Good morning. Welcome to Morgan Stanley's second quarter 2022 earnings call. On behalf of Morgan Stanley, I will begin the call with the following information and disclaimers. This call is being recorded. During today's presentation, we will refer to our earnings release and financial supplement, copies of which are available at morganstanley.com. Today's presentation may include forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Please refer to our notices regarding forward-looking statements and non-GAAP measures that appear in the earnings release. This presentation may not be duplicated or reproduced without our consent. I will now turn the call over to Chairman and Chief Executive Officer, James Gorman. Thank you, operator. Good morning, everyone, and thank you for joining us. We're doing the call a little differently this time. I'm in London, Sharon's in New York. If we have any logistical gaps for a second or two, please understand, but I think we'll be just fine. The firm delivered a very solid quarter against obviously what is a more challenging backdrop. Our business has proved resilient, reflecting an important aspect of our strategy, and that is to, as we've said many times, deliver stable performance in a difficult environment while remaining well-capitalized. The integrations of E*TRADE and Eaton Vance continue to expand our opportunities to reach new clients, grow assets, and support the firm's overall stability. Net new assets in wealth management of over $50 billion, despite the volatility and clients' tax-related withdrawals in the quarter, underscored the scale of our business and its power to attract assets. In the face of a sharp decline of equity markets, wealth management delivered a strong PBT and improved margin, supported by the benefits of rising rates. Investment Management benefited from its diversification, and we saw continued momentum in private alternatives, Parametric customized portfolios, and the counter-cyclicality of our money market business. Finally, in Institutional Securities, our strong franchise in equity and fixed income helped materially counter what everybody knows to be limited activity across investment banking. Our results this quarter also reflected 2 notable headwinds that are worth calling out. First, we saw a significant movement in the investments related to deferred cash-based compensation plans. While the marks on these investments are substantially offsetting compensation expense, they created significant drag on top line revenues in the quarter across the firm, particularly in wealth management, where the impact to revenues exceeded $500 million. Secondly, the quarter results also included the legal cost of $200 million that reflects the likely resolution of regulatory investigations by the SEC and the CFTC regarding employees' use of unapproved personal devices and the firm's record-keeping requirements. This has been the subject of industry-wide scrutiny. Our ROTCE, excluding integration expenses for the deals that we've done, was 14.3%, down 20% in Q1 and from last year. As I said at the outset, our objective to demonstrate resilience and balance in a more difficult economic cycle was achieved this quarter, helped in part by the acquisition of E*TRADE and Eaton Vance in what was otherwise a challenging environment. Finally, the Fed stress test further affirmed our differentiated business model. Our diversified business mix, as well as our strong capital position, provide us the flexibility to invest for future growth and support our robust capital return program. As such, we increased our quarterly dividend by 11% and announced a $20 billion multiyear buyback program. Having a dividend that's aligned to the more stable earnings from Wealth and Investment Management is a leading priority of this firm. By the way, at today's stock price, the current dividend has a yield of approximately 4%. With the buyback, we wanted more flexibility than an annual fixed commitment allows. Given the nature of our business model, it's especially appealing to have this additional flexibility to deploy capital at what we believe to be attractive valuations. I'll now turn the call over to Sharon, and as always, at the end, we'll take your questions. Thank you, and good morning. The firm produced revenues of $13.1 billion in the second quarter. Our EPS was $1.39, and our ROTCE was 13.8%. Excluding integration related expenses, our EPS was $1.44, and our ROTCE was 14.3%. Our results reaffirm the stability of the franchise against a challenging backdrop and the benefits of a balanced business model. The integrated investment bank continues to serve clients' evolving needs in a dynamic environment. Wealth management benefited from its scale and rising rates. Despite the decline in global asset prices, our expanded product set and investment management proved supportive to that business. The firm's year-to-date efficiency ratio, excluding integration related expenses, was 70%. This includes the $200 million legal matter related to the firm's record-keeping requirements that James discussed. Given the broader market uncertainty and inflationary environment, we are focused on discretionary spend while balancing continued investment initiatives and ensuring the right controls are in place to support future growth. As a management team, our priority is to diligently address what we can control given the market realities. We will continue to review incremental spend as we regard efficiency as a critical performance objective. Now to the businesses. Institutional revenue of over $6 billion demonstrates the power of our balanced franchise against a difficult market backdrop. Revenues declined from the exceptionally strong prior year. While the backdrop was challenging for investment banking, particularly underwriting, fixed income and equities led the strength of the quarter as clients navigated volatile markets. Investment banking revenues were $1.1 billion, down significantly from the prior year. Heightened volatility led clients to delay strategic actions and new issue activity. Advisory revenues were $598 million, reflecting lower completed M&A volumes. Equity underwriting revenues declined to $148 million. Results