Yes, we're at time. Thanks, everybody. Good morning again. We'll get started with our next session. Next up, I would like to introduce Dermot McDonogh, CFO of BNY Mellon. Out of the custody banks, BK has the broadest set of products, expanding beyond just Asset Servicing and Asset Management into businesses like Pershing, Clearance and Collateral Management, which continue to be important sources of growth for the company. Dermot joined BNY Mellon from Goldman Sachs about a year or so ago, joining our alumni lineup over the course of today and yesterday. So welcome. Welcome back. Great, great to see you here, and looking forward to catching up. Thanks for having me. Yeah, look forward to that. Of course. So, look, maybe picking up on the first question, as kind of part of my intro. You know, first year as the CFO of BNY Mellon, talk to us a little bit about what the impressions are so far, and what are the key priorities into 2024. And the way I would really kind of try to frame that, you know, you and Robin talked a lot about sort of breaking down silos in the organization. What are some of the lessons learned from that? Okay. So I would say it's been very happy that I took the assignment. I've really enjoyed my first year. I've learned a ton, and I feel like there is a BNY Mellon, I think, is a terrific organization with a terrific franchise. I've learned a lot, and like, I'd spent a lot of time with Robin before I joined, and saw the opportunity, and I saw the strategy that he was trying to deliver. And one year on, I think we're more excited about the forward than we were 12 months ago. More excited about the opportunities that lie in front of us, and it's really kind of, you know, to use the old cliché of going on shoulders that were before you. But I really do think that BNY Mellon has a very storied history and a very storied franchise, incredible client base, very unconflicted in a lot of markets, leading businesses in a lot of places, but a quiet pride about leading businesses. And I think we're more focused on up and at them, a little bit more hustle, and a little bit more kind of winners mentality approach. And I think that will deliver a lot for BNY Mellon over the medium term. Your point about silos is an important one. It's one thing to say it, it's another thing to actually understand what it means in practice, and how do you change it. BNY Mellon is in its current state today as a result of a lot of M&A over a long period of time. It's reasonable to say that M&A hasn't really been integrated well into the fabric of the institution, and so that comes from a people standpoint and a technology standpoint. I think if you can, we're about melding the institution together to think one way all the time, and if you get 50, or 1,000 people thinking one way all the time, then that can deliver a lot of kind of franchise power. Robin laid out a strategy a few weeks ago internally, where he kind of said, "We're about three things. We're about being more for clients, we're about running the company better, and we're about powering our culture." So everything that we do every day has to kind of fall into one of those three things, and it makes it simple. As I said to you just before we started here, I've come back from, like, a 10-day trip in Europe, and you talk to all the people around our firm, they've never experienced the uptick in internal communication. Mm-hmm ... in terms of messaging, what we're about, what we want to deliver for our clients, what we want to deliver for each other. And so there's a real sense of energy within the company that's going to help us really well into the next two to three years. Great. Well, I would love to dig in a little more on the first point you made, which is doing more, doing more for your clients. And that fits well with the construct of organization, right? You, you guys are more than just a servicer. You're more than just an asset manager. There's a number of ways you can interact with your clients, and Robin actually mentioned that on the call, I think it was the last call, suggesting that: Look, BK's clients are looking to do more with the firm. Can you contextualize that a little bit more? What areas of the firm are most prone to the kind of this cross-selling opportunity? And if there's a way to contextualize that, of course, in terms of what that means for organic revenue growth, that'll be super helpful. Look, the best way to answer this question is to do a little bit compare and contrast between my alum and BNY Mellon. Fair. And so, when David took the reins, and John kind of came into the leadership position at Goldman, they created the One GS. And, and so having been at Goldman for quite a long time, I didn't really think very much of it at the time, but then I watched it go into action, and I was really impressed by what they both did, as it relates to the One GS. And everybody has a one something