Please stand by. Good morning, and welcome to the 2023 second quarter earnings conference call hosted by BNY Mellon. 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 Mellon's consent. I will now turn the call over to Marius Merz, BNY Mellon, Head of Investor Relations. Please go ahead. Thank you, operator. Good morning, everyone. Welcome to our second quarter 2023 earnings call. As always, we will reference our financial highlights presentation, which can be found on the investor relations page of our website at bnymellon.com. I'm joined by Robin Vince, President and Chief Executive Officer, and Dermot McDonogh, our Chief Financial Officer. Robin will start with introductory remarks. Dermot will take you through the earnings presentation. Following their remarks, there will be a Q&A session. Before we begin, please note that our remarks include forward-looking statements and non-GAAP measures. Information about these statements and non-GAAP measures are available in the earnings press release, financial supplement, and financial highlights presentation, all available on the investor relations page of our website. Forward-looking statements made on this call speak only as of today, July 18, 2023, and will not be updated. With that, I will turn it over to Robin. Thanks, Marius, thank you everyone for joining us this morning. Dermot will walk you through the financials for the quarter shortly, but in summary, the company delivered good financial performance amid a very dynamic operating environment, and we've continued taking actions to position the firm for higher underlying growth and enhanced operational efficiency over time. Referring to slide 2 of our financial highlights presentation, BNY Mellon reported second quarter earnings per share of $1.30, which was up 26% year-over-year on $4.5 billion of revenue, an increase of 5% year-over-year. Consistent with our focus on driving pre-tax margin expansion in 2023 and beyond, we drove meaningful positive operating leverage as we maintained strong expense discipline, while continuing to make significant investments to improve our growth trajectory and transform our operating model. As a result, our pre-tax margin improved to 30%. We generated a return on tangible common equity of 23% in the quarter. As I've said many times before, disciplined execution and consistent progress from milestone to milestone is the key to unlocking the financial opportunity inherent in our high-quality franchise. While we're conscious of the work ahead of us, we're pleased to see the momentum building across the company. First, we're getting an increasingly firm grip on our expense base. I'm proud of our people who are embracing the task of making BNY Mellon a more efficient and scalable company, which gives me confidence in our ability to deliver tangible results in 2023 and beyond. Remember, in January, we committed to essentially cut expense growth in half this year, roughly 4% growth, excluding notable items in 2023, compared to roughly 8% ex-currency in 2022. Halfway through the year, I'm pleased to report that we're on track, even a little ahead of our plans. Second, the strength of our balance sheet, the resiliency of our business model, and our proactive balance sheet management continue to differentiate us with clients and create value for our shareholders. Net interest revenue and deposits were both bright spots in the quarter. The Federal Reserve's 2023 bank stress test demonstrated our capacity to withstand an extreme stress scenario. As a result of the test, our preliminary stress capital buffer requirement remains at the regulatory floor of 2.5%. While our overall approach to returning capital to shareholders remains unchanged, we increased our quarterly common dividend by 14% to $0.42 starting this quarter. Third, we remain laser-focused on driving sustainably higher underlying growth across the firm. We've talked before about the advantages of our business model. Businesses such as clearance and collateral management, Pershing, depository receipts, corporate trust, and treasury services offer us a breadth and diversification in comparison to traditional trust banks. We saw strength in some of these differentiated businesses in the second quarter, new business pipelines are healthy across the board. Importantly, we continued pushing ahead with new, innovative client solutions that we expect to become growth accelerators for the medium and long term. Less than two years after hiring employee number one. Pershing X is now live with Wove, our open architecture wealth management platform that addresses a major pain point in the advisory market by better integrating advisors' core applications. Wove allows us to integrate some of the best solutions from around BNY Mellon, including from our investment management business, as well as from leading third-party fintechs. Our launch at Pershing's INSITE Conference in June has garnered significant early enthusiasm from clients and industry influencers who see Wove as a promising solution. The client pipeline is growing nicely, which we'll report on more in the quarters ahead. More broadly, Wove is a proof point of our ability to execute at speed. We can deliver leading solutions quickly when we empower our people, surround them with the expertise and tools that they need, and drive forward with a product mindset, leveraging our great platforms. It's also a reflection of the change in mindset we are cultivating here, more commercially oriented, with a greater sense of ownership and a greater focus on execution. I'll also call out treasury services, which continues to innovate in areas like faster payments and banking as a service. This quarter, the business announced a strategic alliance with Mobility Capital Finance, or MoCaFi, a Black-founded fintech whose mission is to enable underserved communities to access banking services. This is just the latest example of how we are deploying our capabilities to advance financial inclusion in an innovative way. I've spoken in the past about the opportunity to do more things for our clients by connecting the dots for them through our ONE BNY Mellon initiative, and how we're gonna operationalize that. To help us realize this potential, and more broadly, to sharpen our commercial focus and elevate the client experience across the firm, in May, we welcomed Cathinka Wahlstrom as our first Chief Commercial Officer and member of our executive committee. In addition to taking on oversight responsibilities for global client management, I've tasked Cathinka to embed ONE BNY Mellon into the operations of our company. It's important that we commercialize this opportunity through training, by properly incentivizing our people to collaborate across the firm, and by developing deliberate approaches to multi-product solutions. Stepping back for a moment, let me provide a few thoughts on the macro environment. We acknowledge that the path of interest rates, continued QT, and elevated U.S. Treasury issuance activity carry meaningful uncertainties for the environment in the months ahead. From our vantage point as the primary clearer of U.S. Treasuries, and through touching roughly 20% of the world's investable assets, our data tells us that more than half of recent T-bill issuance has been absorbed by funds flowing out of the Fed's RRP, but a good chunk of the balance has come from the banking system. Most of the money market fund demand for T-bills has been concentrated at the very front end, as funds have been less comfortable extending duration past the end of July, ahead of an expected rate hike later this month, and continued uncertainty on the path of rates thereafter. We're also not seeing much foreign demand, as cross-border flows into U.S. Treasuries of all maturities are negative and have been for some time. Together, this is likely going to put some incremental pressure on domestic funding sources, funds, banks, and corporates, as well as state and local governments, to absorb upcoming supply unless T-bill prices cheapen materially from current levels. For this reason, we do expect some further