Good afternoon, and welcome to the 2024 Fourth 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 afternoon, everyone, and welcome to our earnings call for the fourth quarter of 2024. I'm joined by Robin Vince, our President and Chief Executive Officer; and Dermot McDonogh, our Chief Financial Officer. Robin will start with a strategic update, followed by Dermot with his financial update and outlook. Both will reference our quarterly update 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 is available in the earnings press release, financial supplement, and quarterly update presentation, all of which can be found on the Investor Relations page of our website. Forward-looking statements made on this call speak only as of today, January 15, 2025, and will not be updated. With that, I will turn the call over to Robin.

Thanks, Marius. Good afternoon, everyone, and thank you for joining us. Before we get into our results, I want to address the ongoing wildfires affecting parts of Los Angeles. We are heartbroken by the tremendous loss being suffered by the community where we have several offices. As always, our primary concern is for the safety and well-being of our employees and clients located in the affected areas. We have also committed matching employee donations to eligible non-profits providing relief and recovery to those impacted by the fires. Turning now to our quarterly update presentation, 2024 was an exciting year for BNY, and we are entering 2025 with strong momentum on the right path to unlock the opportunity embedded in our company. Building on the solid foundation that we laid in 2023, we accelerated the pace of our ongoing transformation and closed out 2024 with a strong performance, delivering record net income of $4.3 billion on record revenue of $18.6 billion and generating a return on tangible common equity of 23% for the year. Aligned to our three strategic pillars to be more for our clients, to run our company better and to power our culture. At this time last year, we laid out a set of medium-term financial targets as well as our action plan to drive sustainably higher revenue growth over time. We're executing against these plans and targets every day. As you can see on Page 3 of our presentation, we made very tangible progress in terms of delivery in 2024. For our clients, the rollout of our new commercial coverage model was an important milestone. Effectively cross-selling and leveraging the breadth of our business platforms is the single most compelling growth opportunity for the company. Our commercial model is designed to deliver from across the company at an accelerated pace, improve the client experience and ultimately deepen our relationships. This is the operationalization of One BNY. But our growth is not just about more of the same. Delivering innovative solutions to the market that leverage the powerful combination of capabilities we have at BNY is another important way for us to be more for our clients and drive topline growth. This is One BNY version 2.0. Our acquisition of Archer is a good example of BNY becoming an end-to-end solutions provider across the entire managed account ecosystem, be it manufacturing and BNY investments, distribution through Pershing or servicing through Archer. Over the course of 2024, we also developed numerous new client solutions such as CollateralOne, Alts Bridge, a NextGen ETF servicing platform and new capabilities on Wove. This new product momentum is an important investment for the years ahead. Continuing the investment theme, over the course of the year, we further increased our investments to drive both revenues and scalability, and we generated approximately $0.5 billion of efficiency savings as we continued to digitize workflows and began to leverage new technologies, including AI. We also commenced the phased transition to our strategic platform's operating model in the spring and over the course of 2024 transitioned approximately 13,000 employees or roughly one quarter of the company into this new way of working. Zooming out for a moment, the wrapper for much of our work is culture. Powering our culture remains essential to everything else, and we are starting to see the benefits of our people around the world working more closely together. Celebrating our company's 240th anniversary in 2024 with colleagues, clients and many other stakeholders around the world felt even more special at a moment in which our people could start to see their hard work leaving a positive mark on this iconic institution. Considering the transformation underway at our company, we decided that the time was right last summer to simplify and modernize our brand and logo to improve the market's familiarity with who we are and what we do. The benefits of BNY's improved visibility in the market have also supported our recruiting efforts. Throughout the year, we've been successful in attracting top talent across the firm from recruiting our largest intern and analyst classes to further rounding out our executive leadership team and the targeted investments we've been making in the employee experience across learning, benefits and facilities are being recognized and valued by our people. Another important aspect of powering our culture is to deliver on our commitments. We've worked hard to say what we do and to do what we say. And so, turning to Page 4, I'm pleased that in 2024, we once again met or exceeded our financial goals for the year. We are confident that BNY can deliver positive operating leverage across a wide range of scenarios, and so we started 2024 determined to at least breakeven from an operating leverage perspective. That was an ambitious goal at the time, considering that our revenue outlook at the beginning of the year foresaw an approximately 10% NII headwind to largely offset growth in fee revenue. Therefore, we had to set up to keep expenses, excluding notable items roughly flat, while at the same time self-funding incremental investments in the business. Dermot will discuss the financials in more detail, but in summary, in 2024, we delivered 968 basis points of positive operating leverage on a reported basis and 288 basis points, excluding notable items. We grew fee revenue by 6% year-over-year, and NII was down 1%, outperforming our outlook from the beginning of the year by approximately 9 percentage points. Despite higher-than-expected revenue, expenses were down 4% year-over-year on a reported basis and up 1% excluding notable items. And finally, consistent with our outlook, we returned 