build down emphatic we'd reduce to been to we why in back about that plan. we like fee expecting to continue notwithstanding right that which year think we're

Brian Kleinhanzl

thanks. Great,

Operator

Our Carrier next Bank with question comes of from Michael America.

open. Your line now is

Michael Carrier

Thanks, for me. just a one quick

mix some adjustments in that you market-related if and highlighted? mentioned what quarter the was in what in that the material then software just item curious fees, was XQ You the outlook, and fee client

Eric Aboaf

Mike. Eric, It's Sure.

part take Let me first that. the of

items there's two positive where -- we sheet. activity are effectively are And those or do market-related fees, asset uptake, a seed processing of ones underlying the There's capital. mark-to-market where because are management obviously, kind market there around have several funds own tied with and an in an they're software business our if you equity to if our activities. tend balance the On on larger the there well funds the

effect the the you accrual management programs relatively time that -- different asset to those, tied mark-to-market and that because is way because second are an effect, they how The And but tend in vehicles. tend some works -- works the it's, again, tied, accounting in is tied one we've think, and different at be a typical accounting to to got have investment periods. I compensation of

quarter are that's a there have we positive. appreciating Those live fourth they we had why tend year, -- of effectively the are the at we falling in other as big of a smaller lumpy XXXX, are end like with. so but we the need to negative, markets And markets be they ones, just this swing. were very couple to In that had of and items those

Ronald P. O'Hanley

a it's lots Ron. -- I'll pick a your a question we up relationship we large There very -- of have large it's asset client there. second where them part and have management other like comprehensive the -- we Mike, with corporate. do of

As early And assuming enough on be expect client to as investments, that it's to lower have assets, have we of type this it liability-driven will XXXX. which a a sometime fee which it derisking, happens and in fixed it kinds be income moves takes large higher place of fee. meaningful, from risk

Michael Carrier

Alright, thanks a lot.

Operator

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

Your line is now open.

Michael Mayo

solution. one addresses one that the headwind the and question I for Hi, have

that headwind guess is BlackRock? a core I you And gone guiding isn't installed little is in you pressure if the on X% you to first, assets it's a for equal that? but improvement AUC, have of to to of from abating So why due that really terms conservatively problem of bit growth? not if why the to headwind, X% fee the And maybe said be low-margin of pricing are to X.X% pressure, some X% level, X%, better. pricing X% is which addressed, runoff you

Eric Aboaf

it's Eric. Mike,

the I of pressure. on think are there pricing pieces a there couple different

to line. servicing fee also I but other fee distinct pressure -- think we to drivers our -- the relative real be in our pricing try around internal of analysis, disclosure the certainly

would added modest. about or markets. business, talk new been we which relatively other the and is include client flows And -- net which activity, There we drivers are business. have then transition So talked about

about So consciously manage. we the us buckets different talk it because better helps

some if expect that the through I In year-over-year. fee you description do headwind, be from go of to we past we to the it And lighter I think to closer be expect X% gave, XXXX, X%. this

averages was in of of that, and out, the significant some of some uplift expect do look effect, average in in the we your those. added market new think the you expect no uplift net effectively last we XXXX of it business, or you around a either in on contrast point, would to based client world and transition clients actually at transition. include the XXXX XXXX. was some then at which year market And that, positive if I look the in averages be on that would do to occasional XXXX, And in that bit flat and wins. because that That's

bit little that's So a a and of compare contrast.

Ronald P. O'Hanley

addition fee way a abating. reduction of consolidation of Alpha broader gotten fee pressure clients, platform Mike, to maybe deeper business, new -- additional they at the fee to of either see of we respond of gotten to level, we've best describe with the better to I being business, a with services is the that pressure River able of and wallet. the have want through better offsetting managing like Charles some and can. a course, that, at share itself, on and your effects a the on mean question We've better the the it proposition

the of better gotten we've always way but terms managing the now fee at meantime, it lower, additional there's is pressure. to but can also it's at In that maybe So ongoing there. how it, or bring both that's actually we And we to services think go bear. in the in times, higher always terms of managing, about about