pressure on deposit balances across the industry in the months ahead. As you would expect, we are positioning ourselves prudently given these uncertainties, but see these flows as benefiting our broader cash ecosystem. We manage over $1.3 trillion worth of cash on behalf of clients across deposits, money market funds, repos, and securities lending, and we're the biggest provider of collateral services globally as well, with about $6 trillion of tri-party balances on our platform. This $7 trillion of relevance to money market flows allows us to retain a connection to the money when it moves around various short-term investment alternatives, and allows us to help our clients find the right solutions for their investment needs. Let me conclude my comments on a reflective note. As I've acknowledged before, strategy matters, but execution and culture matter even more. As we close the books on the second quarter, we're entering the back half of the year with good momentum and confidence in our ability to drive change by executing consistently and at pace. Over the past couple of years, we've been able to attract high caliber talents to upgrade multiple important roles across the company. Our existing team, together with these new leaders, are rising to the challenge of unlocking our potential. It's clear to me that we have a tremendous opportunity in front of us by leveraging our unique combination of businesses, our preeminent client franchise, and the power of our culture and people. I'm encouraged by the initial progress over the past couple of quarters and excited about what lies ahead. With that, over to you, Dermot. ... Thank you, Robin, and good morning, everyone. Let me start on page 3 of the presentation with some additional details on our consolidated financial results in the second quarter. Total revenue of $4.5 billion was up 5% year-over-year. Net interest revenue was up 33% year-over-year, primarily driven by higher interest rates, partially offset by changes in balance sheet size and mix. Fee revenue was down 2%, driven by the sale of Alcentra in the fourth quarter. The mix of cumulative AUM net inflows and lower FX revenue on the back of lower volumes and volatility, partially offset by the abatement of money market fee waivers. Firm-wide AUCA of $46.9 trillion increased by 9% year-over-year. This increase reflects the impact of higher market values, client inflows, and net new business. Assets under management of $1.9 trillion decreased by 2% year-over-year. The impact of lower market values, driven by a year-over-year decrease in the U.K. fixed income markets and the sale of Alcentra, was partially offset by cumulative net inflows over the last year and the favorable impact of a weaker U.S. dollar. Investment in other revenue was $97 million. We continued to see strength in fixed income trading and positive C capital results. Expenses were flat on a reported basis and up 1%, excluding notable items. This was driven by higher investments and revenue-related expenses and the impact of inflation, partially offset by efficiency savings and the Alcentra divestiture. Provision for credit losses was $5 million in the quarter, reflecting changes in the macroeconomic forecast, resulting in higher reserves relating to commercial real estate, largely offset by reserve releases related to financial institutions. As Robin mentioned earlier, earnings per share were $1.30, up 26% year-over-year, or up 20%, excluding notable items. Pre-tax margin continued to improve to 30%. Our return on tangible common equity improved to 23%. Turning to capital and liquidity on page 4. Our regulatory capital ratios remained roughly unchanged. The Tier 1 leverage ratio was 5.7%, down 14 basis points quarter-over-quarter, primarily driven by an increase in average assets. Tier 1 capital increased slightly, driven by capital generated through earnings, net of capital returned through buybacks and dividends. The CET1 ratio was 11.1%, up 10 basis points quarter-over-quarter, primarily reflecting higher CET1 capital. As we said on our earnings call in April, we tapered buybacks in the second quarter to maintain conservative buffers above our management targets, being mindful of the uncertain environment. Overall, we returned 72% of earnings, including approximately $300 million of common dividends and approximately $450 million of buybacks in the second quarter. On a year-to-date basis, we have returned 119% of earnings. The consolidated liquidity coverage ratio was 120%, an increase of two percentage points compared with the prior quarter. Our consolidated net stable funding ratio, which we are reporting publicly for the first time this quarter, was 136%, well in excess of the regulatory requirements. Moving on to net interest revenue and further details on the underlying balance sheet trends on page five, which I will describe in sequential terms. Net interest revenue of $1.1 billion was down 2% quarter-over-quarter, driven by deposit mix shifts, partially offset by higher interest rates. Overall, deposit balances have remained elevated relative to our expectations as they increased 1% sequentially on an average basis. Interest-bearing deposits were up 5%. Non-interest-bearing deposits were down 11%, in line with our expectations. Average interest-earning assets increased by 4% quarter-over-quarter. Underneath that, cash and reverse repo was up 15%. Loan balances were flat. Our investment securities portfolio was down 5%. Turning to expenses on page six. Expenses for the quarter were flat year-over-year on a reported basis, and up 1% excluding notable items relating to litigation and severance. As I mentioned earlier, this reflects higher investment and revenue-related expenses and the impact of inflation, partially offset by efficiency savings and the Alcentra divestiture. To summarize, we continue pushing forward with our multi-year investments to increase the growth trajectory of the firm and transform our operating model for greater scalability over time. Importantly, we remain focused on driving positive operating leverage and delivering continued pre-tax margin expansion. As an example of the expense discipline that Robin mentioned, for the second quarter, we self-funded the entirety of our incremental investment spend and importantly, are on course to do the same for the full year. Turning to our business segments, starting with Securities Services on page 7. As I discuss the performance of our Security Services and Market and Wealth Services segments, I will comment on the investment services fees for each line of business described in our earnings press release and the financial supplement. Security Services reported total revenue of $2.2 billion, up 12% year-over-year. Fee revenue was down 2%. Within this, investment services fees were flat. FX revenue was down 20% on the back of lower volatility and volume. Net interest revenue was up 46%. In Asset Servicing, investment services fees were flat, with healthy underlying growth from new and existing clients, offset by lower client transaction activity reflecting the current market environment. Importantly, strength in attractive market segments continued. Despite an industry slowdown for private markets and hedge fund launches, we saw strong growth in our alt servicing business. High single-digit growth in both ETF AUA and number of funds serviced continued. Within issuer services, investment service fees were up 3%, driven by our depository receipts business. Here, the impact of a large client corporate action in the current quarter was tempered by the absence of Russia-related client activity in the second quarter of last year. Next, Market and Wealth Services on page 8. Market and Wealth Services reported total revenue of $1.4 billion, up 10% year-over-year. Fee revenue was up 5%. Net interest revenue increased by 24%. In Pershing, investment services fees were up 4%. The increase reflects the abatement of money market fee waivers and higher fees on sweep balance, partially offset by lower transaction volumes, consistent with the decline in U.S. equity exchange volumes and the