102% of 2024 earnings to our shareholders. Taken together, we delivered record financial results in 2024. Significant positive operating leverage resulted in pre-tax margin expansion and improved profitability and we delivered attractive capital returns to our shareholders, all of which underscored the execution of a reinvigorated BNY. But now, let's look forward on Page 5. We are entering 2025 with strong momentum and determination to deliver further value for our clients and shareholders. BNY plays a central role in global capital markets with $52 trillion of AUCA, $14 trillion of debt serviced, $3 trillion of wealth assets, and $5.6 trillion of assets on our collateral management platform. We manage $2 trillion of AUM, and on an average day, we settle over $15 trillion worth of securities and roughly $2.5 trillion worth of payments for clients around the world. This exceptional client franchise and leadership across our diversified financial services platforms positions us well to capture market beta and capitalize on evolving market trends, several of which we described on the left-hand side of the page. Some of our fastest-growing businesses in 2024, treasury services, clearance and collateral management, and corporate trust demonstrate our gearing toward economic growth and higher capital markets activity, both public and private. And through Pershing and Wealth, we are a leader in serving one of the fastest-growing segments in financial services, the US wealth market. Within that market, our wealth business is focused on the faster-growing ultra-high net worth space. Our Pershing business, on the other hand, leverages the size and scale of our platforms to power advisors' businesses, helping them navigate an increasingly complex operating environment using the power of our technology. Relevant for both retail and institutional investors, the trend toward private markets represents an opportunity for BNY to support our clients end-to-end from servicing to distribution, cash investment, FX hedging, and lending across traditional and alternative asset classes. Last year also saw the mass adoption of digital assets exchange-traded products in the US, which grew to more than $100 billion in assets under management. BNY has been an early mover in the digital asset space. Today, we provide fund services for the vast majority of digital asset exchange-traded products in both the US and Canada, and over the long term, we believe digital assets and the technology underpinnings have the transformative potential to help solve client and market needs. And finally, on this list of important market trends, as global markets evolve and become ever more complex, both buy-side and sell-side firms are looking to outsource certain functions and consolidate providers in order to gain scale and reduce risk, and we expect the strength and connectivity of our platforms to be a differentiator in this regard. As we think about the operating environment in 2025, just a month ago, there were clear signs of optimism with the US election behind us, inflation moderating and the Fed having begun its path toward lower rates. But with the turn of the year, we view the outlook for 2025 as a little more uncertain with persistent tail risks across geopolitical tensions and conflicts, uncertainty about trade and fiscal policies and volatility in markets. Against this backdrop, being positioned conservatively with a strong balance sheet and operational resilience allows us to remain focused on executing our ongoing transformation. While we've made good progress against our strategic priorities over the past 12 months, we have a lot more work ahead of us. As I've said before, strategy is important, actually doing it and how we do it matters the most. And so on the right-hand side of this page is the reminder of our strategic priorities and underneath each are some indicators for the progress that we're making. The makeup of our new business wins in 2024, we highlighted some of them on our earnings calls over the past year, validated for us that there is real demand in the market for the type of integrated solutions that BNY can deliver. For example, last year, we've seen a 30% year-on-year increase in sales from clients buying from three or more lines of business. This remains a work in progress but with real runway ahead. Our commercial model enables our client coverage teams to more effectively deliver integrated solutions from across BNY to our clients, and our platform's operating model realigns how we work and organize ourselves across the entire organization in furtherance of that commercial opportunity. 2025 will be a milestone year for BNY's adoption of the platform's operating model. This transition is not just about driving efficiency; it is also about enabling topline growth. By simplifying, streamlining, and collaborating through cross-functional teams, we create more intuitive client journeys, improve our ability to anticipate unmet needs, and accelerate speed-to-market. This quarter, we're planning to activate our largest wave of platforms yet, so that by the end of March, more than half of our people will be working in the model. We believe that our transition into this model will have a meaningful impact on BNY over the years to come, and so we've included in the appendix of this presentation a summary of the program and the timeline for implementation. Next, our investments in digitization and AI over the last couple of years have laid a solid foundation for us to become more efficient and to drive topline growth over time. We're embracing the power of AI to make it easier for our employees to do their jobs and channel their energy towards new innovations. To summarize this broader alpha and beta theme, we believe that we are well-positioned to capture market beta and capitalize on evolving market trends while we remain focused on generating Alpha through the continued transformation of the company. I'll wrap up on Page 6 by reminding you of the value proposition that we laid out for our clients, our shareholders, and our people at the beginning of last year. Our strategic priorities and financial goals are clear, and we remain focused on consistent execution. Before I turn the call over to Dermot for our financial update and outlook, I'd like to close by thanking our teams around the world. I'm proud of what our people have accomplished over the past two years and grateful for everyone's continued dedication to the hard work that's ahead of us. And with that, over to you, Dermot.