now. Mm-hmm. Yeah. Yeah. It's become a bit of a cliché. But to go back to the silo problem and kind of bring that over to BNY Mellon, we have siloed businesses that don't know what the other businesses do and don't know what they're selling. So educating the enterprise on what each other does and how they sell, and how you can help each other's clients. So recently we had an example. I'll give you an example of. There's a very, very big client that the market services, and we have a big relationship with this client in two of the businesses, but we had a very compelling wealth offering for them as well. Mm-hmm. ...which those other businesses didn't really know how to connect that, yeah? And so we made those connections. We're beginning to make those referrals and kind of showing Asset Servicing and Pershing are now talking to each other. You know, your client, "Oh, I can help there, or I can do that," and little things, and then you see the momentum, you see revenue come from it. We set a sales target at the beginning of this year for cross-referrals within the system. We've kind of blown it away. Mm. And so people are kind of going: Oh, wow, I didn't know we did that. Mm-hmm. And so we're kind of at the enterprise level, just more connecting the dots with people. And it's a very important hire that we've made in the summer of this year, Cathinka Wahlstrom, as our Chief Commercial Officer. And so before we had a head of client management, that was really more focused on big clients who touch more than one line of business. But Cathinka is now responsible for all sales at BNY Mellon- Mm-hmm across all lines of business. And so her ability to set standards, practices, how we talk to each other internally, how we deliver for our clients, is super impressive, and she's really off to a kind of really, really good start. Are there incentives that you're setting up internally as well to actually facilitate that? So I think there are incentives, yes, but also it's the right thing to do for clients. And it's one thing that I think really BNY Mellon stands out. It's a very client-centric organization. It will bend over backwards to do the right thing. Mm for clients, and it's not a very compensation, incentive-driven culture. Mm-hmm. It's more about what's the right thing to do for our clients. Got it. Makes sense. All right, let's spend a couple of minutes on some of the businesses that delivered quite strong growth for you guys over the years, and where momentum continues to be pretty good, Pershing being one of them. Yeah. You guys made a lot of investments into the platform. You talked quite a bit about Pershing X, and the rollout of that. Spend a couple of minutes on what the competitive advantage and the addressable market opportunity you guys think is for Pershing today, given the enhanced capability set, and then ultimately, again, any way you can frame organic growth in this business over the next couple of years. Okay, so I'll make a few points here. One, cultural point, that is slowly changing. If you join the Pershing business today, Pershing is a business, not a company. A lot of people historically would say, "I work for Pershing and not for BNY Mellon," because they think they work for Pershing, because- Yeah It's a siloed business. Now, they think they work for BNY Mellon. That's a big change. They think they have a career at BNY Mellon, not a career at Pershing. Point number two is, Pershing is a high margin, low single digit growing, platform solutions company, 1,300 clients, $2.5 trillion under custody, 8 million accounts, and we process over 2 million trades a day. I don't know, I think they're impressive numbers. Yeah? And so... And we're unconflicted. Mm-hmm. Our clients are not competing with us as they are with others. And so we're open architecture, so we're very big, we're growing, and we feel like we have a very good hand to play in this space. A couple of years ago, we recognized we had a gap. There was a gap in the market in the wealth advisory tech space. We went about it, we hired Ainslie Simmonds. She was employee number one. We've invested significant amount of money in developing that platform. Again, open architecture, and we launched it at the INSITE Conference in June of this year. Mm-hmm. Now, the feedback for that is very, very good. We've signed clients. We're in active discussion with other clients. One very, very big client has signed with us, Integrity. So people like us. So either it's new clients can join just for Wove or existing clients can adopt to have more products and services from us. So we're coming at it from two different angles, attracting clients to Wove who are new to Pershing as well. So it's going really well in terms of the inbound we're getting. Now, on January 12, we're doing an extended earnings call, where we'll talk more about medium-term targets, and Robin will give a more cohesive, up-to-date strategy overview. But