impact of lost business. The net new assets number was a negative $34 billion in the quarter, reflecting the deconversion of a regional bank client that was acquired in May. Excluding the impact of this ongoing deconversion, which we expect to weigh on our reported net new assets for several quarters, net new assets grew at a mid-single digit annualized growth rate. We remain confident in Pershing's underlying momentum and prospects. Importantly, our continued investments to enhance Pershing's core platform, as well as the business's access to the strength and breadth of the whole company, is being recognized by clients as a differentiator, especially in the current market environment. As Robin mentioned earlier, Wove is off to an excellent start. In Treasury Services, investment services fees decreased by 2%, reflecting higher earnings credits for non-interest-bearing deposit balances and lower payment volumes, partially offset by continued momentum across payment and liquidity solutions. In Clearance and Collateral Management, investment services fees were up 10%, driven by U.S. government clearance volumes, reflecting elevated volatility and U.S. Treasury issuance following resolution of the debt ceiling. We also saw healthy growth in collateral management fees. As the largest, truly global collateral manager, we continue to increase market connectivity by expanding our tri-party platform to include new markets, trade types, and collateral pools. Our average tri-party collateral management balances increased by 16% year-over-year to $6 trillion. Turning to Investment and Wealth Management on page 9. Investment and Wealth Management reported total revenue of $813 million, down 10% year-over-year. Fee revenue was down 10%. Investment and other revenue was $12 million in the quarter, primarily reflecting seed capital gains. Net interest revenue declined 37% year-over-year. Assets under management of $1.9 trillion decreased by 2% year-over-year. As I mentioned earlier, this decrease largely reflects lower market values, driven by the year-over-year decrease in U.K. fixed income markets and the Alcentra divestiture, partially offset by cumulative net inflows and the favorable impact of the weaker dollar. In the quarter, we saw $9 billion of net outflows from long-term products as clients continued to de-risk and rebalance their portfolios. Despite competitive investment performance, we saw $9 billion of net outflows from cash. In investment management, revenue was down 9% year-over-year, primarily reflecting the sale of Alcentra and the mix of cumulative net inflows, partially offset by improved fee capital results and lower money market fee waivers. While in wealth management, revenue decreased 10%, driven by lower net interest revenue and changes in product mix. Client assets of $286 billion increased by 8% year-over-year, reflecting higher market values and cumulative net inflows. Page 10 shows the results of the other segments. I will close with a few comments on our current financial outlook for the second half of the year. Number one, our net interest revenue outlook for the full year 2023 remains unchanged for 20% growth year-over-year. This is based on market implied forward interest rates toward the end of the quarter. We are pleased with our net interest revenue trajectory and balance sheet management year-to-date, but mindful that we are operating in a very uncertain environment with continued rate volatility, higher for longer rates market backdrop, and uncertainty surrounding meaningful U.S. Treasury issuance in the coming months. Number two, we are ahead of plan when it comes to executing on our efficiency efforts. We remain focused on outperforming our target of 4% expense growth, excluding notable items for the full year 2023, and we'll work hard to drive this closer to 3% in the coming months. While we expect the operating environment to continue to weigh on fee growth relative to what we expected at the beginning of the year, our progress on the expense side continues to give us confidence in our ability to deliver positive operating leverage this year. Number three, we still expect to return 100% of our earnings or more to our shareholders over the full year 2023, while continuing to position ourselves conservatively with respect to our capital levels, considering the amount of operating uncertainty. In conclusion, I am pleased to report that the company continues to perform well against the backdrop of complex operating environments, and we continue to execute with a great sense of urgency against our growth and efficiency initiatives. With that, operator, can you please open the line for Q&A? Thank you. If you would like to ask a question, please press star one on your telephone keypad. As a reminder, we ask that you please limit yourself to one question and one related follow-up question. Our first question will come from Brennan Hawken with UBS. Good morning. Thanks for taking my question. Dermot, Morning, Brennan. Good morning. Dermot, I'd like to start with what you just touched on, the unchanged NII outlook. Curious what you're seeing as far as deposit cost pressure. We've begun to see that emerge. There are peer firms of Bank of New York that have flagged some upward pressure in the back book. How is it that you are able to avoid these pressures and keep on your NII outlook that you had provided earlier? Thanks for the question, Brennan, and good morning, everyone. I will accept the fact that the pressures are there, but I think the team is doing a great job managing both sides of the balance sheet in a very dynamic environment. If we kind of look at the first half of the year, I think we're very pleased with where we've come out in the first half of the year and feel we're on a very good footing for the back half of the year. In January, when we spoke to you, we kind of gave a guidance of 20%, and that was with a mid-single digit decline in deposits over the course of the year. If you reflect on the two quarters just behind us, we had elevated deposits in Q1 on the back of uncertainty around regional banks. We had elevated deposits in Q2 on debt ceiling, which really speaks to the strength of our balance sheet and the strength of our franchise and clients looking to use us in times of uncertainty. Now, when you look to the back half of the year, you know, and our deposit average deposits in Q2 were around $277 billion, up 1% sequentially. We do expect this growth to moderate in the back half of the year, and we do expect declines in our balances as a result of the treasury issuance, which I think is going to be announced in August in terms of what they're going to do between bills and coupon payments. The interplay between QT, RRP, and bank reserves is something that we're all watching carefully. We do expect our balances to go down to mid to high single digits from here. When we reflect back and do the bottoms up, top down and talk to clients and see what's happening in the marketplace, we come back to the same place as where we started at the beginning of the year, in terms of our overall feel good about the guidance of 20%. Specifically, to your point on deposit costs. Look, our client base, unlike others, is largely institutional, and, you know, our bases are in the mid to high seventies, and we feel our book is kind of... We passed on the rate rises to our clients over the last one and a half years. We feel pretty good about where the book is. We price competitively. Clients come to us not just for deposits, they come for a broad range of goods and services, and deposits are part of our overall product mix. We feel very good about where the book is and where the cost is. Notwithstanding, there are pressures given the higher for longer rates environment and people looking to optimize their net interest income. That's it. That's very helpful. Thanks, Dermot. I appreciate that. Switching gears a little bit on the fee revenue side, this was a pretty good outcome for you guys here this quarter. How should we be thinking about jumping off into the next quarter? Is there anywhere in particular