Thank you, Robin, and good afternoon, everyone. I'm picking up on Page 9 of the presentation and will first touch upon 2024 highlights before diving into the results for the fourth quarter. Total revenue of $18.6 billion was up 5% year-over-year. Fee revenue was up 6%. Investment services fees grew 7%, reflecting net-new business, higher market values, and client activity across our Security Services and Marketing and Wealth Services segments. Investment management and performance fees from our Investment and Wealth Management segment were up 3%, driven by higher market values, partially offset by the mix of AUM flows and lower performance fees. Despite a year of relatively muted volatility, foreign exchange revenue was up 9% on the back of higher client volumes. Net interest income was down 1%, reflecting changes in the deposit mix, partially offset by higher investment securities portfolio yields and balance sheet growth. Expenses of $12.7 billion were down 4% year-over-year on a reported basis, largely reflecting the net impact of adjustments for the FDIC special assessment. Excluding notable items, expenses were up 1%, reflecting higher investments, employee merit increases, and revenue-related expenses, partially offset by efficiency savings. On a reported basis, pre-tax margin was 31% and return on tangible common equity was 23% for the year. Excluding notable items, pre-tax margin was 33% and return on tangible common equity was 24%. We reported earnings per share of $5.80. Excluding notable items, earnings per share were $6.03, up 19% year-over-year, and we returned 102% of earnings to common shareholders through dividends and share repurchases in 2024. Now turning to Page 11 for the financial highlights for the fourth quarter. Total revenue of $4.8 billion was up 11% year-over-year. Fee revenue was up 9%. This includes 9% growth in investment services fees, reflecting net-new business, higher client activity, and higher market values. Investment management and performance fees were also up 9%, driven by higher market values, partially offset by the mix of AUM flows. Firmwide AUCA of $52.1 trillion was up 9% year-over-year, reflecting higher market values, client inflows, and net-new business, partially offset by the unfavorable impact of a stronger US dollar. Assets under management of $2 trillion were up 3% year-over-year, primarily reflecting higher market values, partially offset by the unfavorable impact of the stronger dollar. Foreign exchange revenue increased by 24% driven by higher client volumes. Investment in other revenue was $140 million in the quarter. As a reminder, the fourth quarter of 2023 included a $144 million reduction in investment and other revenue related to a fair-value adjustment of a receivable. Excluding notable items, the year-over-year decrease primarily reflects the absence of strategic equity investment gains recorded in the fourth quarter of last year. Net interest income increased by 8% year-over-year, primarily reflecting higher investment securities portfolio yields and balance sheet growth, partially offset by changes in deposit mix. Expenses of $3.4 billion were down 16% year-over-year on a reported basis, primarily reflecting the FDIC special assessment recorded in the fourth quarter of 2023. Excluding notable items, which were primarily severance and higher litigation reserves in the fourth quarter of 2024, expenses were up 2%. Provision for credit losses was $20 million in the quarter, primarily reflecting reserve increases related to commercial real estate exposure. Pre-tax margin was 30% and return on tangible common equity was 23%. Excluding notable items, pre-tax margin was 34% and return on tangible common equity was 26%. We reported earnings per share of $1.54 and excluding notable items, earnings per share were $1.72, up 33% year-over-year. Turning to capital and liquidity on Page 12. Our Tier 1 leverage ratio for the quarter was 5.7%. Tier 1 capital decreased by 4% sequentially, primarily reflecting a decline in accumulated other comprehensive income and capital returns through common stock repurchases and dividends, partially offset by capital generated through earnings. Average assets were up 1%. Our CET1 ratio at the end of the quarter was 11.2%. CET1 capital decreased by 5% sequentially and risk-weighted assets increased by 1%. We returned $1.1 billion of capital to our shareholders over the course of the fourth quarter. Moving to liquidity, the consolidated liquidity coverage ratio was 115% and the consolidated net stable funding ratio was 132%. Next, net interest income and balance sheet trends on Page 13. Net interest income of $1.2 billion was up 8% year-over-year and up 14% quarter-over-quarter. The sequential increase was primarily driven by the reinvestment of maturing investment securities at higher yields, partially offset by deposit margin compression. Average deposit balances increased by 1% sequentially. Non-interest-bearing deposits increased by 7% in the quarter, while interest-bearing deposits decreased by 1%. Average interest-earning assets were flat quarter-over-quarter. Our cash and reverse repo, loan, and investment securities portfolio balances all remained flat. Turning to our business segments, starting on Page 14. Security Services reported total revenue of $2.3 billion, up 7% year-over-year. Total investment services fees were up 6% year-over-year. In Asset Servicing, investment services fees grew by 7%, primarily reflecting higher market values, client activity, and net new business. We're pleased with the broad-based momentum in asset servicing. Clients are increasingly looking to leverage the scale of BNY's platforms and utilize the differentiated breadth of our capabilities and at the same time, we continue to see particular strength in ETF and alternative servicing, validating the multiyear investments we've made into these platforms. ETF AUCA of $2.8 trillion was up over 60% year-over-year with inflows into ETFs on our platform once again outpacing the market, and alternatives AUCA was up 20% year-over-year. In issuer services, investment services fees were up 4%. Healthy net-new business and higher client activity in corporate trust was partially