we'll lay out some targets on what we expect from Wove over the next couple of years. But from where we are today, we're excited, but we understand the market wants to see some numbers and wants to see when the word's going to turn into cash. Great. We recognize that. All right. Well, I guess it sounds like we're going to have to wait, a couple more weeks for that. Yeah. I don't want to see Robin thunder, yeah. Fair enough. All right, let's talk about collateral management for a minute as well. So clearance collateral management is another solid grower for you guys. I think revenues in that business are up about 11%, year to date, building on last year's 6% growth. Clearly, the environment has been helpful. There's some cyclical factors- Yeah ... that have been supporting this business, elevated treasury issuance for one, obviously, lots of rate volatility being another. Can the business sustain growth off of this higher base as you look out over the next couple of years? So I would say, I would say yes. Why would I say that? I'd say a lot of people in this room think of Clearance and Collateral Management for BNY Mellon as largely a U.S. business. You know, and we've benefited a lot from that. But we have a big international business. We believe our leading position in the U.S. allows us to grow a lot more internationally, and, you know, and we've seen the benefit of that this year. So Brian Ruane, who leads that business, has spent a lot of time internationally this year, and we feel like international is a place. On the domestic side of things, we have, you know, in some ways you kind of feel like you're in the incumbent. You just have to show up and you make the money. But we've innovated a lot this year. We talk to a lot of clients, we take the feedback, we develop new products and services for them. And just like, if you kind of take the volatility of March this year, and you take the debt ceiling, and just the general kind of stress in the system over the course of the year, we've made 1,000 code releases- Mm-hmm. this year into production to service our clients' needs. Mm-hmm. That's a lot of weekend working, so as not to disrupt the Monday to Friday. Yeah. And I think we've really demonstrated to the world at large, that... and Robin talks about this a lot, is that resilience is a commercial attribute for our enterprise, and CCM is like a classic example of us having a unique platform and innovating and delivering for clients. And so we would expect, you know, again, mid-40s pre-tax margin. Sure. Feel very, very good about it. It's in the same segment as Pershing- Yeah Another mid-40s. And if you add in Treasury Services, the third one for that segment, you have a very profitable segment, where we're investing to grow, and at the same time, reducing overall expense spend. Mm-hmm. What's not to like about that? Yeah. Yeah. Sounds like a good business. Yeah. So let's pivot a little bit. I want to spend a few minutes on Asset Servicing. Again, it's the business that, you know, folks in the room are probably most familiar with, given your closest peers. Growth there has been a bit more resilient than what we've seen in the marketplace. Part of that maybe is just the mix. You guys have less beta kind of in that, in that line as well. But you spoke to some organic growth initiatives also. So help me maybe unpack a little bit more the organic growth characteristics of the servicing business today. What are you doing in sort of some of the faster growth areas, whether it's ETFs or private markets? So look, Emily spoke at, up in, Boston a couple of weeks ago. Emily, you know, previous CFO, now leads that business. Sure. For us, in Asset Servicing, I would just take a step back for a sec, and this is kind of how I think about it. One is, we've made a number of important people changes this year in that business. One is, Emily is now in leading it. She's gone and hired a number of top-class talent. We have a new head of custody, we have a new operations person, we have a new COO. These are all, like, top-class people who've executed well at other institutions, that we've brought in to complement an already good team. Now, I think Emily spoke at this conference previously, where she delivered kind of, a pre-tax margin goal for that business of 30%. Yep. Now, I think we're kind of in the mid-20s now, and we're getting into the hard yards of getting to 30%, but we're committed to doing it, and I believe we will get there over time, because we have the right people in place. So the people point is really important. We're the world's largest custodian, but I don't think, historically, we've kind of we have done the right thing in order to kind of continue to grow from number one, in terms of to just, like, push on. Yeah. And so I think Emily is bringing that energy into the business, and we're hungry, hungry for more. Now, we've invested... I'll pick three areas. We've invested