were in line with global equity volumes, which fell meaningfully versus the prior year. Fixed income underwriting revenues were $326 million, also down compared to the prior year as bond issuance was muted across both investment-grade and non-investment grade companies. The investment banking pipeline remains solid. Conversion to realize will largely be dependent on market conditions and corporate confidence. Equity revenues were $3 billion, reflecting the strength of our business against a volatile backdrop. Prime brokerage revenue- Please stand by as we reconnect our speakers. I understand the sound just dropped, but they'll reconnect now. Please continue. Our revenues declined versus the prior year and reflected a loss of $413 million. Mark-to-market losses on corporate loans held for sale, including event loans, offset by gains on hedges were $282 million. This reflected the widening of credit spreads. Notable declines in deferred cash-based compensation plans compared to gains in the prior year also contributed to the decline. Turning to ISG lending. As a reminder, over 90% of our ISG loans and commitments are either investment-grade or secured. Our institutional securities group credit portfolio continues to perform well. Our funded ratio on corporate loans stands at approximately 11%, in line with pre-pandemic levels and well below the first quarter 2020 peak of approximately 25%. Turning to wealth management. By several measures, performance was strong despite the volatile backdrop. We reported revenues of $5.7 billion. Results were meaningfully impacted by movements in DCP, which reduced revenues by $515 million in the quarter. Excluding the impacts of DCP, revenues increased 6% from the prior year to $6.3 billion, a new record. The decline in DCP was substantially offset by a reduction in compensation expense. Excluding integration-related expenses, PBT was robust at $1.6 billion, and the margin increased to 28.2%. The margin's resilience in a turbulent market environment serves as evidence of the strength of the franchise and the benefits of our business mix, including the growth of our banking offerings. Transactional revenues were $291 million. Excluding the impact of DCP, transactional revenues declined 17%. Lower revenues reflect a moderation of client activity from last year's elevated levels and limited new issuance. Self-directed daily average trades remained well above E*TRADE's pre-acquisition high. Asset management revenues of $3.5 billion were up modestly versus the prior year, driven by strong fee-based flows realized over recent quarters. Fee-based flow assets were $29 billion in the quarter, and fee-based assets now represent 50% of our advisor-led assets. Total net new assets were $53 billion in the quarter, bringing year-to-date NNA to $195 billion, representing a 6% annualized growth rate. Tax outflows were roughly double that of recent second quarters, and yet asset generation remains strong and balanced. NNA was driven by existing and new clients in the advisor-led channel, stock plan vesting events, positive net recruiting, and self-directed channel inflows. Bank lending balances grew $7 billion in the quarter, driven by securities-based lending and mortgages. We continue to expect full-year loan growth of $22 billion. Deposits declined $12 billion in the quarter to $340 billion. The decline was associated with seasonal tax outflows and the deployment of rate-sensitive cash. The outflows were largely in line with our expectations. The average rate of deposits increased to 28 basis points. This was driven by an increase in savings account rates and deposit mix. Net interest income was $1.7 billion, up notably from the prior year, driven by higher rates and continued strong bank lending growth. Looking ahead to the second quarter, NII is now a more reasonable exit rate going forward. While the magnitude of rate hikes is not certain, if the forward curve is realized and our model assumptions materialize, we estimate $500 million of incremental NII to be spread over the upcoming two quarters, weighted towards the fourth quarter. Turning to investment management. Revenues were $1.4 billion. Against a challenging public market environment, our results demonstrate the benefits of our diversified product mix, particularly with strength in our portfolio solutions led by Parametric customization and private alternative funds, as well as our liquidity offerings. We have built a portfolio that provides balance across various market environments. The benefits of these efforts were apparent in the quarter. Total AUM was $1.4 trillion. Long-term net outflows of $3.5 billion primarily reflect recurring headwinds in equity strategies, but were partially offset by strong demand in alternatives and solutions, particularly in Parametric customized portfolios. Collaboration with our wealth management business as well as other U.S. wealth management platforms is a driver of strength of our customized offerings. Liquidity net inflows exceeded $30 billion. We have invested in our liquidity business in the past decade, which has positioned our franchise well to benefit from the current rising rate environment. Asset management and related fees were $1.3 billion. The impact of lower AUM was partially offset by higher liquidity fee revenue as rates came off of a zero bound. Performance-based income and other revenues were $107 million in the quarter. We saw broad-based gains in our private alternative portfolio, with particular strength in infrastructure and the energy sector investments. The decline versus the prior year was driven by movements in DCP and markdowns on public investments. Overall, our integration with Eaton Vance continues to progress well. We have seen early success in leveraging our global distribution across our combined businesses. Turning to the balance sheet. Total spot assets declined 4% from the prior quarter to $1.2 trillion. Our standardized CET1 ratio was 15.2%, up 70 basis points versus the prior quarter. Standardized RWAs notably decreased to $461 billion from the prior quarter as we manage our exposure efficiently across our businesses amid a market decline. The result was a reduction in RWAs of $40 billion. OCI related