offset by lower depository receipt fees, reflecting a higher level of corporate actions and cross-border activity in the prior year quarter. Over the course of 2024, we've maintained our market-leading share in straight stat servicing and by increasing our market share in CLO servicing, further strengthened our number 2 position. In this segment, foreign exchange revenue was up 25% year-over-year, reflecting growth from higher client activity. Net interest income for the segment was up 7% year-over-year. Segment expenses of $1.7 billion were up 1% year-over-year, reflecting higher litigation reserves, employee merit increases, and higher investments, partially offset by efficiency savings. Pre-tax income was $643 million, a 39% increase year-over-year, and pre-tax margin was 28%. Next, Market and Wealth Services on Page 15. Market and Wealth Services reported total revenue of $1.7 billion, up 11% year-over-year. Total investment services fees were up 12% year-over-year. In Pershing, investment services fees were up 9%, reflecting higher market values and client activity. Net-new assets were $41 billion, including a large client onboarding in the quarter. In Clearance and Collateral Management, investment services fees increased by 13%, primarily reflecting higher collateral management fees and clearance volumes. We continue to see strong US securities clearance volumes on the back of US Treasury issues as well as trading activity across the platform. We remain focused on increasing market connectivity by expanding our global collateral platform to new markets. In Treasury Services, investment services fees were up 15%, primarily reflecting net-new business. In November, the US Department of the Treasury's Bureau of the Fiscal Service selected BNY as the new financial agent for the Direct Express program. This decision to appoint BNY speaks to our organization's strength in driving commercial outcomes that broaden access to the financial ecosystem. The program leverages our innovative and resilient payment capabilities to provide disbursement services at scale. Net interest income for the segment overall was up 9% year-over-year. Segment expenses of $852 million were up 2% year-over-year, reflecting higher revenue-related expenses, investments, and employee merit increases, partially offset by efficiency savings and lower litigation reserves. Pre-tax income was up 28% year-over-year at $806 million, representing a 48% pre-tax margin. Turning to Investment and Wealth Management on Page 16. Investment and Wealth Management reported total revenue of $873 million, up 29% year-over-year. In our Investment Management business, revenue was up 41%. Excluding a notable item in the prior year quarter, revenue was up 5%, reflecting higher market values, partially offset by the mix of AUM flows. In Wealth Management, revenue increased by 9%, reflecting higher market values and net interest income, partially offset by changes in product mix. Segment expenses of $700 million were up 2% year-over-year as higher revenue-related expenses and employee merit increases were partially offset by efficiency savings. Pre-tax income was $173 million and pre-tax margin was 20%. As I mentioned earlier, assets under management of $2 trillion increased by 3% year-over-year, primarily reflecting higher market values, partially offset by the unfavorable impact of the stronger dollar. In the fourth quarter, we saw net outflows of $15 billion. This includes $27 billion of net outflows from long-term strategies and $12 billion of net inflows into cash. Wealth Management's client assets of $327 billion increased by 5% year-over-year, reflecting higher market values and cumulative net inflows. Page 17 shows the results of the other segment. Next, on Page 19, our current outlook for 2025. Positive operating leverage continues to be our North Star and so once again, we have set ourselves up to drive positive operating leverage consistent with our medium-term financial targets. Starting with NII, based on current market implied forward interest rates, we expect full-year 2025 NII to be up mid-single-digit percentage points year-over-year. We expect fee revenue to be up year-over-year and we expect approximately 1% to 2% year-over-year growth in expenses, excluding notable items for the full year 2025. Specific to the first quarter, I would like to remind you that staff expenses are typically elevated due to long-term incentive compensation expense for retirement-eligible employees. And then on taxes, we expect our effective tax rate for the full year 2025 to be in the 22% to 23% range. And finally, our philosophy for capital deployment and distributions remains unchanged. We anticipate to continue to pursue growth opportunities and deliver compelling capital returns to our shareholders through dividends and buybacks. Based on what we are seeing today, we expect to return 100% plus or minus 2025 earnings over the course of the year. As always, we will calibrate the pace of our buybacks considering factors such as balance sheet growth opportunities as well as macroeconomic and interest rate environments, which are real considerations in 2025. Our Tier 1 leverage ratio management target remains unchanged at 5.5% to 6%, and against the backdrop of continued interest rate volatility, we will continue to manage ourselves to the upper end of that range for the foreseeable future. To wrap up on Page 20, in January of last year, we shared our firmwide medium-term financial targets, which were to improve BNY's pre-tax margin to equal to or greater than 33% and our return on tangible common equity to equal to or greater than 23% over the medium term while maintaining a strong balance sheet. We have made solid progress towards these targets over the past 12 months and are excited about the year in front of us as our people harness the momentum and continue to embrace our pillars and principles in order to consistently meet or exceed our targets through the cycle. As Robin said at the top of the call, we're pleased with our performance this past year and we're heading into 2025 with good momentum, confident that we're on the right path to unlock the opportunity embedded in our company.