Michael Mayo

row you've that, then as efficient, technology. to in getting is X really And solution of reduced quarters headcount mentioned, part more a the and

of I Tech technology So to billion. just the sense go? $X.X if you Technology you could priorities I guess, know give tech last you went spend hired some Where your a year. spending, new X% Chief do but to Officer, just expect up

And I the margin last you it the but Annual asked with a asked cloud. decade pretax the XX% and this. this to at Meeting when you converted year, first XX% ended know was I've I

last what predates that do maybe and have to you you the earlier and when back State are should at this have years say, few Ron, you should decade? done you, that Eric. Just done look going -- predates or you, next you okay, Street But different

Ronald P. O'Hanley

Mike, firstly, of of lot to and trying me business, firstly, for was our it in efficiently. last and ongoing So focus we our and we clients; investments. the important to The and let needs year resiliency. operating being operational investments try incremental secondly, was on, about careful very it -- needed to we do thirdly, your the answer closely ruthless more incremental what make, model; in our improving need there's a we question, what needed prioritization make what what much to do ongoing We're the for

set priorities. That executing be we us has priorities on better that. in the in will, up. to to took now with personnel now to are that That the just do the feel is place a we've got some right priorities. need if we We -- us And what actions felt that you have do those set let we at go we just think focused we've We up plan weren't what set. consistent XXXX get

you've historic that what So seen we told growth. our is you

clients. that with We'll continue will offset The impact the gross reasonably to need way we be just bent that Our overall continuing combination positioned bend we growth intention the a be growth. we've to that to is to our investments high, to through want of be expense do that like but reprioritize. expense make to it'll of by be

probably be year, for the will I So think still would growth, significant it. a the slightly be arresting about up the result we'll the of of net way that but is

Michael Mayo

Okay.

tech just should little X%, bit increase total like X%, a So any or spend what, higher? numbers

Eric Aboaf

No, plan been up, our high too X% is XXXX our single X% past that tech has range. up this way let down me this into tech flat just which clarify. We at to to And to spend factored were the X%. year, to high digits very be been, outlook, the and in the clear is December has year, have XXXX, in right,

Ronald P. O'Hanley

be overall expenses I manage think a like Yes. to be we understand, done, through to And amount would offset tech reduction kind spending. lower to slightly that a us important in of gross get to down investments is there'll some by flat spending, tech of just which

Michael Mayo

thank you. alright, it, Got

Operator

comes Rob from with Wildhack next Autonomous Our question Research.

is Your now line open.

Robert Wildhack

in guys. asset Morning December, highlighted the as about a to you some the the asset from and side? that term? Ron, owner near you in space. you're talk that competitive business the something hiring medium real differences strategic and in in Can emphasizing any growth target dynamics is priority manager And

Ronald P. O'Hanley

we couple emphasizing are a So that for of as priority reasons. a Rob,

their increasingly, of in of allocator. activities, they're The asset asset accounting. custody with distant lots are in And to cases, have have the asset owner, of asset own alongside firstly, Firstly, increasingly many large we and is of third more relevant doing form space the bit of investment an capabilities much space. that owner they typical maybe was only, parties. that past medium And owners what a little a some

be that to If very it involves the itself array different it's we bit selling a have. prescribed a on cycle. a them public, cycle little So but cycle. tends time services it's The selling quicker, lends of it to

more that more in something it's needs -- So business already, that capabilities we're we capabilities but there's a lot distinct the can have. of like we as and leverage opportunity those And we we that share not believe that segment present believe the it's not have. we that to grow of

Robert Wildhack

was Got e-broker there it. the on consolidation case? discuss strategy management have impact space. think the keeps products. that distribution the I as speculation of State you asset evolving? obviously there's that some you're And your landscape some believe this then about Do that's in Street been distribution you can more generally, And maybe And on an thinking side, how could