to our available-for-sale securities portfolio reflected an increase of unrealized losses of $1.1 billion. While this should be earned back over time, it reduced our CET1 ratio by approximately 20 basis points in the quarter. Our supplementary leverage ratio was 5.4%. During the second quarter, we completed our $12 billion buyback plan that we announced last year. The most recent stress test results further reaffirmed our durable business model, and we announced a dividend increase of 11% and a $20 billion multi-year repurchase authorization. Looking ahead, while the second half of the year remains difficult to predict, we are focused on our underlying business drivers. Lower asset values will impact revenue in both wealth and investment management. However, in wealth management, rising rates are already driving NII higher, supporting performance. Net new assets remain healthy in investment management. The diversification across fund strategies should continue to support results. What we do not know is how much volatility we will see in the coming months and how it will impact our institutional securities business. However, our competitive positions remain strong, and we remain close to our clients while they assess current valuations and the overall environment. With that, we will now open the lineup to questions. Thank you. We are now ready to take in questions. To get in the queue, you may press star and the number one on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press star and the number two on your touch-tone telephone. You're allowed to ask one question and one follow-up, then we'll move to the next person in queue. Please stand by while we compile the Q&A roster. We'll take our first question from Christian Bolu with Autonomous. Thank you. Good afternoon, James, I guess, and then good morning, Sharon. Maybe start on the macro. James, it's a very confusing time on the macro front, and there are some positives, but a ton of headwinds. I'd also say this quarter was unusually noisy for Morgan Stanley, and I think you kind of put up your lowest ROE in almost two years. Just curious how you were thinking about the macro backdrop. How is MS positioned for that backdrop? Maybe how you think about your pathways to achieve some of your longer-term targets, you know, in the current backdrop. Thanks. Sure. Thanks, Christian. You know, I think you hit it on the head. The environment, if I had to use one word to describe it would be complicated. You know, we have the Russian invasion of the Ukraine, obviously a historic, you know, occasion. We have historically low rates with very significant rate increases going around the world. We've got the tail of COVID. We've got obviously the fears of inflation and actual inflation. We've got enormous political change just here in this country, the U.K., where I am at the moment. They had a leadership change a few days ago, supply chain issues, China-U.S. relations, et cetera. Yeah, very, very complicated. I think it's important to say, though, it is not 2008 complicated. This is a different type of financial stress in the system. Frankly, the banking sector is much stronger than it was going into the last time we went through a major reset in 2007, 2008. Morgan Stanley is in particular, I won't speak for others, but we're specifically in much better shape. You know, we're all in the U.S. in our businesses, largely 'cause wealth management is almost entirely U.S., and the U.S. is yet again sort of the, you know, a great region to be in in the world. Yes, while we might head into some form of recession, and I, like many others, have tried to handicap it, but we're frankly guessing at this stage. I think it's unlikely to be a deep and dramatic recession, at least in the U.S. I think, you know, Asia is a little behind. It depends how COVID rolls out, you know, and it's sort of reemerging a little bit in some countries. Europe is obviously the, you know, fighting the hardest right now because of the war in Ukraine, because of the pressure on gas and gas prices and so on. When I look at Morgan Stanley, just sort of add it all together, you know, we did exactly what we wanted to do this quarter. Yes, it's the lowest ROE for a couple of years after, I think, three consecutive record years. Hey, this is the most difficult environment we've been in in decades. I'm okay with the lower ROE, particularly when it has a ten handle on it. We have, you know, CET1 capital ratio is at 200 basis points above our requirement. Our ROTCE was nearly 14%. If you look at the wealth management margins, we did a 27% margin, including integration this quarter, 28% without it. Those numbers were unheard of a few years ago. You add it all together, you know, the environment, very complicated, lots of uncertainty. Frankly, for our business model, I think we fare, you know, relatively well. Evidence of that is, you know, our confidence in the future. I'm sure we'll talk about that in terms of capital and so on. Okay. Thank you, James. Maybe Sharon, on some more specifics around the buyback. You know, just thinking about how you're thinking about buybacks in the second half of the year. I mean, your CET1 did grow quarter-over-quarter, but I think a lot of that was RWA declining. It looks like actually CET1 dollars are still falling, have been falling for a while. I don't know, can you maintain the sort of $2.7 billion-ish buyback per quarter going forward? Or any more specifics around how long it will take to exhaust that $20 billion in buybacks you announced? Multi-year obviously means more than one year. Sort of just to put that in perspective. I think that the most important thing about the buyback and also the capital more broadly is we've been very prudent and efficient around our capital usage. I think that we've always said that capital is very much tied to strategy. They're one and the same, and so we think about them holistically. When we think specifically about the buyback and the concept of a multi-year repurchase plan, right, two points. One, we did complete our old authorization, so therefore we had to announce a new authorization. In addition to that, the point is we provide ourselves with tremendous flexibility in an environment