in Alts, we've invested in ETFs. We have, we have some exciting plans to invest more strategically in Alts. But when we invest, and when we do the right thing and clients see it, we're, we're, we're picking up share. Also, for next year, we're investing a lot in, in our, in our tax infrastructure within Asset Servicing. We're investing a lot within our corporate actions processing within that business. And so this all comes back to the point of we're really trying to talk about cost to serve, and so we're going after higher margin deals, reducing our cost to serve, and getting scale into the overall business. And so we get criticized a lot, in that it's kind of, catching a falling knife, pricing pressure continuously. But if you get the cost to serve right, and you get your expense ratio right, and you're investing in the right areas, we have the brand, and we have the franchise, and we will deliver for our clients- Yeah over the medium term. So actually, I feel much, much better about Asset Servicing today than I did 12 months ago. Yeah. I mean, it could be very, and it should be very scalable business. Yeah. I was just getting that right. Yeah. And I think this has been a year where we've laid the granular foundations. Yeah and the accountability internally to make that a reality. Yeah. All right, let's talk about Investment Management. It's a business that had a harder time for the last couple of years. You guys are not alone. Obviously, I cover a lot of asset managers, and the industry has struggled with organic growth, and markets haven't been helpful, and the margins have been coming down, so we all know the challenge there. But as you sort of think about where Investment Management fits, in the BNY Mellon overall framework, there are some natural synergies, particularly with money market business and cash management business. So let's put that aside for a second. But when it comes to the rest of the boutiques, what's sort of the vision? What are you guys doing to improve organic growth and ultimately, margins in that business? Is there room to maybe prune that portfolio a bit, to you know, move capital into more efficient areas? ... So I would say at the beginning of the year, we did a lot of work around, I guess, hidden in your question is buy, sell, you know, are you going to sell anything? And we went through the fundamental analysis, and we thought, I think the conclusion of that analysis was, we are better owners of the asset today. And we feel like we can make the assets more valuable, and we have plans to kind of improve it from where we are today. So we felt the conclusion of that was we were better owners of the asset. Mm-hmm. Notwithstanding the fact that the margin a couple of years ago was 13%, and now it's mid-teens. Let's assume that's unacceptable. As a management team, we accept it. You know, it's easier to fall from 30% -16% than it is to go from 16%- 30%. That I can- Yeah ... assure you, yeah? And, but we own it. Yeah. It's five boutiques, I think. Mm-hmm. Yeah. It's Dreyfus, Newton, Walter Scott, Insight. Yep. They're-- That's it. That's what you think about, right? There are a couple of other smaller ones that are not really relevant in this conversation. Dreyfus is what you talked about, the cash management one. Mm-hmm. Walter Scott is small, active equity. Does very well, yeah. Newton is active equity, and that is the one that has had, you know, a tougher time with rebalancing clients, changing their behaviors. That's the kind of the core of what you described as the issue over the last couple of years. And also, Insight, you know, with the volatility in the fixed income markets, has had a, has had a more challenging time, but it is number one in its field, and we're very excited about the strength of that business overall. And so we're a $1.92 trillion asset manager, so we're big, we're scalable. Yeah. But as an overall organization, we don't feel like we have the synergistic benefits of running a boutique model. So we need to attack it at bringing it together more strategically, going after the expenses, adding more products and services to bring back clients and get more AUM going. So we're actively working at that and setting about delivering that over, again, the medium term. Yeah. But, you know, it's tough work, but we're not shying away from it. Yeah. Work in progress. Yeah. So look, you sprinkled margins in various parts of this conversation. You know, we talked about margins in the Asset Servicing, the target being still at 30%. Some businesses that are already scaled and already delivering really good margins. So let's kind of bring it all together. You guys continue to bend the cost curve, which has been great news this year, aiming for a 3% expense growth in 2023, and positive operating leverage, the way you described it, into 2024. Most people took it as expense growth for next year is implied to be probably even lower