where you would flag some adjustments that we should be making to the baseline, or is this a fair way to think about it? As it relates to fees, Brennan, look, I think when I look across the various businesses and the feedback that we're getting from clients, and when I talk to our teams, our backlogs are good. We're winning our fair share of deals. I have to say, the enthusiasm and the energy of the team when they came back from the INSITE conference, having launched the Wove product, gives us great, you know, optimism about the future and what we can do for our clients. Overall, I would say our backlog is good in a very uncertain environment. We're winning our share, and our yet-to-be-installed book of business in asset servicing is healthy and strong. Excellent. Thanks for that color. Our next question will come from Alex Blostein with Goldman Sachs. Hey, guys. Good morning. Thanks for the question. Just a quick follow-up first, maybe around the deposit discussion. Dermot, if I hear you correctly, no kind of catch up from the back book that you expect to see in your deposit pricing for the rest of the year. I guess if we look at the deposit data over the course of this quarter, it looks like it was pretty close to 100% on a currency-adjusted basis. Maybe help us break down the deposit costs in the U.S. and non-U.S., and maybe the type of, you know, what kind of deposit pressure and client conversations are you seeing in the, kind of, you know, different regions? On the catch-up, Alex, I would say when we talked about this last quarter, we kind of said our Q1 results were kind of largely a little bit of the price lag there, which we feel is largely behind us, and that catch-up has happened in Q2. Overall, I think we feel pretty good about the catch-up. Mid to high cumulative bases are in the mid to high 70s percentage for dollars. Look, you know, it's reasonable to expect that they will continue to grind higher from here, but I would say no meaningful change. If you take the overall deposit book in total, it's largely a dollar-based book, 80% dollars, and then 10% split between euros and sterling. The, the bases for sterling and euros are roughly in the kind of 50%-60% range. Then I'll just reiterate, like, the point, and I think it's a very important point, you know, the deposit book is largely institutional, sophisticated clients, and we've really repriced our book quite efficiently over the last 1.5 years, and that's really the message I'd like to leave you with. Makes sense. Thank you. Robin, a question for you, maybe a little bit more on the strategic side. When we look at the investment management business at BNY Mellon, there are some areas that one could maybe characterize as sort of subscale. The organic growth has been muted, and obviously, margins is something you guys, as previously said, need to sort of work on. Are there any strategic areas where you feel like you could, you know, address some of these issues by either divesting or, you know, adding scale to businesses that are subscale? Just kind of thinking more holistically about that business in the context of BNY Mellon. Yeah, thanks for the question, Alex. Obviously, this isn't an area, a segment that we spent a lot of time on. Just to remind you, we did a series of strategic reviews all across the company, going back over the course of the past 9 months. We've looked at every function, we've looked at every business, and we did spend a particular amount of time digging in to our investment and wealth management segment. Look, in terms of IM in particular, you know, if you, if you think about it as part of the IWM segment, two years ago, that whole segment was a 30% pre-tax margin segment. There's no reason to think we couldn't get back there over time. There are a series of different things that we have set out to do ourselves. The execution of all of that's gonna be really important. There's gonna be a combination of improving top line, you know, what you'd expect in terms of really focus on meeting client needs, strong investment performance, new products, et cetera, and also some of the de-siloing and expense management that's really in there. The thing I'm gonna call out to you, which I really think of as the BNY Mellon superpower, and I think everyone needs to have a superpower these days in investment management, is our distribution. That's a place where strategy for the whole company really meets strategy for investment management. If you step back from the way that we were organized, investment management was its own silo in the company, and frankly, a bit landlocked over there in its silo. Our distribution capabilities, $2.5 trillion worth of retail distribution, as one example, but obviously we have other distribution as well in the company on the institutional side, was separately landlocked over in a different corner of the company. Our plan here is really to lean in to what we think of as one of our superpowers, distribution, and then allow the business in this newly configured format to really be able to stretch its legs in this non-siloed format, and then go from there. We think that that's a good path forward. Great. Thank you both. Thank you. We'll take a question from Betsy Graseck with Morgan Stanley. Hi, good morning. Morning, Betsy. I know we talked a lot about deposits, but I did just want to drill down on how you're thinking about the life of the deposits, and is that at all changed versus history? Part of the reason for asking is just trying to understand if there's any impact on the securities portfolio as you know, put those, you know, that deposit flow to work. Thanks. When you say life of deposits, Betsy, do you mean like tenor and duration of the deposit that stays with us? Just to clarify the question. Yeah. You know, what you are assuming the life of the deposit is, because I'm expecting that drives how you're, you know, investing those deposits. Okay. Let me start by talking about the $277 billion of average balance sheet that we have. Important point number one, two-thirds of those deposits are operational, or what we call sticky. Here at BNY Mellon, we don't classify between insured and uninsured. We call it sticky and non-sticky. The vast majority of our deposits are with us because the clients are in our ecosystem for the long term and need to have cash with us to execute their business. That's why we think about it in that way. On the asset side of the balance sheet, like, I would like to go back 18 months when we kind of made some strategic decisions about positioning for this rise in interest rates. We took a view in terms of how we wanted to set up the balance sheet with a rapid increase in interest rates. We've done a lot of work it, last year in terms of repositioning the portfolio, in terms of higher for longer. 60% of our portfolio is in AFS, and a big part of that is 60% of the portfolio is also fixed, that has a weighted average maturity of about four years. Think of about rolling off a quarter every year. If you take on the asset side, the amount of money that we have in cash, plus the amount that's rolling off from fixed to floating, and the investment yield pickup of that is about 300 basis points. We feel when you look at both asset and liability together, combined, we're really well positioned over the next 12 to 18 months to manage through this rate environment. Okay. You would say that the deposits already reflect the rates that obviously have come through to date, right? Largely, yes, absolutely. Okay. Which is why cumulative basis are in the mid to high 70s, and we expect them to grind a little bit higher from here. We, as I've said, you know, we pay our clients a competitive rate, and they are sophisticated, and they know what they're doing. Yep. Okay, just separate question on Op Risk RWA? You know, when next week, I guess we're getting the Basel III endgame rules. Just wondering, I know we don't have the final rule, but I'm sure you've, you know, thought a lot about this, our Op Risk RWA component that's being added to standardized. Maybe you could give us a sense as to how you're