such as this one, where there are, as James said, multiple macroeconomic factors, but also a commitment to continue to return capital to those shareholders, be that both in the evidenced by the increase in the dividend. I think that what we're looking for is flexibility around this capital, the capital repurchase plan. Yeah. I just wanna add something. I mean, it was an important move, the $20 billion number. We said multi-year for a reason. Obviously, we're not gonna do that in one year. We have enormous flexibility quarter to quarter now, and that's really important. With 200 basis points of capital excess, we can use some of that flexibility. Listen, the stock's trading, I don't know what it is this morning, $72 or something. It was $109 a couple of months ago. I like buying the stock at $72. By the way, every time you buy a share at $72, you're retiring a dividend worth $3.10. There's a sort of virtuous circle. If we bought back, you know, we're averaging about 6% of shares outstanding net, we're buying back plus a 4% dividend. Shareholders getting great return without getting out of bed. You know, this is a statement of confidence of, A, our capital position, and B, the resilience of our business model. Thank you. We'll take our next question from Glenn Schorr with Evercore. Hi, thanks. Maybe just to follow on the buyback convo and broaden it out. You, when you look across all the big G-SIBs, lots of the G-SIBs have higher G-SIB buffers coming, capital deficiency to their targets, and don't have the access that you have. I get it, buyback cheap stock is great. Are there any other options that you ponder, like maybe using that capital to grow share in any parts of the business or just save for a rainy day? I'm curious on how that dynamic works being one of the only ones with the excess position. Well, you know, it's Glenn, this is sort of the ultimate question. We've built through a decade of, frankly, hard work and discipline, a great excess capital position. Not for nothing, along the way, we did two major acquisitions. We're using it on deals and two small ones, Solium and Mesa West, you'll recall. The majors, of course, E*TRADE, Eaton Vance. We've taken the dividend. Last year, we doubled the dividend. This year we took it up, you know, another $0.11. It wasn't so long ago our dividend was $0.05 a quarter. The incremental change this year is $0.075 a quarter. We've used it on that. We're investing in the business everywhere, particularly around, you know, the workplace, retirement space. We've invested in the digital bank and building out the wealth space. We've invested in asset management and our capability, and we're going to be doing more of that, taking the Eaton Vance funds internationally, expanding the Parametric program. We're investing in banking. I mean, obviously the banking calendar has been terrible the last few months, but that's not. We're interested in the next 10 years, not the last few months. The only thing we haven't done with excess capital is do a special dividend. That's something I'm just personally not a fan of. I just don't, you know, I think it's like giving shareholders a problem and saying, "We don't know what to do with our money. Here, you take it." What we like to do with our money, invest it in the business, check. Give you a smart dividend with a 4% yield, check. Do buybacks and have flexibility around it when the stock is trading. You know, the beginning of the year, for every X dollars we spent, we got four shares retired. Now we're retiring five shares. I like that. Cool. I appreciate all that, James. Follow up on wealth management. Sharon, thank you. You gave color on new money coming into which types of accounts and new clients. I'm curious, what are they doing with it? In other words, is it sitting in cash? Are cash positions higher than they usually are? What products are they going to? And then thirdly, you're the largest gatherer of alternative assets. Has this market brought any noticeable impact to that opportunity on the wealth channel? Thank you. Sure. Let me start with the last. No, no change in opportunity. I think we continue to actually work very closely with different alternative managers as we go forward and think about educate FAs to educate their clients and use that relationship to continue to create the right products for our clients, all based on education through both channels. In terms of what are they doing with that money, I think what you do see is a lot of the money ends up moving into fee-based over time, right? So look at the fact that we aggregated all these net new assets over recent quarters. That first often does come into the system as cash when they're brought over, and then that cash is then deployed into various types of fee-based asset accounts. I think it's worth noting and just repeating that those fee-based assets are now 50% of our advisor-led channel and those assets, which is a big move from those somewhat 40s, low 40s that we had seen in previous years. In terms of very specifically what we've seen over the course of the first half of this year, in terms of different types of products, we were sitting at the end of the fourth quarter with cash levels at around 17%-18% around the self-directed and the advice-based channel. We're now at around 21%. Of course, that could be reflective of some of the equity asset values and the other asset values coming down to increase. But there is somewhat of a pause. I think people are waiting and observing in certain markets to deploy that cash. I think that's just, you can see that in the transactional coming down a bit and DARTs coming down a bit. I don't want to suggest that the engagement isn't there because we still are at levels where our engagement, as thought about by some of those DART metrics and just what we've seen in transactional, it's still higher than levels where we were from a pre-pandemic basis. People are engaged, people are active, and they are seeking advice from their FAs. Thank you. We'll take our next question from Steven Chubak with Wolfe Research. Hey, good morning. Hey, Steven. Hey. Hey, wanted to ask a follow-up question on the deposit outlook. As you noted in the prepared remarks, just lots of