Bank of New York Mellon Corp at Goldman Sachs U.S. Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Alexander Blostein - Goldman Sachs Group, Inc - Analyst : That. No, we'll obviously get into that. Look, lots of important milestones this year. The fee growth has accelerated, NII has delivered. You guys continue to have a very strong balance sheet return to capital. So has not gone to notice, right. The stock is up nicely. I think last time I checked 50% or so, year-to-date, one of the best performers in our group. So definitely looking forward to hearing from you what's in store for next year. Welcome back, I guess can we say, welcome back. I feel like it's been a while, but welcome.

Question: Alexander Blostein - Goldman Sachs Group, Inc - Analyst : That's right. So happy to have you here. Why don't we start with the question just on ongoing execution. It's been, I think, about two years a little over two years since you became CEO of BNY. At the time, you've emphasized the opportunity to really unlock some of the power of different verticals you guys have by bringing them together, driving more durable growth over time. As 2024 comes to a close, how would you describe the progress you guys made on this front? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 11, 2024 / 3:00PM, BK.N - Bank of New York Mellon Corp at Goldman Sachs U.S. Financial Services Conference

Question: Alexander Blostein - Goldman Sachs Group, Inc - Analyst : Yes. And look, it's a big change, a big cultural change for anybody who's covered the space for a while, that can obviously see. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 11, 2024 / 3:00PM, BK.N - Bank of New York Mellon Corp at Goldman Sachs U.S. Financial Services Conference

Question: Alexander Blostein - Goldman Sachs Group, Inc - Analyst : So let's take that a little further. As you look out for the next two to three years, and I hate to ask you to like rank order because you're probably not going to do that. But if you were to try to rank order some of the biggest growth opportunities you see across the franchise, what are the things the market needs to focus on?

Question: Alexander Blostein - Goldman Sachs Group, Inc - Analyst : Yeah. Well, let's unpack some of these, and I do want to start with Security Services. It is still your largest fee pool. I think it accounts for a little bit over 40%, 45% or so of the firm's total fees. As you noted, really nice growth acceleration. I think you're tracking kind of 5-ish percent year-over-year through September. The question that I get a lot is help us separate kind of alpha versus beta. Markets have generally been constructive. There's certainly been a lot of volumes and you guys get to benefit from some of that volume activity within Security Services as well. So what's been driving the improvement outside of the macro? What's really sustainable? How do you think about the durability of that growth over time?

Question: Alexander Blostein - Goldman Sachs Group, Inc - Analyst : I got you. Great. Well, that's a great background. I wanted to shift gears and talk about markets and wealth services. It's really nice to see that you guys bringing this to light a lot more given a very different nature of that business and a very different growth profile. I can't tell you how many times I talk to investors, and it's like it's all about assets on the custody, like it really doesn't drive the business all that much, can we stop talking about this? But if you think about the key drivers and a couple of different businesses there, Clearance and Collateral Management always stood out as one of the really differentiated and quite fast growers. I think revenues there were up something like 20% last year. I think they're up 15-ish percent

Question: Alexander Blostein - Goldman Sachs Group, Inc - Analyst : Right? So, a bit more countercyclicality and more durability, which is obviously.

Question: Alexander Blostein - Goldman Sachs Group, Inc - Analyst : Yeah, I wanted to hit on another big business for you guys, another good growth business, which is Pershing. I think on the last call, you talked about net new asset growth in that business being at around 4%. That's excluding First Republic deconsolidation, which I think is largely behind you at this point. Talk to us a little bit about the growth algorithm for this business over the next several years. But also I do want to put it in the context of some of the competitive dynamics that are going on in the space where clearly, there's more move to the RIA custody-only business. That's a good thing. But also there's a lot of M&A in the traditional independent broker-dealer space, LPL, for instance, being a big consolidator, and that takes some of that business away from you guys. How do you balance between the two? How do you navigate that? And how do you think about the growth?

Question: Alexander Blostein - Goldman Sachs Group, Inc - Analyst : Yeah, So a lot more ways to integrate as you pointed out earlier. I have a lot more strategic questions, but I do want to get to some of the financial ones as well. So why don't pivot a little bit? Well, we have to do that every once in a while right here. So I did want to go back to some of the comments you guys made around the forward outlook on the last earnings call, you talked about Q4 NII being slightly below Q3 levels and expenses for the year being roughly flat. So I think that also implies Q4 feels kind of like Q3 in terms of expenses. So maybe just give us a mark-to-market on your current expectations for both of these. And then to an extent you have any early look into 2025, let's talk a little bit about that as well.

Question: Alexander Blostein - Goldman Sachs Group, Inc - Analyst : And the comment on NII for the quarter, is it a function of activity? So like repo has been helpful generally? Is it a function of deposits coming in

Question: Alexander Blostein - Goldman Sachs Group, Inc - Analyst : Staying on the balance sheet point for a second. I did want to touch on capital. You guys have been returning capital at a pretty steady pace and obviously welcomed by investors. The capital position in the business remains to be quite strong. I guess you're also on track to return it at about 100% or more of earnings this year. How are you thinking about capital priorities into 2025 between balance sheet growth, acquisition, dividends, share repurchases? And as a caveat to that, and again, nobody has a crystal ball, but it feels like there could be some easing in capital requirements on the regulatory front for the banks. You guys have not been drastically impacted by this, but to an extent it is helpful. I'm just curious how you're thinking about that excess capital that could come through

Question: Alexander Blostein - Goldman Sachs Group, Inc - Analyst : It. Okay. Well, lots more to cover, but unfortunately, we're out of time. So, you're going to have to come back next year. But thank you for doing this. Always great to see you here.