thinking through and how we should think through, you know, assessing your position when those rules come out next week. Thanks. Again, look, we've talked about this pretty much for the last 12 months. Just to kind of recap what we've said before, based on what we know, we expect operation risk, RWAs to be in the standardized approach, and that will drive an increase in our standardized RWAs. Based on our internal analysis, we think that'll have a smaller increase than what the QIS has shown in the past. We kind of feel like, you know, capital levels will be a little bit higher, but we feel we will have the ability to adapt and live with whatever the outcome is. Again, you know, it's been delayed a couple of times, so I think for us, we're just waiting to see, and we will turn it around quickly, and we'll communicate you when we have something tangible to say. Got it. Okay, thanks so much. Appreciate it. Thanks, Betsy. Our next question will come from Steven Chuback with Wolfe Research. Hi, good morning, Robin. Good morning, Dermot. Morning, Steven. Wanted to dig into, you know, non-interest-bearing deposits. They're now firmly within your 20%-25% guidance or target range. Your peers have offered more conservative guidance on NIB deposit trends. I know some of your businesses and your mix is pretty unique or idiosyncratic, but wanted to just better understand what's driving the resiliency in NIB trends and your confidence level at that 20%-25% range is still appropriate. Okay, thanks for the question, Steven. Let me again go back to my last call, when it was at 26%, I guess everybody on the call was looking to see why weren't we guiding higher. We kind of said, history has told us that, through the cycle and the trough, our history and our experience, and we have data going back 20 years, and we look at that, the history tells us we should be in the 20% ZIP code. We've done a very much a bottoms-up analysis, looking at the history. Important point to make here is our mix of businesses today is a little bit more diversified than it was 20 years ago, pre-merger 2007. We have a more diversified range of business, as you said. We have corporate trust, treasury services, asset servicing, clearance and collateral management. Each of our clients in each of those business segments use us for different reasons, and deposits behave in a slightly different way within each of those businesses, and the mix between NIB in those businesses varies. That gives us a really good confidence level in terms of the diversified business model nature that we have. Our internal analysis is kind of pretty solid. Then we look at what industry is saying and what you analysts are writing about, and we kind of take that into accommodation. Also, what other people have guided and what our clients are telling us. We take all of that together, and we kind of feel, at the end of the day, consistent with what we've said in the last two quarters, is 20%, is as best we can give you in terms of through the cycle, which importantly then feeds into our NII guidance of 20% over the course of 12 months. It's important to remember it's a 12-month guidance as opposed to managing it quarter-to-quarter. No, it's really helpful. Just for my follow-up, encouraging to see the 30% margin for security services this quarter. That said, the IWM margin remains subdued, running in the low teens year to date. I know, Robin, you had talked about distribution being a big focus, but what do you see as an achievable target versus that low teens level you're running at today? How much of that margin improvement is contingent on revenue opportunities like improved distribution versus efficiency gains? Sure. Looking, looking at the whole company, the security services margin was 29%. We've given previously the guidance and the target around getting that to 30%. We're very pleased with the progress, but there's no question that we've had some sort of easier tailwinds in the form of rates, and we have to continue to get after this deliberate cost to serve. I just put that as a footnote on the security services point. We are laser focused on continuing to drive that margin higher. We're not complacent about this at all, just because it happens to be approaching our original target. Look, on investment management, and this goes a little bit to the prior question. You know, two years ago, this was a 30% pre-tax margin segment. We look around the world, we look at what's happened, how has it come down, the various causes, some of which is obviously a little bit cyclical. Our conclusion is, we don't see any reason why we couldn't get back there. Execution comes in a bunch of different pieces, as I touched on before, and we really have to get after that execution. I think for me, this point about the superpower of distribution, remembering that we are a diversified set of businesses at BNY Mellon, and we've had these tremendous distribution capabilities, which we have really not put alongside this investment management manufacturing capability as well as we could have. That's a strategic change in the company. As we pursue that strategic change, and it will take a little while, that we think is gonna have some important opportunity. I'll also call out the expenses. I've talked to you before about the fact that one of the other problems with silos, as well as not bringing all of our company to bear on problems, is the fact that we have duplicate costs. Investment management is a great example of this. We have in our investment management central team, additional expense that duplicates to the rest of the firm. We can find better ways of bringing those capabilities together to actually execute better. There's opportunity there as well. Collectively, we're gonna pursue all of these things. It's gonna take us a couple of years, realistically, to see all of the benefit of all of this work, but we feel reasonably optimistic about our path forward here. Of course, we're gonna continue to report it, and we'll keep you updated as we go on the journey. That's great color. Thanks for taking my questions. Our next question will come from Glenn Schorr with Evercore ISI. Hello, how are you? Hi. The FedNow platform is starting for instant interbank payments. I'm assuming you're gonna be playing a big role in this, but I'm curious what you think the expected impact for the industry and for BK is. Like, these things are usually good for expenses, good for capital efficiency, but bad for revenue. I'm just curious if you can tell us what you think. Sure. Immediate payments, which is the umbrella of both FedNow, which is the new service, coming into production from the Fed, and also the clearing houses, real-time payments, rails, that the whole immediate payments world does to us, represent an interesting disruption opportunity in the ecosystem of payments, because there hasn't been a ton of disruption over the course of the past sort of 20 or so years. When these evolutions occur, we see that as an opportunity because we've been a bit underrepresented, although we're the seventh largest U.S. dollar payments clearer, we feel a bit underrepresented in some parts of the flows of that ecosystem. We've deliberately invested to be ready as a market-leading participant in the real-time immediate payments, let's call it evolution. Yes, we think it's important. Yes, we think it's an opportunity. We were the first bank to do a test in the original rails. We've seen good traction. It's still early days. I think FedNow will be a bit of an accelerant to this because it creates more awareness of real-time payments, and it broadens out the overall sort of participation rate, I think. We've been very involved with them on this initiative, and we're trying to position our payments platform as rail agnostic. Clients of ours can come to us and say, "Hey, BNY Mellon, I want to make a payment." They don't need to care about, is it gonna be FedNow, or is it gonna be the RTP rails? How do they want to migrate away from checks? How do they want to treat it, or a payment on the Fed wire versus ACH versus one of these new