cross-currents this quarter on the deposit side, tax seasonality, cash sorting, and maybe some offset from higher market volatility. Given the NII guidance, Sharon, that you had laid out, I was hoping you could speak to what you're assuming for deposit betas and the deposit growth trajectory given the myopic focus on cash sorting and recognizing that you already laid out some pretty explicit guidance on the loan growth side. I think what you just noted at the very end is very important because all of this is weighted into that NII forecast, right? Deposit betas is just one piece of that conversation. The behavior and then also how we continue to build in and aggregate, be it new assets through an M&A and also various types of, as you call it, cash sorting. The movements of cash between products and that behavior of deposits. Specific to your question around the beta, as we've said, we are informed by the last rate hike cycle, and it does have to do with the weighted beta at 50, which I had noted last quarter, and we'll just reiterate again this quarter. That really has to do with the deposit composition mix that we have. We have obviously still accumulated very increased levels on those smaller accounts with smaller account levels. We might have other accounts where we've seen larger inflows into larger accounts, right? Account balances that are higher might also have gone up over time. That helps to explain the deposit beta which we see now based, again, as I said, on that deposit composition mix. It will not just be, though, of course, around deposit beta. A lot that is embedded into the forecast, as I said, has to do with how we see those deposit behavior moving over time. Again, a lot of that is informed by what we saw in the last rate hike cycle. A very helpful color, Sharon. Maybe just a follow-up on the earlier discussion on organic growth. I mean, the 4% number, which considering the more pronounced tax seasonality, elevated market volatility, was certainly an impressive result. If the market volatility persists, should we view this as a reasonable floor on organic growth? I was also hoping you could just speak to the cadence of flows from April to June, just to give us a sense as to how organic growth is tracking over the course of the quarter. Well, the cadence is obviously. You've seen more in the second quarter. I mean, you've seen a different mix, right, in the second two months than the first month because you had a tax outflow season. That kind of gives you the change in those two numbers. I think what we have seen is a continuation. You have a lot that comes in from a flow-based basis. It's just, if you think about Morgan Stanley at Work, you're gonna see that development and continue as people have exercised their options, they continue to move forward. There are various types of offsets. I think what's important as we look forward in terms of where is the floor. Look, we've said historically we don't expect to be in that very low single-digit range which we were before the acquisition of E*TRADE. We said that 11% was too high, so that kind of gave you that middle range. Exactly how it will pan out, what I can say to you is that it does look, it's still healthy, and we still feel well-positioned. As it relates specifically to other indicators that you might think about, for example, recruiting, when the recruiting pipeline remains healthy. What we often see and, you know, tactically, anecdotally is when those recruits come over, they could be in a market volatility event actually be quicker to begin to bring those assets that were held away into the channel. Why? Because they're seeking to be with their FA through that advice-led channel more immediately. as you called it, there are cross-currents, and I think they're important to bear in mind in this environment. Thank you. We'll take our next question from Dan Fannon with Jefferies. Thanks. Good morning. Wanted to follow up on investment management and the fee outlook. You have, you know, obviously beta working against you on some of your higher fee products, but you have fee waivers coming off on the money market side. As you think about mix and client behavior going forward, how do you think about the fee rates in that business longer term? It's a great question. I'm sure you'll see the disclosure also that will come out in the Q specifically for this business. Just to give you a sense, the fee rates themselves haven't changed. What has changed is the mix of the actual flows themselves. We've seen a decrease over the course of the last two quarters in some of those equity accounts, for example, which as is disclosed, could be higher, could have higher fees. What we have seen is an increase in balances in things like liquidity, where we're now not seeing the fee waivers since we've moved off that zero-bound floor. We had given you previous guidance of $200 million that we expected to see as an incremental fee positive over the course of the year as those waivers went away because rates came off of that zero bound. We stand behind that guidance, and you've continued to see that flow into the numbers. I think that what is important is obviously where you could see things change is the liquidity balances, right? It's a rate times balance question, as I've said before. The balances in this case, I think it's a testament to the amount of time and the investment we've put into this business to find relationships also across the integrated investment bank, where we've worked with partners in Institutional Securities, for example, to help forge relationships that will help bring in some of those deposits into those money market products. Great. Thank you. Just as a follow-up, given the backdrop we're in where, you know, revenues are a bit more challenged or uncertain. As you think about non-comp expense, and you highlighted being focused on this area and being efficient, but have you proactively started to make decisions around spend and cutting back? Or as you think about that flexibility in the back half of the year, you know, is there a way to quantify levels of growth or lack thereof and any changes? The first point that I would highlight to you is that ex integration, our efficiency