Ronald P. O'Hanley

a there's in good that, stages playing And field -- level, it we're at that. for think still in distribution. -- early the leveled mean I I question. one that's That's

sharing it write to goes So you that for be that. to those platforms checks paying are on don't in revenues anymore for were, some way, X, when

range, harder to for no get to longer think -- for will, criterion many and despite underlying liquid. going reduced our deeper pay most more -- -- we've got the distinctive ones we've focused traded -- Very -- others, And we're also is transaction cases, cause But got on, of some it's a we investors and us some a the expenses. the the you of that positioning. So that liquid only -- in it's which than cost they do that's in us should enable point moving product, to out to it's be it the cases, But it's if products to and harder is by there. with, it's and the true out it believe now investors, will what we assets. the fees, liquidity of primary actively should product. In some not of

side, So an early to opportunity early, we the is investors. the think this. that for us focus of in liquidity But days on for our importance this actually

Robert Wildhack

Great, thank you.

Operator

with from comes question next Our Cassidy RBC. Gerard

Your line is now open.

Gerard Cassidy

business now type you a go River, can Thank willing types of talk us -- about is are Eric. existing earlier you. past of give Can back? talked are with of you morning customers to or is there's products, opportunity what that different new front-to-back been Ron, Good because array to and that of products mix you customers to new this share business which to succeeded is seeing wins, the Ron with and to that front it you wins completely it no you year. that full whole customer, Charles grab of on a you

Ronald P. O'Hanley

where Gerard, XXXX, be have And daily out. in existing the certainly would it very where or most this. conversations might a there is therefore, see and a And that true in our reengineer we what give the to is to were able expected a clients being early has existing minor would integrates instances expect clients. have own a there all business and we but in a some no them the the the client it products kind towards XXXX. mandate that through been see already, pipeline, platform they them But ability pleased in of of are we what's working a advantage Street pipeline be relationship would all it's signed that and just very model. them that gratifying pipeline large is about platform, with much had not, interested and to XXXX might -- of in the State in position relationship had mix we're that played where We relationship. we their particularly very, Clients have or or

are are Interestingly, clients conversations for achieve to said of at the guide, scale out how as to, at pipeline I winning challenged about custody set than we'll your some to are be that figure led in it's going you your are are a fraction entirely It's this as to It's -- and those business, in of the [indiscernible]. lower X more years. just you'd expect, about are the an for a next those do already earlier, environment. XX much what the they're by that with not able different Others in clients. trying environment and to point the or you trying

of clients, So has large it's think mix and a very, very a -- rich us just we potential forward. for we go a as

Gerard Cassidy

Very a that pressure I good. there's X%. the guys it went And Eric, been then seen, lot up call of talk maybe, have to know pricing about on the you

business, unabated? you Now a has your reduction. to repricing, pricing years little seems price or two coming Can to be it which about competition, mix finding competitors of competitive and you talked the though? less talk are it contributing that to remained Are three than your or really maybe may bit, the be the ago in you

Eric Aboaf

Gerard, Eric. it's

competitors, that pricing drive others actually cases, a actually it's headwinds. the in of and think I clients some mix and

a And the challenges the the industry. And investment so and some in the around those the the the have we accountant. world asset actually segment if asset you and it's U.S. think manager custodian about are in fund of that I the so brunt providers, particular, think borne in as clients, the it, largest clients, manager of of

so bull's kind been eye in been effect near of think some the why impacted. disproportionately industry, we've of there's disruption investment of It's and ways, we're larger in the where I share position. the that that's to having And

always of in I a managers, competitor in. and much some large refocus. fade as focus that or asset there's other there as There deciding don't position, other I are small to for other are our that. seen of our we've think don't much change. in think a come competitor there's segments, the but that, And tell sometimes you, small certainly, out areas, the it's competitors think but our and of always those that's industry, competition-driven I a who's ascent, every There's coming in other of disruptor on MBS, I large beginning players to areas it's

client-driven think I a than more So little otherwise.

Gerard Cassidy

and call. time you you. thank that Well you spent Thank the appreciate on the

Operator

are There I comments. call turn will for the time. Ron further no closing to at questions this over O'Hanley

Ronald P. O'Hanley

and your very interest. for your Thanks much, everybody, participation

Operator

conference concludes This call. today's

may disconnect. now You

State Street (STT) 18 Jan 202019 Q4 Earnings call transcript