Bank of New York Mellon Corp Q1 2025 Earnings Call Transcript

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

Question: Ken Usdin - Autonomous Research LLP - Analyst : Robin, Dermot, good morning. Another really good quarter in terms of the NII generation and good deposits. I know you guys have talked about how deposit stability is important to NII generation. I know it's early in the year and we have all this uncertainty. Obviously, a better start than the run rate guide would imply. But just wondering, what do you think about just the world of deposits? Do you see any benefits in an uncertain world in terms of flows, flight to safety, and just how we should think about some of the moving parts going forward. Thanks.

Question: Ken Usdin - Autonomous Research LLP - Analyst : Okay, so we'll just see if that holds up and go from there. Just a bigger picture about just the environment we're in. You have a lot of different businesses, and this is the type of environment where we see a lot of activity potential, I guess. And it was notable to see FX a little softer. But I'm just wondering, how do you guys see this world in terms of just businesses that either get more active or potentially less active based on just how clients act and where you expect to see kind of money flows as you could think about how past cycles would be inferenced to this one? Thanks.

Question: Ken Usdin - Autonomous Research LLP - Analyst : Got it. Thank you.

Question: Alex Blostein - Goldman Sachs & Co. LLC - Analyst : Hey, good morning. Thank you for the question as well. Maybe starting with a bit of a strategic question also. Just kind of thinking about the position of the bank, obviously very strong capital base, lots of liquidity. At times of uncertainty and dislocation, there might be some interesting inorganic REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 11, 2025 / 3:00PM, BK.N - Q1 2025 Bank of New York Mellon Corp Earnings Call opportunities that may come up time and again. How are you thinking about that? Maybe it's too early but just want to get your sense for appetite for M&A if something compelling comes along and if there are areas of particular interest where inorganic growth might make sense.

Question: Alex Blostein - Goldman Sachs & Co. LLC - Analyst : Got you, thanks. And then my follow up is actually double-clicking into your earlier response to Ken's question around deposits. So up a little, not

Question: Alex Blostein - Goldman Sachs & Co. LLC - Analyst : Great. All right, thank you, guys.

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : Hey, I guess my first question is, no good deed goes unpunished, so I do know your revenues are up 5% year over year and your headcount's down 2%. So you've raised the bar for yourself but did note that the non-comp expenses are growing mid-single digits year over year. I'm wondering how much that might continue. And also the impact on revenues from the decline of non-interest-bearing deposits, is that seasonal or is that something that's just a result of the macro environment? Thanks.

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : And then you answered the non-interfering deposit question, which might not be answerable, but just any thoughts there?

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : That's great. My second question is for Robin. I saw you're on CNBC, and you talked about the hard data is good, but the soft data is bad, converged one way or another. I guess it's unanswerable also, but how long can this go on before things tip? Like the hard data goes to soft data, the soft data goes back to hard data. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 11, 2025 / 3:00PM, BK.N - Q1 2025 Bank of New York Mellon Corp Earnings Call Do we have one month as a country and economy, one month, three months, six months, 12 months? What's your sense there? And what is the risk of being an international company and being a services company and potential retaliation there? I don't know how you'll think or frame that, but I'll take any thoughts you have. Thanks.

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : Great, thank you.

Question: Ebrahim Poonawala - BofA Securities, Inc. - Analyst : Good morning. I guess maybe, Robin, just to that last point -- and Robin, you mentioned the clearing of treasuries. You have a very deep sort of understanding of the market infrastructure. There's obviously concerns around the Treasury market, what's happening, whether the Fed needs to intervene. Just give us a sort of a preview into what you've seen over the last few days. Are things working as smoothly as you would expect, and what the risk looks like there, or the need for a Fed intervention? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 11, 2025 / 3:00PM, BK.N - Q1 2025 Bank of New York Mellon Corp Earnings Call

Question: Ebrahim Poonawala - BofA Securities, Inc. - Analyst : That's helpful. And I guess a separate question, maybe not timely given all the macro concerns, but your Global Head of Digital Assets testified in front of Congress with regards to the stablecoin legislation. That's a huge priority for this administration. Just give us a sense of how we should think about what is stablecoin legislation. BNY had relationships with Circle, I think, going back a few years ago. What all of that means in terms of your ability to play in digital assets? Are there meaningful implications on revenue growth, deposits that we should be thinking about?

Question: Ebrahim Poonawala - BofA Securities, Inc. - Analyst : Thank you.

Question: David Smith - Truist Securities, Inc. - Analyst : Hi, good morning. A couple questions on NII. First, it looks like NII from repo and Fed funds increased again this quarter. Do you see this sustaining? Is there an expectation for a meaningful drop-off? Just help us frame that. And then secondly, your deposit beta was really high, around 90% again this quarter. Obviously, it's a very fluid rate backdrop. But based on what you're seeing, when might this start to level off? Since I think last cycle, your beta was around 75% or 80% for the cumulative cycle.

Question: David Smith - Truist Securities, Inc. - Analyst : Thank you. And then just in terms of how the macro environment is affecting client activity, do you find clients are less willing to move around from one provider to another in a turbulent environment like this, or the custodians with differentiated capabilities become more attractive to a large enough extent that people will still consider moving where they hold funds?

Question: David Smith - Truist Securities, Inc. - Analyst : Thank you.