pace of growth in 2024 versus 2023. So, A, is that still the framework we should be thinking about, and any update, updated thoughts on expenses for Q4 and 2024? So, expenses is an interesting one. I didn't think when I took on the job as CFO, I would spend so much time on expenses, but I let the crowd know, a lot of my week goes on expense management. Yeah. I think in January of last year, we said we would halve the growth rate down to 4%. At Barclays, I pushed that closer to 3%. Yep. And so we've outperformed the four. I feel confident we'll be closer to the three, and so I feel like foundational year for the management team, we said we were going to do something, and we've delivered. We will be more detailed in January 12th, but my hope and my determination is, we're lower next year again. One of the things that we've done this year internally, in terms of how we talk to the leadership team and how we talk to the firm at large, is we have to be determined to deliver positive operating leverage to the market on a continuous basis. It's not good to do it one year and miss the next year, and the market needs to believe that we're sustainable in that. We as a team are very determined on positive operating leverage, and hopefully, you see that in January. Yeah. And so now I don't want to run ahead ourselves, I guess, but as a broader framework, should we be thinking about aligning your expense growth over time to be sort of like below your fee revenue growth? Like, NII will bounce around, of course, and- Uh. You are less susceptible to market moves than maybe, you know, some of your peers. But is that the framework you're ultimately trying to go after? I would say more all in at the moment, including NII. Yep. Because we kind of think of NII. Our NII is different to other institutions. I think a little bit it comes as a package of the fee. So for a lot of our businesses, we think of it as together, so I wouldn't split out the NII. Okay. Yeah, I would say more all in, but who knows what the future brings? Mm-hmm. But we have some very kind of entrenched North Stars- Mm ... on expenses now, and people internally get the joke. Yeah. Great. And so as I keep saying to people, "Would you do it at home? Right. Yeah. If you don't do it at home, don't do it here. Yeah. Fair enough. So you mentioned NII, so let's, let's talk a little bit about that. Maybe starting with the fourth quarter. You and I were talking about it before the session started. You were the only, you know, financial institution that we cover, at least, that did not really bring down their guidance for the full year. You set up 20%. It sounds like you're on track to do the up 20% for 2023. So update us on Q4. Does that still feel like the right bogey? And maybe some of the underlying drivers with respect to deposits that you're seeing over the course of the quarter. ... So I, like as I said to you before, don't try and back me into giving guidance, yeah? So what I said at Barclays, I think, is that we had come off the trough in August, and so I would reiterate that Q4 has continued to trend modestly in the right direction. And so feel good overall where the balances are, feel very good about the 20% guidance for the full year. Barclays, you wanted me to give guidance for the Q4. I think I gave that. For next year, I would kind of use, like, as a base start, where what was implied in the Q4 off 20% is multiply that by 4 for next year, would kind of give you a decent framework of where to start for next year, yeah. Got it. Okay, great. Without asking you for specific guidance for 2024, but then you kind of just gave it to us. I did want to talk a little bit more philosophically about how you're thinking about the balance sheet. Yeah. Acknowledging that the rate market is all over the place, and the information value in the forward rate curve, perhaps is not as good as it used to be. But in that environment, how are you just thinking about extending duration? You guys have been right. You were very short, for longer, and that served you well. But as you look out over the next several quarters, is there an appetite to start locking in some of the higher rates, higher spreads? Point number one is, I think it's the last two years has been a tremendous amount of hard work between the asset side and the liability side in terms of the teams. The CIO book, the treasurer, the deposit raising team, have really been joined at the hip, and it is a lot of teamwork that has delivered those financial results. And, you know, I would give, in many ways, it happened before I came, but I would give Robin a huge amount of credit in terms of putting that in place and that strategy. And I think his experience of running money markets business, being a Chief Risk Officer, so understanding the first line and the second line and how it all interweaves together. Yep. has been a terrific asset to BNY Mellon through this last 18 months. And