We'll take our first question from Ebrahim Poonawala with Bank of America.

Hey, good afternoon.

Hey, Ebrahim.

I’d like to start with a question regarding your pretax margin and return on equity targets for this year. I understand they aim to be equal to or greater than. I'm interested in understanding how resilient these figures are. You've done an excellent job in the past couple of years, so is it reasonable to expect that achieving higher pre-tax margins than your current levels is possible, assuming there are no significant market shocks? If you could address this at a high level, Robin, I would appreciate it, and then I can ask further questions.

Hi, Ebrahim, it's Dermot here. So I would say as it relates to the medium-term targets that we gave this time last year, and I think you collectively as a group liked those targets that we gave you. Since Robin has taken on the role as CEO, we've had eight quarters where we've executed very well. I'd like to think that we've established a track record of execution and holding ourselves accountable as Robin said in his prepared remarks, say what you do and do what you say. We feel confident that we're going to hit those targets sustainably through the cycle. So you're going to see more of the same from us and what you've seen in the last couple of years into '25 and beyond.

Understood. If I look at Slide 5 and consider the discussion about 80% of employees operating on the platform model by the end of 2025, could you discuss this in two ways? First, does this model enhance the resilience of your fee revenue growth regardless of market fluctuations? Specifically, how does the synergy from transitioning to this model contribute to that? Can you also provide insight into whether this change could enable you to perform better than the last few quarters? This could potentially be a '26 event, but I'm curious if the platform will foster more stable fee growth and lead to improvements in margins and return on equity.

So the way I think about this is if you kind of look at the three pillars of the strategy, be more for clients, run our company better and power our culture and then underneath that, which we talk about less but are very important in terms of how we run the company internally or the pillars and how we show up in terms of behaviors every day. The platform operating model, which we've laid out a page for you, page 22, really is the mechanism by which we kind of drive the three pillars. I do really believe quite strongly that the platform operating model will drive incremental topline growth, will make the topline growth more resilient, but also will allow us to run the company better and become more efficient with that. And that then in turn, we used the words over the last couple of years de-siloing, bringing our businesses closer together and that really speaks to on the topline side, the launch of the commercial operating model that we kind of went out with in the middle of last year. So you take all those discrete elements together and you add it together, you kind of go, okay, fee revenue is going to kind of incrementally grind higher from here with the tools that we're deploying and executing.

Ebrahim, I'd add one thing to it, which is just this concept that we've talked about before on the call about short, medium, and long term and we have consistently been investing both for the topline and also for expense efficiency with all three-time horizons, and we've been trying to do that pretty consistently over the past two years. That's relevant for your question because it isn't just a '26 story, it's actually going to be a '27, '28, and '29 story as well in our opinion, because some of what the platform's model enables is really a foundational point that then allows us to do other things. Retiring systems comes after that. We've retired some, we can retire more. Being able to do more solutioning for clients, we've done some, but we can do even more. So it's quite a bedrock thing for us and given the fact that we won't even be fully into the model until 2026, I think you can expect that there's more payoff to come, '26, '27, '28 through the end of the decade, quite frankly, if we do this well.

Got it. And that’s a great slide, the Slide 27. So good job. Thank you.

We'll move to our next question from Betsy Graseck with Morgan Stanley.

Hi, just two things. One, just to wrap up on that last topic. Given that '23, '24, you got to 25% of the folks in the operating model, the platform model. And in '25 you're putting on an incremental 60%. I get that the benefits of all of this is multi-year but that's a step-up in the percentage of employees that are going to be joining the platform in '25. Should we expect that operating leverage will also increase given this large slug of folks coming in '25?

I want to address the connection you've made. As we reflect on our platform's operating model, we are already three years into this process, which began when I transitioned into the CEO role. We planned, tested, and executed our approach deliberately, recognizing it was a significant change for the company. We aimed to implement this change progressively. While we have seen some immediate benefits in employee satisfaction and improved workflows, the more substantial benefits from the pilots we initiated in 2022 will likely manifest about a year later as teams adapt to their new working rhythms. There is a phased delivery to this transition. Once teams are functioning at a higher velocity, they will be better equipped to manage the design of their systems and client products, while also streamlining potentially duplicative processes. We've observed a lead time associated with these changes. While the returns you and Ebrahim are hinting at are indeed present, they may not be as immediate as you expect. Nevertheless, we are also investing in other initiatives we believe will provide expense benefits by 2025, which we have included in our guidance.

Yeah, it just feels like going from 25% to 60% to 80%, right, in one year should over time bump up that operating leverage rate. Anyway, that's okay. All right. Thank you so much. Appreciate it.

Thanks, Betsy.

Our next question comes from Brennan Hawken with UBS. Brennan, your line is now open.

Sorry, had the mute button pressed. Okay. Thanks for taking my questions. So we saw a really solid rebound in net-new assets at Pershing this quarter. So curious if you could maybe compare and contrast how that would look like for net-new assets in prior quarters ex the offboarding, which we were dealing with. And, Robin, I believe you spoke to ultra-high net worth as like a client segment driving or wealth strata driving some of this. But could you speak to maybe what type of firms are driving this growth? Is it RIAs? Is it broker-dealers, any particular sources of strength? Thanks.

Thank you for the question, Brennan. The year 2024 has been quite eventful due to the significant offboarding we experienced, along with a notable onboarding in the fourth quarter. To put it simply, we believe we have a strong capability and the right strategy to achieve mid-single-digit growth in our net-new assets over the cycle, encompassing various sectors such as RIAs, broker-dealers, and banks. We have the right team and technology to support this. Last year, we provided guidance on Wove, and I am pleased to report that we met that guidance and have since raised it again this year. We currently have 36 clients using the platform and 41 signed contracts. Overall, we feel a strong momentum with Pershing moving forward, which is a key component of our business as we transition to the platform operating model in the first quarter, where we expect to see additional benefits. Pershing remains a robust business for us and continues to grow. Additionally, as Robin will discuss regarding the wealth tech sector, it is one of the fastest-growing areas in the market, and we hold a significant position in that space.