ratio is at 7%, and that includes the legal charge that James mentioned this quarter. I think we have shown and continue to demonstrate discipline around our expense base, very similar to the way we think about capital resources, we think about it very holistically and part of our strategic decision-making process. As we walked into the second quarter, we were aware that, you know, the environment was changing, and we all had been seeing the same events that, you know, we've all witnessed together as it relates to the geopolitical front and the macro side. We came in, and we took a look, a hard look, and we continue to do so, individual product by product, investment by investment, project by project, to understand where are the potential growths and expenses coming from. How are we thinking about balancing, as James said, that near term investment, making sure that we need to get done certain things. We always need to ensure that as we invest also with a longer-term horizon, the right controls are in place as we continue to grow the business efficiently. Are there projects that can be delayed that we might be doing on the margin? I'd say that work is in flight, has been in flight. It's not new information, and it's certainly something that we're keeping our eyes on. Thank you. We'll take our next question from Ebrahim Poonawala with Bank of America. Good morning. Good morning. Just wanted to follow up on the institutional securities business. You talked about the market share opportunities, which you clearly have. Would love to hear your thoughts around just the health of how's the plumbing in the capital markets functioning. We saw a bunch of headlines around hung deals, et cetera, during the quarter. Just how are clients holding up on the institutional side? Given how strong the franchise already is on the prime brokerage side, is there more opportunity there? I realize that was a big driver of the growth this quarter. Would love to hear your thoughts. From basically in terms of the capital markets functioning, as James said, this is not, we're not in a position of the same kind of stress we've seen in other recessionary cycles. We're still seeing functioning markets. You can see that in just some of the funded balance points that I made, across the ISG portfolio in terms of funded balances being at 11% versus even in the pandemic, we had seen those balances up to 25%. I would certainly say that you see institutions that are in a good place. I also think from a corporate perspective, it is worth noting that many came into this from an environmental perspective, in a much better position than they have before because they did issue and were in a good spot, from a balance sheet perspective in the period of low rates that you saw over the course of last year. Of course, there are days where it's more difficult to come to market. That is very clear as you see that in the underwriting results. Just to provide that balance, of course, it's not the same thing as having a green screen every single day. I think that you are seeing both institutions and corporations, et cetera, taking advantage of days where the market is open, and they are able to do that, and from that perspective, the market is functioning. As it relates to prime brokerage, we've been very balanced in that business. I think we've been a tremendous leader in that business, and we continue to effectively look for the relationships that we're well suited for, both in this environment that makes sense to partner with clients. You see that on the balance side, you see that on the revenue side, and you see that the mix also matters to us. From that perspective, you know, we've been very focused on the equities business more holistically for over a decade now. Thanks for that. Just on the fixed income, so appreciate that you all right-sized the business a few years ago. Like, given the capital constraints at your peers, does it make sense, maybe James or Sharon, to like lean in and revisit areas where you could actually pick up share on the fixed income side, or no? You know, listen, there's always opportunities in an environment where you can try and pick up share. We're in a bit of an uncertain world, as I open with. I don't think this is the time to be overly aggressive, personally. I like the fact we have excess capital. I like where our CET1 ratio is. Obviously, as you drive up RWAs, you eat into that. We actually brought our RWAs down by $40 billion in this quarter. I think the institutional team in both fixed income and equities were very prudent and appropriately so. Listen, if the option is to trigger another 50 basis points on the SCB or generate another, I don't know, $100 million, $200 million in revenue, that for me is a very easy call right now. I like the 50 basis points that we haven't had to trigger that some of our competitors have. Listen, we'll be, you know, eyes wide open, but we're not trying to win the game right now. There's, you know, the fixed income business has gone from doing, I don't know what they were doing, $500 million, $600 million a quarter in the back half of 2015. We're consistently, you know, somewhere between $1.75 billion-$3 billion. They've done a phenomenal job. They've materially gained share. I think we're around 10% share up from 6% or lower in those days. Stable business, great leadership. Yeah, we'll be opportunistic, but we're not gonna be greedy. Thank you. We'll take our next question from Brennan Hawken with UBS. Good morning. Thanks for taking my questions. I wanted to follow up on Steven's questions on deposit beta, but rather talk about the balance side of things. The brokerage sweep deposits declined by about $30 billion this quarter. Sharon, I think you referenced that it That was driven by both tax payments but also some yield seeking. Could you maybe break that down a little bit, or do you have a sense about what that attribution would be? Just so we can kind of level set and think about how much further potential deposit yield deposit loss there could be from further yield seeking. Yeah, I mean, I think that one quarter would be a little bit difficult to kind of draw those conclusions. I think the way I would think about it, Brennan, is a