capabilities? Remember, we wrap them in new services, so the ability to offer real-time requests for payments, bill pay capabilities, the ability to wrap additional fraud services in this whole thing, we think this will be quite an interesting evolution. To your point about volumes versus price, one of the good things about being a disruptor when you don't have as big a share of some of the credit card flows and some of those other things, which admittedly have a higher price on them, we aren't. We get the opportunity to bring this unconflicted approach and benefit from the upside, frankly, without sacrificing much on the other side. Very interesting. Thank you for that. Separate but related. I think you guys have done a very good job of taking that 20% Net Interest Income growth you expect this year, offsetting the couple of% expense growth, and bringing that operating leverage. I'm trying to think out loud. The mid-to-high single-digit expected deposit decline in the back half makes for a tougher full year 2024. Even with good expense control, I guess my question is: how much do you need more of those, you know, get clients to do more with BNY Mellon, cross-selling mentality to kick in to produce that operating leverage next year? Look, that's a kind of a crystal ball type question, Glenn? I think it's a bit too early for us to comment on 2024. You know, there are three parts to the question is, like, ONE BNY Mellon client franchise. We go at it every single day with incredible intensity. We want clients to do more with us across different parts of the firm, and we're really working hard at that. The second point is expenses. Two quarters in, we're very pleased with where we are. We like the forward in terms of how we're executing and how the firm has set up to execute. I will remind you, like this time last year, we conducted a bottoms-up exercise where we took 1,500 ideas across the company from all our team members around the world, put a bit of investment dollars behind it, digitization, automation, and eliminating manual processes. In the expenses flat quarter-over-quarter, you're beginning to see the dividends of that paying through. Importantly, in my prepared remarks, I said that we funded the entirety of our investment plans from the second quarter from efficiency, and we expect that to continue over the medium term. NII will just prepare as we go, and the outlook is uncertain, but we'll manage through it. Glenn, I'll add one thing to that, which is, you know, as you look across our strategy, we were very clear at the beginning of the year about what we wanted to achieve this year. We set out these three points of our outlook, our guidance for 2023, and of course, the year is always going to evolve a little differently than you imagine it will right at the beginning of the year. We've certainly had a year like that this year, where we've had unexpected things happening in all quarters of financial markets. So what we have done is we've stuck very deliberately to our medium-term plan, and we've not allowed ourselves, while we manage every quarter, of course, very deliberately, every individual thing that we're doing every day, generating more fees, focused on NII, focused on expenses. What we're really doing is preparing our company for this medium and longer-term journey of delivery and achieving our objectives. There are always going to be a little bit of pluses and minuses in the quarter, but we really think that sort of broader strategy is what we're about, just deliberately executing and bringing the culture to bear. I hear you on the next couple of quarters, but I would just continually remind you and put you back to that guidance that Dermot mentioned about what we're trying to do this year. Totally fair. Thanks. We have a question from Ebrahim Poonawala with Bank of America. Hey, good morning. Good morning, Ebrahim. Just as a follow-up, Dermot, on the NII side. Heard everything that you've talked about. You've done a good job in terms of forecasting NII and depositor behavior. Give us a sense of if we don't get any rate cuts over the next 12 months, where does NII trough, given the repricing on the security side that you expect? Assuming no big surprises on deposits relative to your current expectations, just is there a natural trough to NII without, before we bake into it, any Fed moves? Look, the path of. You know, it's a difficult question. The path of interest rate matters, yeah, rate, level of rates, timing. If you look at the last eight months, the market, broadly speaking, hasn't got it right relative to Fed dots and has now come into line over the last several weeks. I think the two things that I'm looking at are, you know, it's pretty baked in that the Fed will hike in July, then you have Jackson Hole. That's going to be a very important meeting. What happens in November? Because if it's one hike, every two meetings between July and November is a long time, and there would be a lot of data in that period. If they pass, if they pass on November, it's going to be very hard for them to restart again. I think when we look at our balance sheet, we positioned it higher for longer, and that kind of has informed our guidance of 20% for this year. The book over the next 12 months, 12-18 months, we're broadly neutral on the outcome for rates up a little bit or rates down a little bit, and that's kind of how we think about it. Got it. I guess just one follow-up, maybe. Robin, you made efficiency improvement a huge focus for the last year or two. As we think about, and without sort of asking for guidance into next year, as we think about these efficiency benefits to the bottom line, should we think about it in increments, much like you achieved it this year? Or should we expect a larger move at some point as you've had the time to assess operations, and maybe we see something larger next year or so? It's an important question, Ebrahim, I'm gonna frame it slightly differently to you, which is: we have focused on things that are going to be relatively quick wins associated with cleaning things up that we thought were inefficient. We've also laid out for ourselves a series of medium-term things and a series of long-term things. We have a variety of initiatives in each of those buckets. Of course, we've been executing on them in parallel, but you only see the benefits of some of the shorter term things right now. Dermot gave you the example of the ideas that our people generated, and we're going after those, and we said those were sort of a three-year or so implementation to get after that. We've talked about the fact that we did some work, some delayering in the organization at the end of last year into the beginning of this year, which has been quite helpful. That's also been a slightly shorter term thing. At the same time, we're looking very deliberately and remembering that we are essentially a diversified financial services company because of all of these different businesses that we have, and we have a lot of embedded platforms within that. Platforms that have been operated in sort of non-platform ways as a result of our sort of slightly siloed past. Now we're getting after organizing those things a little bit differently, and as we organize that, there'll be some expense benefit from that. Also, then, having organized them in that way, we get to really deliberately go after the duplication of systems and processes that are inside the company, and that's also when we really get to go after the digitization. It's harvesting a little bit for the short term, focused on the things that we think make the company a well-run company, organizing ourselves to be able to structurally operate ourselves as we think of the company, and then harvesting the benefit of that. There's a one-year story, a two-, three-, four-, five-year story associated with doing all of those things. As with everything, we have to execute it really well, and we want our people to come along with us on that journey, because a lot of this is change of behavior from how people have worked in the past, which is why we have a strategy, we're laser