Yeah. And the thing that I'd add, Brennan, is just you made the point about ultra-high net worth. That's really in our BNY Wealth business. We like that business. It's been a solid performer. We think there's more upside in that over time and then Pershing is really across the high net worth space and that's got its focus on $1 billion plus RIA firms, and that's where we're investing. Together, they're about $3 trillion worth of wealth assets, and so when we think about what is the market trend, we think the US wealth market is a big trend and we're actually approaching it through both of those businesses, one ultra-high net worth, one real software, and service approaching the broader retail market.

Thank you for that information; it’s helpful. Now, regarding our expectations for net interest income, our outlook is definitely more positive this year compared to last year. Can you provide some insight into what you expect the trajectory to be? Do you still consider your stance to be mostly neutral? Should we expect the cadence to remain stable? Additionally, you mentioned changes in the deposit mix. Are there any significant shifts in the deposit mix that you are factoring into your projections for the year?

Okay. So in order to answer the question, Brennan, I'd like to maybe spend a couple of seconds just reflecting on '24 where we kind of gave the guide down 10%. We came in down 1%. When I think back on that year, for me, it was really kind of broken into three years in one. When we sat here at this time last year, I think the market implied forward curve was pricing in about six to seven rate cuts, and then clearly, the Fed was kind of signaling higher for longer that kind of in the spring, and that's the way we were kind of positioned at the time. Then as we went into the fall, we had a very strong finish to the end of the year, and that was really kind of the strength of the franchise, clients doing more with us, which led to higher balances overall, particularly NIBs in the corporate trust space where we had more clients doing kind of year-end activity. Now on balances overall, we've kind of seen that moderate a little bit at the beginning of the year, as you would expect, particularly on the NIB side. As you know, like the whole NII is made up of balances, it's made up of the forward curve, it's made up of clients doing stuff with us and it's made up of what we're doing on the asset side. I really do believe that we have a unique strength in terms of the tripod in terms of the interaction between our CIO, the GLS leadership, and then our treasurer, and that team is working really, really well to deliver the strength of the franchise, which shows up in that strong guide of mid-single digits for this year.

Thanks for that color.

We'll move to our next question from Mike Mayo with Wells Fargo Securities.

Hey, I'm conflicted about this transformation of the financial services platform company. On one hand, it seems beneficial for everyone to be on the same platform, which would create the One BNY concept. On the other hand, it appears to involve significant effort to increase employee adaptation from 25% to 80%. It seems like it might necessitate running parallel systems and include training, so I'm wondering if you anticipate achieving positive operating leverage in 2025, considering the challenges of demonstrating any positive operating leverage during such transformations. I understand the objective with One BNY and the unified platform, but it feels somewhat abstract. Could you provide more detailed information?

Absolutely, Mike. I'm glad to clarify. Let me take you back to what we discussed two years ago when we outlined our identity and operations at BNY. We concluded that our core mission is to provide technology, services, and software that help clients grow their businesses. Our market-leading platforms include being number one in collateral, securities lending, and issuer services, as well as being the world’s top custodian. We have a substantial $3 trillion wealth platform that we recently covered. These elements combine technology, software, and services, enabling our clients to leverage our platform for growth. You can see it in our numbers, particularly in market and wealth services, which is the most profitable and fastest-growing part of our company. Acknowledging our identity, we recognized the need for two main changes in our approach. First, we had to be more strategic and organized with the commercial aspect, implementing the One BNY model. We provided statistics in our presentation highlighting our efforts to offer more solutions and introduce new products for our clients. Second, we realized that we couldn’t maintain a siloed back-end organization with fragmented systems and structures. We previously operated with eight different call centers and various custody technologies, with each client onboarding process being handled separately. This approach was ineffective for our business model and future direction. Consequently, we determined that reorganizing was essential, which is the essence of our platform's operating model. In response to Betsy's question, we have been methodical about this reorganization over time to minimize disruption. We do not believe this effort has hindered us; rather, it has provided marginal advantages each year and could offer even greater benefits in the long run. We are focusing on three key metrics: employee satisfaction has improved with the new model, our client service delivery speed has increased, and our operational efficiency has also enhanced. You're correct that this is a significant transformation and not something that can be achieved quickly or superficially. To make BNY the best it can be, we are committed to a medium to long-range vision, engaging in these foundational changes while continuing to deliver results along the way, which is vital.

And do you have an example outside the banking industry, software-as-a-service, I mean, when I hang out with my tech colleagues, they'll use phrases like you're using. Is there any example or maybe another bank somewhere else around the world or fintech, or is it something brand new?