little bit differently, which is, some of the questions I know we've received are, "Well, why didn't your beta come down?" Because you had E*TRADE, and so those balances should be in a position where you should have an average weighted beta that's lower over time. So I think the best way to kind of answer your question a little bit more head on, in terms of where the underlying crux is we have seen balances also increase in the higher account level. That's built into the model, it's built into our expectations, it's built into the NII forecast. We've said, as I said directly in my remarks, we also saw deposit behavior very much in line with what we expected. It is working in terms of that predictability. Why is the beta then higher? Some of that beta just has to do with you have some higher balance amount. Why? Because you accumulated them likely at periods of time where yields were lower and there was excess cash that was sitting in position. Some of that higher balance amount begins to leave seeking out higher yielding payments. I think that can help give you a little bit of context in terms of what's going on from the balance perspective to more directly, I think, answer the question rather than just look at one quarter's behavior. Sure, sure. Okay. That's fair. Thank you. Then when we think about the SBL book, you know, you flagged the $22 billion of continued loan growth. You know, it seems like you're expecting loan growth in the back half to be about half of what you saw in the first half, a little more than that, but not by much. So that makes sense it would slow. Can you talk about what we've seen from an LTV perspective in the SBL book, and whether or not some of that slowing loan growth is gonna reflect some, maybe some SBL pay down or is there the potential of some SBL reduction just because LTVs are getting high, and so there's gonna need to be some of that just mechanically and maybe also how you manage those LTVs in these choppy market environments? Yeah. The LTVs. Multipart, sorry. Are very well managed. No, it's okay. It's okay. I'll just try to remember it all. From the LTV perspective, as you would expect, we're very much actually in line with where we've been from historical years. The reason for that is it is a very well-managed book. Why any uptick at all, as you would expect, obviously the value of the underlying has gone down. From a historical basis, we've always been within that. We've sort of given a 40 range, a low 40 range. We're in that range, and we're very much, like I said, in line over the last couple of years. Now, as it relates directly to what we're looking forward and seeing, I think what's important here is that from a mortgage perspective, you might see some slowing, just obviously given where rates are. Now why would the SBLs come down? You just might not have as much interest or engagement in the product with lower asset values. I don't look at it in terms of, oh, there's a management issue. Rather, that is a very well-managed portfolio where we haven't seen issues in a lot of different market environments with the calls from an operational perspective, more broadly, et cetera. Rather just the engagement from that relationship side. Is this the right product to be using now? You might not have those conversations as much with the asset values coming down. Very practical answer to the question that you gave. Thank you. We'll take our next question from Mike Mayo with Wells Fargo Securities. Hi. Just a follow-up on the loan growth. The $20 billion loan growth target from the start of the year, it looks like you're still looking at that, but how are you thinking about loss rates on those new loans, you know, given perhaps a new economic forecast? We note that provisions for wealth losses are already triple the level of last year. Kind of what's the risk in that portfolio? Does it make sense to have a loan growth target? It's always easy to make loans. It's just tough to get paid back sometimes. Thanks. Yeah. I think that the loan growth target is, I mean, just in terms of it's more of an expectation to help people understand where the NII trajectory is. I wouldn't call it a target. To the point that was made by Brennan, obviously the expectations on a quarter-over-quarter basis have come down. You know, we did see some pull forward, and that's all we're reflecting in that. As you look at the provisions themselves, they're still very low on a relative basis to other provisions across various both institutions and even our institutional securities franchise is quite low. In terms of what drives that, as you know, it is based on the CECL concept and the life of loan concept. As you also know, it is a complicated idea between both qualitative and a quantitative scenario. For us, as we disclose in our Q, the factors that we look at that are most important is really around GDP. We did see a degradation in the GDP expectations, very consistent with what's gone on in the macroeconomic outlook. We are expecting, you know, the recession that we've talked about, the probabilities are in the 50-50 range, and that's very consistent with also what we've said publicly. Did you have any extra CECL provisions this quarter? No, we feel appropriately reserved for where we are right now. Thank you. We'll take our next question from Gerard Cassidy with RBC Capital Markets. Thank you. Good morning. Sharon, in the workplace channel, you guys had some good growth in the number of participants on a year-over-year basis. It was up 17%. The unvested asset values declined about 33%. Can you give us a little color? Was it primarily just market conditions bringing that down, or is there something else there? It's a great question. You draw an interesting distinction. No, it's just the value of the assets themselves have gone down that those holders have. Now, the increase in participants has a lot to do with the fact that as we continue to win mandates, we've seen that increase the number of participants. What I would say in terms of just an opportunity, in terms of engaging with those clients is obviously it is a difficult time and environment for some of those individuals. We do, you know, we continue to educate and use financial wellness as