focused on the execution, and culture really matters. Got it. Thanks for the color. Thank you. We have a question from Ken Usdin with Jefferies. Hey, thanks. Good morning. Just a follow-up. To your point about being able to beat that expense expectation for the year, and in reaction to a little bit, you know, different outcome on the fees than initially expected. I just wonder if you could just talk to us about both sides of that. Number one, the beating on the expense side, is that doing anything incremental in terms of either the severance effects or delaying investments, or is it just the core? On the fee side, I'm just wondering if you could kind of catalog for us, you know, which businesses have underperformed a little bit, and do you have a better line of sight for, you know, a better rate of change for those going forward? Thanks. Okay, I'll take that on the expense side. The guidance was 4%, okay? That's kind of down from 8%, ex notables, ex currency. Important point to kind of stress there. It really comes down to executing an operational excellence in everything that we do on all the points that Robin made. I think the executive committee and the firm and the team coming together and seeing that it can be done in a different way, executing on that. If you double-click into different businesses, let's take the Market and Wealth Services segment for a second, that's a segment that has a mid 40% margin. We're growing that segment. We're investing in that segment. We're putting big budget dollars to work there. That's evidenced by our launch of Wove. If you go to our Securities Services segment, that is about increasing our margin through the cycle to 30%. Within that, we're insanely focused on our cost to serve. Automation, digitization, serving our clients in a more differentiated way that brings down our cost to serve. It does mean different things to different businesses at different points in the cycle. In the first instance, it's all about how we show up and how we execute. On the fees, I think generally we feel very good about our backlog. We feel very good about the pipeline. We're winning our share of what the market has to offer, and our clients like what we have to offer. On the forward, we feel we have excellent momentum, and we're executing well with our clients. Thanks a lot. Thanks, Ken. Moving on to Brian Bedell with Deutsche Bank. Great, thanks. Maybe just to follow on the ONE BNY Mellon initiative. Maybe on the revenue side of that, it sounds like obviously, there's a lot of low-hanging fruit on the cost side. That will run well over the next, you know, one to two years. On the revenue side of that, I guess, how would you just in a comparison perspective, relative to expenses, how would you cite the revenue potential for ONE BNY over the next couple years? If you can point to any one early example of cross-sell traction. Sure. Let me, Brian, I'm gonna split this into two pieces. One is specifically on ONE BNY Mellon, which we think of as increasing wallet share with our clients, being able to do more with existing clients, also attract new clients, of course, to the platform, and sort of dealing with this issue that the median client at BNY Mellon is a consumer of products from one of our businesses. That started as an initiative. If I really look back to the very origin of it was almost a bit of a movement. It was a heart-to-mind exercise around getting people focused on the fact that this was an opportunity, and that was a good way to start. We set ourselves targets for 2022. We exceeded them. We set ourselves targets for 2023. By the way, we've achieved 80% at the half year mark, 80% of our full year's sales targets for that initiative, and at least 50% of our sales force has made at least one referral. We feel good about the way that we started. As I mentioned in my prepared remarks, actually, kind of industrializing that, embedding it into the way that we actually run all of our sales and relationship management groups all across the company, that's the next critical phase of this. That's when it becomes part of sales targets and part of the way in which we assess people's performance, and we incentivize them, and we train them. To enable that, we made an important new hire, I mentioned Cathinka in my prepared remarks, because we needed to put somebody and wrap up that strategy deeply into how we actually operate the company. That's the specific ONE BNY Mellon initiative. We feel very good that that creates an underlying boost to whatever our growth would've been without that on the new business side. In addition to that, the point that I made earlier on about de-siloing the company, we talked about that more through the lens of expenses, but actually, it has an equally important component in terms of growth. We're investing in growth in how we actually operate our existing businesses, in addition to the new innovations that we've talked about, like Pershing X and outsourced trading and others. I'll give you a few examples of that. Let me, let me give you one good classic example, which is we're a large clearing firm. We're known for having that as one of our businesses, but we actually had two institutional clearing platforms at BNY Mellon. One embedded in our clearance and collateral management business, and one embedded in our Pershing business. Remember, I'm talking about institutions here, so this isn't including the wealth piece in Pershing. It didn't make any sense because we had multiple platforms, clients were confused, we did it in different ways, and so we've taken those two businesses, and we've combined them, and now we have one institutional clearing business at BNY Mellon. We're in the process of executing that change right now. I could give you the same types of examples around the way that outsourced trading came into being, which was originally landlocked inside investment management. We took it out, we aligned it next to our markets business. We have another example of that with trading that we do for certain clients, where we had multiple examples. We have a long list of things where we were operating kind of independently, and part of our growth is by bringing those together. We will get benefits in terms of efficiency, but we expect more client business from it, too. Yeah, that's fantastic color. Maybe if I could just finish up on the deposit, one more on the deposit side for you, Dermot. You mentioned your pricing is already very good, and you're not seeing a great deal of pressure on deposit costs other than the grind higher that you cited. Within the asset servicing segments specifically, so the asset servicing part of Securities Services, are you seeing a different dynamic there, whereby, you know, clients are looking to either shift out of NIBs or look for better deposit pricing? In those contracts that you have, the servicing contracts that you have, do you have, provisions for embedding sort of a, you know, a level revenue type of outcome, depending on whether they pay via fee or compensating balance? Look, Brian, I think you're trying to do a read across, I think it's not really appropriate for me to kind of get into the detail on any specific business because, you know, we aggregate up to the firm, we give you a firm view. I wouldn't say... I'm not seeing anything within asset servicing as it relates to the mix of IBs and NIBs that would cause me to think there's been an outlier change quarter-over-quarter or something that's unusual and out of line with what we expected at the beginning of the year. Yep. fair enough. Thank you. Thanks, Brian. We have a question from Gerard Cassidy with RBC. Thank you. Good morning, gentlemen. Morning, Gerard. Dermot, earlier, Robin pointed out that, obviously, there's going to be a lot of Treasury issuance in the second half of the year. Could you guys quantify the benefit or the monetary benefit that you'll see from this type of issuance? Because you're the primary clearer of Treasuries, of course. Is there any way of quantifying that for us? Well, yeah, I'll take that actually, Gerard. Look, when you look across all of