This approach is largely inspired by the technology sector. I've spoken with CEOs from major tech companies, and this is how they have structured or reorganized their operations. When you consult with a CEO from a tech company, whether it’s a fintech or a traditional tech firm, you will notice a similar organizational style. We're not adopting this model because it’s fashionable in the tech world; we believe it aligns well with our platform-like operations. Some banks have explored this strategy for parts of their business, and many firms in the broader fintech sector have embraced this model due to their specific characteristics. We find this approach particularly suitable for us. However, I wouldn't recommend it for every bank; it might not work for investment banks, large trading firms, or major retail banks. Our business is distinct, and while we operate as a bank, our business model is quite different and well-matched to this approach. Moreover, we've already conducted early pilots, and we have significant data on their performance, which reinforces our confidence. This strategy is not based solely on theoretical concepts.

And then for the last follow-up, how do you feel about tech spending in 2024 compared to 2025 and your AI efforts? Do you feel better, worse, or the same?

So, like, the zip code of tech spending, Mike, we're in the kind of $3.8 billion range of numbers and we have roughly earmarked $0.5 billion for investment this year. I feel like, yeah, really, really good about where we are on the AI journey. We spent the last couple of years building out the infrastructure. We've got really good relationships with the West Coast and we have a seat at the table and learning what to do and how to do it. I think you're going to hear a lot more from us in the coming quarters about how we deploy AI to run the company better.

As a broader statement, this concept of running the company better has different seasons to it. Season number one has been a lot of blocking and tackling. Season number two is really the platform's operating model, implementation and then harvesting the benefit. That lasts a few years. Then AI and we think AI is very important, and so within the mix of that 3.8 that Dermott mentioned, there's a gradual pivot that's occurring under the hood around uplifting basic capabilities and infrastructure, which was the past through to making our systems better through AI, and I think that evolution is quite important. It may feel like a static number, but it's actually not a static composition.

Got it. All right. Thank you.

For our next question, we'll move to Alex Blostein with Goldman Sachs.

Hey, good afternoon. Thanks for the question. Another one for you guys on operating leverage. So obviously, great progress so far. Here you are loud and clear on 2025 and more importantly beyond. I guess in that context, how important is fee operating leverage to the firm? I know you talk about total, which is right and NII is a helper in 2025, but for whatever reason if the fee outlook falls short, how much wiggle room do you guys have against that 1% to 2%? And again, maybe talk about the fee operating leverage as well as a metric that you care about or not?

Thanks, Alex. So we do talk about total and we're very focused on delivering that consistently through the cycle, and I also think about it in terms of fee operating leverage and we're also focused on delivering positive fee operating leverage as well. But look, as I said in my prepared remarks, total operating leverage is the North Star. There are a number of factors that go into that. NII, fees, expenses, and with each of those categories, we have multiple levers that we can toggle. We feel like we have flexibility over the inputs in terms of how we end up with that number, so I kind of think if you kind of take last year, 288 was a very good year. There was a reasonable amount of positive contribution to that from NII, and so we expect to deliver positive fee operating leverage through the cycle as well as total.

Got it. All right. Super helpful. And then a small nuanced follow up for you guys just around NII. We've seen stronger results in the repo business for a handful of quarters now, and I think there's still some expectation for that to normalize, but clearly that hasn't happened yet. So maybe talk a little bit about the factors that contributed to the stronger performance in that part of the model within the quarter, but also maybe within the year. What could change that given where you are in the sort of the environment and the outlook? And what do you think is the appropriate run rate, I guess, for that contribution to NII going forward? Thanks.

For Clear to Repo, we saw strong performance in Q4. It's important to note that it represents about 5% of our overall net interest income. While we discuss it, it's still relatively small compared to the total number. We've made significant investments in technology, improved products, and enhanced client services over the past couple of years. Overall, we expect it to grow, but it remains a minor component of the overall figure.

Okay. Thanks very much.

Our next question comes from Brian Bedell with Deutsche Bank.

Great. Good afternoon, everyone. Thanks for taking my question. I have a couple of assumptions regarding the financial outlook for '25. To start with net interest revenue, I appreciate all the insights you provided, Dermot, about the contributing factors. It seems like the focus is more on the mix of assets and deposits rather than an increase in deposits and earning assets. I want to understand your perspective on how much you can actually grow the deposit base through the various client initiatives you have.

For 2024, we believe we performed well on the balance side. Looking ahead to 2025, there may be some uncertainty as we start the year, especially following the election. Based on our current guidance, we expect balances to remain mostly flat, with a slight moderation in net interest bearing assets, projected to be around $44 billion to $46 billion. There is still a substantial amount of the book that will roll off at about 2%, which is in line with current market rates. Our proactive management of the asset side has instilled confidence in our mid-single-digit guidance.

Okay. Great. And then shifting to the fee side. It looks like this guidance is sort of an alpha guide. You talked about the drivers of being higher organic growth as you make progress on the platform strategy, of course, partially mitigated by current currency headwinds. But does this assume generally flat markets? I guess that would be in line with your uncertainty commentary and then I guess if we do have very strong equity markets, say, if we're up just 10%, what would be the rough delta to revenue on that?

Thanks, Brian. So what I would say is roughly kind of 5% on markets from here is about kind of $70 million in fees. That's the rough sensitivity and to your kind of the first part of your question, we kind of given the last couple of years, have, as you say, really strong performance in markets. We are kind of more neutral on kind of market growth in terms of our guide. Thanks, Brian. So what I would say is roughly a 5% increase in markets from here translates to about $70 million in fees. That's the rough sensitivity. Regarding the first part of your question, we have had really strong performance in markets over the last couple of years, and we are now more neutral on market growth in terms of our guidance.