so, you know, we're on the asset side, we're very liquid. You know, we expect, you know, the pull-to-par to be quite strong next year, assuming we follow the forward path of the curve, and so that would help capital. It will help NII overall. And so, and to use the words of our CIO, he's nibbling at extending duration. And so it's kind of watching and seeing, but possibly extending duration. Great. That was really helpful. Let's talk about capital a little bit. So you mentioned the pull, the pull-to-par dynamic, and if you look at BK's excess capital position, it's been strong all year. It continues to build. You guys restrained yourself maybe a little bit with respect to buybacks in the last, the last couple of quarters. So again, any updates for Q4, and as we look forward, can you try to frame what the pull-to-par capital accretion could look like for next year as we start to pencil out 2024 buybacks? So I think we guided we guided Q4 to be the same as Q3 in terms of buybacks, so that's north of 100 for the full year. As you say, you know, we're in a strong capital position. We made the decision in March to kind of slow it down. Like, we got off to a very good start in Q1 in terms of buybacks, but we slowed it just given the uncertainty of March and then the debt ceiling. So and then, look, Basel III Endgame as well. Yeah. So there were, and just the various conflicts in geopolitics, we just wanted to be safer. And so we have a board meeting next week, where we will talk about our views and philosophies for the capital next year and where we want to be. That would be, you know, subject of quite a detailed update to you on January 12. Great. Basel III Endgame, you guys framed the impact on BK, which sounded pretty manageable. There's a lot of chatter on that, hopefully, being watered down, and there's various efforts underneath that. Any updated thoughts on, you know, what the implications of a looser set of rules could be for BK, or does it- So we're in the 5%-8% range- Uh. and entirely manageable. We advocate, like everybody else's, we're in the game. We're doing our bit. Our respective CEOs are down in D.C. today. Yep ... doing their bit. Yep. And look, we all know that the rule, as written, is not going to be the final rule. Right. We watch it like everybody else does, and we'll comment as appropriate. Yep. Great. Okay, last question from me, and then we might have a minute or two to take questions from the room. M&A, from your earlier comments and your body language, you kind of made it seem like BK has done a lot of deals, and you're in the process of perhaps, you know, working with what you have. But philosophy on M&A, from here, anything that looks interesting that you guys feel might make sense to go after inorganically? So I would say nothing. Based on what I know today, nothing transformational. We look at a lot of stuff because I think it's very important to have the muscle memory and the wherewithal to go through the traps on deals, and you learn a lot from that about where your own gaps are and what you need to build if you don't want to do it through M&A. Mm-hmm. But, I think as with all things in the future, who knows? And there will be a time for M&A, but if I was to sit here and say what kind of M&A, it would be more kind of small niche acquisitions to help a particular business or small technologies that would allow us to go to market quicker than building it ourselves- Mm-hmm. rather than buying something significant and then kind of dealing with the integration that would follow that. That would be just my hunch based on- Yeah -where we are today. But, if something is for sale at the right price, yeah, as Charlie Munger said- Yeah Buy good assets at reasonable prices. You always have to keep a lookout for it," yeah. That's a fair point. Okay, a couple of minutes left. Any questions from the room, please? There's one over there. Yeah. So when portfolio managers think of Bank of New York Mellon, you're kind of often lumped with your nearest competitor. Now, I mean, one point of differentiation is Pershing, which is like a really high quality, very differentiated asset. Apart from Pershing, how would you kind of differentiate yourself from your nearest competitor? We've only got three minutes left. I could go on a while. So I think it's Pershing, it's Clearance and Collateral Management, it's Treasury Services. So that whole Market and Wealth Services, I think, is a key differentiator. Within the SSD, Securities Services business, we have a very nice Corporate Trust business, mid-40s pre-tax margin. We have a very nice Depositary Receipts business, mid-40s pre-tax margin, and we have a very nice Wealth Management business. And so I think we're a very different spot today, and I think we're going to be very different in the future, once we've delivered our strategic objective. Great. Well, I think we'll leave it there. Dermot, thank you very much.