The Bank of New York Mellon Corporation

Good morning and welcome to the 2024 Third Quarter Earnings Conference Call hosted by BNY. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Please note that this conference call and webcast will be recorded and will consist of copyrighted material. You may not record or rebroadcast these materials without BNY's consent. I will now turn the call over to Marius Merz, BNY Head of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to our third quarter earnings call. I'm joined by Robin Vince, our President and Chief Executive Officer, and Dermot McDonough, our Chief Financial Officer. As usual, we will reference our Financial Highlights presentation, which can be found on the Investor Relations page of our website at bny.com. I'll also note that our remarks will contain forward-looking statements and non-GAAP measures. Actual results may differ materially from those projected in the forward-looking statements. Information about these statements and non-GAAP measures are available in the earnings press release, financial supplement, and financial highlights presentation, all available on the investor relations page of our website. Forward-looking statements made on this call speak only as of today, October 11, 2024, and will not be updated. With that, I will turn it over to Robin.

Thanks, Marius. Good morning, everyone. Thank you for joining us. I'll start with a few remarks on the quarter, and then Dermot will take you through the financials in greater detail. In short, BNY reported strong third quarter results, reflecting growth across our three business segments and consistent execution on our strategic priorities. Stepping back on the macro side for a moment, at the beginning of the year markets had priced in significant monetary policy easing in anticipation of economic slowdowns. Despite numerous shifts in the macroeconomic outlook since then, we've now seen the start of the easing cycle in several markets around the world, including a 50 basis point reduction in policy rates in the U.S., as the Federal Reserve recalibrates its policy stance to balance employment, inflation, and growth. Following increased market volatility and a sell-off in equities in early August, markets recovered and both equity and fixed income values ended the quarter higher. A little more micro, but relevant for markets, around the most recent quarter end, the market saw simultaneous flows into the Fed's reverse repo facility alongside the first meaningful usage of the standing repo facility, both of which we administer. At the same time, sponsored cleared repo volumes increased on the back of higher repo rates, possibly signaling a transition from abundant to ample reserves in the system, with potential implication for the pace of QT going forward. More broadly, while markets have been constructive, there are clearly risks and uncertainties ahead, and so we constantly prepare and position for the many tail risks that exist, from geopolitical tensions and conflicts to fiscal deficits and the impact of impending regulations and elections. Now referring to page two of the financial highlights presentation. As I said earlier, BNY delivered a strong financial performance in the third quarter, with strong EPS growth on the back of broad-based revenue growth and positive operating leverage. Reported earnings per share of $1.50 were up 22% year-over-year, and excluding notable items, earnings per share of $1.52 were up 20%. Total revenue of $4.6 billion increased by 5% year-over-year, and reported expenses of $3.1 billion were flat. Excluding the impact of notable items, expenses were up 1% year-over-year as we continue to invest in our people and technology, while we also generate greater efficiencies from running our company in new and better ways. Pre-tax margin and return on tangible common equity improved year-over-year to 33% and 23% respectively. For the first time in our history, we reported over $50 trillion of assets under custody and or administration at the end of the quarter. Now, custody is not something we are, but it is something important that we do. This number one market position improves our unique vantage point as a global financial services company, and it provides opportunity to drive value across our portfolio of adjacent businesses to deliver more of BNY to our clients. We increasingly see that the true power of BNY's client franchise exists in the combination of capabilities across our leading security services, market and wealth services, and investments and wealth businesses. We have the ability to enhance this and to deliver more to our clients by bringing new, innovative solutions to the market from across the seams of these businesses. As an example, we recently announced the planned acquisition of Archer, a leading technology-enabled service provider of managed account solutions to the asset and wealth management industry. Archer provides comprehensive technology and operational solutions that allow asset and wealth managers to access one of the fastest growing investment vehicles in the industry, managed accounts, at scale, expanding distribution, streamlining operations, launching new investment products, and delivering personalized outcomes for their clients. The integration of Archer should produce a positive impact across several of our lines of business. In addition to augmenting our asset servicing capabilities for managed accounts, Archer will provide our investments business as well as our Wove Wealth Advisor platform in Pershing with expanded distribution of model portfolios and access to Archer's multi-custodial network. Buy it once, use it many, if you will. The transaction is expected to close before the end of the year and we look forward to welcoming the Archer team to BNY. Another one of the fastest growing areas in financial services, alternatives, also presents a promising opportunity for us to deliver new client solutions across one BNY. We already have relationships with hundreds of alternatives managers as well as roughly $3 trillion of wealth assets on our platforms. We believe there is more for us to do to mine the opportunity and build the technology to reach across our franchise and unlock the fast-growing alternatives market for wealth intermediaries, advisors, and the investors they serve. Last month, we introduced AltsBridge, a comprehensive data, software, and services solution built for wealth advisors. AltsBridge aims to make investing in alternatives easier for advisors through a streamlined end-to-end experience and direct integration into advisors' existing desktops, starting with our Pershing NetX 360 Plus and Wove platforms. As we continue to deliver new, innovative products we are also addressing the significant opportunity from enhancing our commercial model, making it easier for clients to navigate BNY. In order to accomplish this, we are promoting an enterprise approach to client coverage, and we are operationalizing our new commercial model. For example, over the summer, and for the first time in recent memory, we brought together several hundred of BNY's client-facing commercial leaders from around the world, as well as members of our executive committee, for a two-day event we called Commercial Liftoff. This program enabled our top client coverage people and their business partners to take a one BNY view to account planning, creating a shared vision for serving each of our clients holistically across the entire relationship, generating new ideas to meet the client's objectives and developing action-oriented plans to deliver on those goals. During the quarter, we also made progress toward running our company better, including the ongoing transition to a platforms operating model, enhancing the connectivity across our teams and empowering our people to drive change across the company. In September, we went live with the next step on our multi-year plan to unite related capabilities around BNY and elevate our execution by doing things in one place and doing them well. We now have about 13,000 or about one quarter of our people working in our new operating model. As we've said before, powering our one BNY culture in order to be more for our clients and run our company better requires not just words, but action. I want to thank our people around the world for their hard work and for collectively pulling together as a team to create the change for our clients, for our shareholders, and for one another. To wrap up, the combination of our talented team, our portfolio of leading businesses working together, and the strength of our balance sheet gives us a great foundation to deliver more to our clients and drive sustainable long-term shareholder value. While our results in the third quarter demonstrate continued execution against our strategic priorities, as well as progress toward our medium-term financial targets, our team remains focused on the work ahead. With that, over to you, Dermot.