We'll take our next question from David Smith with Truist Securities.

Hi, good afternoon. You managed to keep your AUCA steady despite a significant decline in fixed income markets in the fourth quarter. Can you remind us how much of that $52.1 trillion may be reflecting a lag and not capturing the full decline in markets that we experienced later in the quarter? Regardless, it appears that inflows to the asset servicing business were very strong in the quarter. Could you provide your insights on the competitive environment that you're currently seeing there?

So look, I'll start with the competitive environment. I think very pleased with where asset servicing is in terms of competitive strength, in terms of new business, one over the last year. We came into '24 with strong momentum and executed very well, and we talked about a number of the deals that we won on prior calls. We've invested in the infrastructure. I think we're showing up well for clients and we exit the year feeling very good about the business. I think you know in some ways, asset servicing, everybody looks at asset servicing as the bellwether of the firm, and so we kind of enter into 2025 with continued momentum and our right to win and winning our share as the world's largest custodian. I think we're going to do just fine in '25.

And there's not a ton of lag.

Okay. And then just to clarify, you mentioned $44 billion to $46 billion of NIBs embedded in the outlook. Is that the average for the first quarter or for the full year?

For the full year.

We'll take our next question from Gerard Cassidy with RBC.

Hi, good afternoon. This is Thomas Leddy standing in for Gerard. Aside from the obvious geopolitical risks we all see in the news, what are the primary risks you guys are monitoring for your businesses?

There are many risks in the world right now. I've been asked this question multiple times recently. We have conflicts in various regions, and there's uncertainty in policies across many countries. Some major economies are struggling to achieve growth. We've just experienced a year filled with elections, leading to many new teams in different countries. There's a potential risk of a downturn or recession in the US, although we don't see that as an immediate concern. The impact of higher interest rates is a factor; if we sustain rates at higher levels, that could create additional complexity. The market is facing numerous challenges, each of which might have a low probability individually, but collectively, they pose risks. While we don’t make predictions, we strive to prepare. Our platforms equip us to assist clients in managing these uncertainties, which is our primary focus. If I had to highlight a few key risks, I would mention geopolitical risks, yield curve risks, issuance levels, and cyber risks. On the other hand, it’s important to note that we are a capital markets-focused company and a financial services platform, so we are pro-growth. We benefit from growth, and it's encouraging to hear a pro-growth message, especially with the new administration in the US, as growth is crucial for our business and opens up many opportunities. Amid these risks, there is also a sense of potential for the year, which we remain aware of while managing the existing challenges.

Got it. That's helpful. Thank you. And sort of sticking to the theme of many cross currents, can you give us some color on how increased trading volatility attributed to the dynamic interest rate environment might impact your servicing fee revenue growth?

Well, if you look at last year, one particular business, clearance and collateral management, really benefited from increased treasury issuance, heightened volatility, and clients engaging in more activities, which resulted in us processing significantly more volume on the platform. When we mention increased volume, we are referring to increased fees, and last year, we set numerous records in terms of transactions. Treasury issuance has provided a substantial advantage for us over the past couple of years.

There were two things that I'd add just quickly on the composition of revenues because to the prior question, the absolute levels of assets does matter in some parts of our business. To your question, transaction volumes matter; elsewhere we have revenues from direct software sales. That's a growing part of who we are and part of this sort of platform's concept. But if you just take something like fixed income and this goes to the gearing to capital markets that we laid out in one of our trends pages in the presentation, take fixed income; what's happening in public markets, private markets, in credit touches so many of our businesses, our clearance business, our collateral management business, our asset servicing business, our corporate trust business, our debt capital markets business, our investment management fixed-income business, our investment management LDI business, cash strategies and so the firm across the breadth of who we are is really able to capitalize in a lot of different ways back to this point on growth and activity.

Thank you. That's helpful and thank you guys for taking my question.

Thank you.

And our final question comes from the line of Brian Bedell with Deutsche Bank.

Thanks for addressing my follow-ups. I wanted to revisit Wove. Dermot, you mentioned a revenue guide, but I might have missed it. I noticed the $75 million exit rate annualized for 2024. Did I overlook the actual guidance for 2025, or is that the off-boarding point? Also, could you provide an update on the general progress?

So, incremental revenue for '25 of $60 million to $70 million and I would say we're very pleased with the progress on that product. We have 36 clients on the platform, and we have 41 signed contracts. We feel like we really have big momentum on Pershing moving into the next year.

Got it. And then 67 is incremental to the 30 of '24. Is that correct?

Yeah, that's correct.

Got it. Okay. Great. Thank you.

Thank you, operator, and thanks, everyone, for your time today. We appreciate your interest in BNY. Please reach out to Marius and the IR team if you have any follow-up questions. Be well.

Thank you. This does conclude today's conference and webcast. A replay of this conference call and webcast will be available on the BNY Investor Relations website at 4 o'clock P.M. Eastern Standard Time today. Have a great day.