Question: Brian Bedell - Deutsche Bank Securities, Inc. - Analyst : Hey, good morning, folks. Just the platforms question, going back to Robin, I think what you talked about in your earlier remarks, over half of BNY is now on the platform model. And then you talked about the costs, the efficiencies, and you cited some examples. The question would be is now that you've got half of the firm on the model, are you -- are the efficiencies and the cross sells, and if I can throw AI in there as well, are these contributions exceeding your expectations so far? And if that is so, would that either translate into lower expense growth or would you tend to channel those savings and to reinvest them in growth initiatives?

Question: Brian Bedell - Deutsche Bank Securities, Inc. - Analyst : That's great color. And I think you wanted to convert the entire company by the end of the year on the platform model. Is that correct, or is that into '26?

Question: Brian Bedell - Deutsche Bank Securities, Inc. - Analyst : That's great color. Thank you.

Question: Steven Chubak - Wolfe Research LLC - Analyst : Hi, good morning and thanks for taking my questions. I hope you guys are well. So I have a couple of questions on the Pershing business. There was some press coverage noting recent changes to the sharing of cash economics with some of your RIA and IBD clients. I was hoping you could just speak to what informed the pricing changes, the feedback you've gotten from the clients thus far, and how we should think about any potential benefit to NII as you retain more of those spread economics.

Question: Steven Chubak - Wolfe Research LLC - Analyst : That's helpful context. Dermot. And for my follow up, just on the NNA outlook in Pershing, the flow rate, it was a touch softer versus some of the recent mid-single-digit or better NNA flows that you've been seeing in recent quarters. I recognize there's a lot of volatility and uncertainty in the current backdrop, but I was hoping you could just speak to what drove the moderation in flows, whether you expect that to continue amid the recent volatility. And if you could also clarify the timing and impact of the pending Atria departure, just to make sure we have all the moving pieces accounted for.

Question: Steven Chubak - Wolfe Research LLC - Analyst : That's great. And the Atria impact?

Question: Steven Chubak - Wolfe Research LLC - Analyst : Understood. Well, thanks so much for taking my questions. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 11, 2025 / 3:00PM, BK.N - Q1 2025 Bank of New York Mellon Corp Earnings Call

Question: Betsy Graseck - Morgan Stanley & Co. LLC - Analyst : Hi, good morning.

Question: Betsy Graseck - Morgan Stanley & Co. LLC - Analyst : A couple of questions. One, just on the Treasury Direct Express program that's moving over to your platform, I just want to confirm that already started and wanted to get a sense as to anything you can share on how we should expect that's going to roll through and impact, if at all, visible P&L?

Question: Betsy Graseck - Morgan Stanley & Co. LLC - Analyst : Okay, and then as I'm looking at the deposit and the SKU, NIB, IB, I thought in the past NIB you were thinking that might move down towards $44 billion, and is that the case still or not? And if that changed, why?

Question: Betsy Graseck - Morgan Stanley & Co. LLC - Analyst : Okay. And then you mentioned if the Fed cuts 50 bps tomorrow, there's no NII impact. What should we be keeping an eye out for that would drive an NII impact? Is it flattening of the curve, sharp flattening, anything, or you're good in any situation? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 11, 2025 / 3:00PM, BK.N - Q1 2025 Bank of New York Mellon Corp Earnings Call

Question: Betsy Graseck - Morgan Stanley & Co. LLC - Analyst : And Treasury Express obviously is in your guide.

Question: Betsy Graseck - Morgan Stanley & Co. LLC - Analyst : Thank you.

Question: Gerard Cassidy - RBC Capital Markets LLC - Analyst : Good afternoon. Dermot, can you share with us your thoughts about -- you talked about the immunization that you guys did. And Robin, you just touched on it last year following Jackson Hole for this year's NII. Would you consider doing something like that for 2026 as the year progresses, or

Question: Gerard Cassidy - RBC Capital Markets LLC - Analyst : Very good. I don't think you guys touched on this. I apologize if you did, if I missed it. There's a lot of talk about regulatory change on the horizon, specifically when it comes to the supplementary leverage ratio, which I think you guys in the past have pointed out to all of us that's your binding capital constraint. Assuming there is relief where they exclude those Treasury securities and possibly mortgage-backed securities from the calculation of the SLR, can you share with us how that would impact the way you manage your balance sheet and the outlook for revenue, should that change?

Question: Gerard Cassidy - RBC Capital Markets LLC - Analyst : Robin, thank you. Very insightful.

Question: Jim Mitchell - Seaport Global Securities LLC - Analyst : Hey, good afternoon. I think maybe a broader question on organic growth. I think, Robin, you mentioned earlier that you might have had record new business wins. So is there a way to kind of frame that in terms of percentage terms, year-over-year terms, just trying to think through the progress towards getting that organic growth rate up and where you stand today?

Question: Jim Mitchell - Seaport Global Securities LLC - Analyst : Yes, absolutely. So I guess versus two years ago, is it fair to assume you seem even more confident in driving this improvement in still kind of early days? Is that a fair way to think about it?

Question: Jim Mitchell - Seaport Global Securities LLC - Analyst : Great. Thank you.

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : I was just looking for one wrap-up number, just even if it's just what you're conceptually thinking, because you're talking about all these revenue growth initiatives, products, platforms, processes, and people. And you talk about clients involving more than three lines of business, but then you also say there's some caveats because markets will do what markets will do. So I'm just trying -- you can help us out with our earnings models, but not for the next quarter, for the next three to five years. The main question is, what should be the core organic growth rate ahead, and what has it been in the past? Thanks.

Question: Mike Mayo - Wells Fargo Securities, LLC - Analyst : Well, that was a comprehensive answer. Thank you very much.