our businesses, we recognize that growth comes in lots of different forms. We can have clients growing their wallet share with us, we can have market appreciation, we can have transaction balances, the total addressable market can go up. There are different ways in which we see opportunity. In the treasury market, given the role that we play in the treasury market, at the end of the day, more treasuries is a benefit for us because there are more treasuries that get traded in the market, there are more treasuries that need to get funded in the market, there are more treasuries that get issued in the market. There's a broader set of benefits there, and you've seen that, as we've reported, some of our results in clearance and collateral management, which obviously has been a growing business. Now, that business isn't only about treasuries, it's also about international clearance. It's about global tri-party outside of the U.S. I don't want you to zero in and only think about that being driven by treasuries, but clearly, treasuries is a market we serve, and so when there are more of them and more activity, we regard that on average as good. Very good. I appreciate that. Dermot, you were talking about the balance sheet and how the portfolios, the securities portfolios are positioned, going forward, especially if we're in a higher for longer rate environment. What if we get surprised sometime in the spring of 2024 and the Fed starts cutting rates? How quickly can you reposition the portfolio for that, or would you need to do that? Can you give us some color on, you know, the opposite of what everybody expects today of higher for longer? The kind of the quick answer is, a large part of our portfolio is cash, reprice is very quickly up or down. We kind of think of our balance sheet as broadly neutral. If they cut by 25 basis points or 50 basis points, we're okay. I think also our CIO has taken, you know, a couple of, you know, a little bit of protection on NII for 2024 in terms of locking some of the gains in. I would say, again, to the question a little while ago, we're broadly neutral, up or down in over the next 12 to 18 months. Just if we were to move into this lower rate environment, because your deposit betas are so high, you know, so far, you know, year to from the beginning to where we are today, I would assume you would be able to cut rates pretty quickly, deposit rates pretty quickly? Symmetrical. 100% accurate. Yeah. Great. Equally on the way down as they've gone on the way up. Yeah. Thank you. we have a question from Rob Wildhack with Autonomous Research. Morning, guys. I wanted to go back to the theme of fees versus expenses and drill down a little bit into Securities Services and the margin in there. I mean, what portion of the margin improvement you're aiming for, do you think will come from sheer expense discipline? Then what portion do you think comes from all the fee opportunities that you're speaking to? I'm not too sure I would like to give guidance at that granular level of detail, but what I would say is, Emily and Roman are intensely focused on delivering a better cost to serve model than what we've done in the past. We want to give clients a better experience with respect to automation, digitization, and how we deliver our products to them. That is an intense focus of the team. We feel we have, you know, we're the world's largest custodian. We're number one in a lot of different things in the Securities Services space. We like our hand, we're winning our share. As I said earlier, our backlog is very strong, and we have a good medium-term opportunity set in front of us that we're looking to win and execute on. Our yet to be installed book of business is very healthy. I think we're going after the two legs with equal intensity, and both will deliver that margin of 30% through the cycle. Very important. You know, this quarter, we had a nice, healthy pickup from the rate backup. As Robin said, in an answer to another question, we're just not relying on that. We know we have a lot of work to do, and we're getting about it. Thanks, Dermot. Just one more on Pershing. You know, excluding the deconversion, performed pretty well, again, in terms of net new assets. Can you speak to some of the drivers there? Remind us what the revenue impact is and how you're thinking about the pipeline for that business specifically. Don't want to do, you know, a revenue outlook based on the deconversion, because I don't think it's right to talk about any single particular client. What I would say, you know, ex the deconversion over the quarter, we had like, you know, 4% growth. Pershing is a business that's grown really well over the last number of years. We're very competitive. We're number one, top three in different things. I would say the feedback from our conference in Florida, INSITE, where we launched Wove, was really, really good. Robin spoke about this at length in terms of, you know, the appetite about Wove. We kind of think over the next several quarters, we like the business momentum. We have a lot of stuff in the pipeline. I think come October, we're going to have a couple of deals that we're going to be able to talk to you about that are quite exciting and will make you feel pretty good. Okay, appreciate the call. Thank you. Our final question comes from the line of Rajiv Bhatia with Morningstar. Good morning. Thank you for taking my question. Just on that Pershing business, can you remind us how much of your revenue is from RIA custody side? Can you talk about what you're seeing from a competitive standpoint? You know, Goldman Sachs seems to be expanding in this area. Investment has partnered with FNZ. SEI has also made some moves here. Curious how you see the competitive landscape evolving. Sure, Rajiv. Look, we don't split out the RIA versus the broker-dealer. As you know, we're number one in broker-dealer, and we're in the top three in RIA, we're clearly a market leader. You know, it's interesting the names that you picked, because none of them are in the top three on either of those measures. Having said that, we're obviously not complacent about newer entrants into the market or other people who want to sort of get into this. This is a business that we've been in for a long time. We understand it, and we have scale. I'm just gonna repoint you to the $2.3 trillion of assets on that platform that we think gives us a tremendous starting point with clients, and then the innovation that we've got in it. We've gone multi-custody, which is very important in that business. We're innovating. A lot of our services traditionally have been focused on the investor, but now we're delivering to the advisor as well with the Wove platform. We've innovated into direct indexing capabilities, financial planning capabilities, tax-aware investing capabilities. We're deploying BNY Mellon advisors and the capabilities from investment management because we have a $1.9 trillion investment manager. We have existing technology from our wealth management franchise, which is market leading, and we're adopting a ONE BNY Mellon mindset to that, so we're taking that technology and delivering it through Wove to other advisor clients. We've got this whole breadth to how we're actually approaching this opportunity. While we of course, welcome the competition from some of these other folks, I don't think any of them can deliver that breadth of capability to our clients. For advisors and investors, we feel very good about our direction of travel in this business. Thank you. Thank you. With that does conclude our question-and-answer session for today. I would now like to hand the call back over to Robin with any additional or closing remarks. Thank you, operator, and thank you everyone for your interest in BNY Mellon. If you have any follow-up questions, please reach out to Marius and the IR team. Be well. Thank you. This concludes today's conference call and webcast. A replay of this conference call and webcast will be available on the BNY Mellon Investor Relations website at 2:00 P.M. Eastern Standard Time today. Have a great day. Thank you.