a tool, especially in these environments, to explain the advice-driven model and provide us with an opportunity actually in these kind of environments to discuss what financial advice and what financial wellness is, specifically as people see different declines in their potential portfolio. Very good. Does the assets skew to more new, you know, startup companies that might be tech-oriented versus a more traditional industrial company or a stable company in those plans? It's, you know, skewed. There is a good portion, I would say, of technology companies that would be in that sector that you can see as you see those asset values decline. There is a balance on the other side of different types of companies, and as we win mandates, it's not just on the tech side. We're winning mandates across different institutions, especially as people better understand that financial wellness offering. Thank you. We'll take our next question from Matt O'Connor with Deutsche Bank. Good morning. Appreciate all the details on slide 11 here, the allowance for credit losses. Maybe you've had it before, but it's more relevant now and good detail. You know, if you had to kind of guesstimate in a moderate recession, you know, that $1.2 billion of total ACL, where does that go? You know, I think that is a very difficult question to answer. I think that what you can look at and think about it is obviously the economic scenario makes sense, the GDP makes sense, the size of the world, where the growth actually comes from and goes. Then there is some extension of duration that you can see dependent on the rate rise expectation. Okay. Any way to frame, you know, is it double or triple? Obviously, a lot of the loans are in wealth management, which is just not gonna, you would think have as much loss content, but any way to frame, numerically how high it could go? Yeah, I wouldn't. I mean, you can. You know what I would do? I would say is why don't you think about it as it relates to COVID, right? You can think about where we were from a COVID perspective. Let's talk ISG specifically. The provisions this quarter are $82. It was almost 4 times that when you think about where we were from a COVID perspective. Okay. That's helpful. I'd just point out that the wealth management piece, ACL percentage is 0.1%. These are very different kinds of loans from traditional consumer banking loans. You're just not gonna see, at least for that part of it, a major move. For the others, you know, I think it's just you can't project. I mean, who knows what kind of recession it might be, how long it might be, and so on. We manage this business conservatively, and we don't have a big traditional middle market small business loan book. We just don't have that kind of business. That's helpful. Just a clarification question. The total DCP for the firm, you mentioned $515 million revenue impact in wealth, but what's the firm-wide revenue and expense impact, please? You know, it's not material per business line, which is why we don't call out the number. The reason we called it out in wealth, just to be clear, was wealth actually had a great quarter. Revenue growth, new money growth, fee-based growth, and margins year-over-year the same at 27% in a very difficult environment. We thought it was kind of raining on the party a little bit that the DCP took $500 million off the top line number, even though it comes out of the comp expense number almost dollar for dollar, not quite. That's why we called it out there. Ordinarily, we wouldn't call out DCP. We don't make a big deal of it. It's kind of an accounting issue. It's not a business issue. We're not often that excited about it. We just thought given you'd all be interested in how the retail investor was behaving right now and what was going on in that business and how panicked they were. The short answer is not very. Behaving well, business stable, solid growth. Hence, we want to call it out. Thank you. We'll take our next question from James Mitchell with Seaport Global. Hey, good morning. Maybe just on the RWA decline, was that a deliberate reduction or was that more market-driven? If somewhat, some deliberate actions, can you kind of give us a little more clarity on what those actions were specifically and if that can continue? Yes. It was both, is the way I would answer it. There are obviously market declines that had to do with it as well. This was a Right. A very thoughtful use and thoughtful approach around efficient uses of RWAs. Where does it make sense from a business perspective given the uncertainty? I think, as I said, the same way when we think about the expenses, it's about being efficient, and thoughtful and very prudent and flexible with all of that in the environment. It's both of those things that were taken into account when thinking about the RWA decline. Listen, I wanna make an important point here. We regard our capital ratios as, you know, sacrosanct. These are a big deal for us. We've spent a decade building them. We like having excess capital for exactly this environment we're in now. We can buy back up to $20 billion, and a bunch of it we're gonna be doing, hopefully, in the low seventies. You know, making sure we give ourselves that flexibility, demonstrating discipline in a tough environment. I think Ted and the ISG team did a phenomenal job in driving that number down. You know, obviously, it's driven in part by volatility in the market, so things outside of their control. You know, this is something that we should and will try and control as best as we can. Right. Maybe as a follow-up on that, James, I think you've talked about, you know, hoping the change in the mix of your business over time would push your DFAST losses and SCB down slightly. This year is probably a pyrrhic victory relative to what somehow happened to your peers. Do you think it, there's still room to see that come down over time, given your changing mix? Absolutely. Look at the PPNR number was materially up. Our stress losses were also up, not surprisingly. The test was incredibly demanding in this environment. Notwithstanding that, we increased the dividend, and we still came out at 13.3%, I think, versus 13.2%. We're very focused on the SCB buffer not getting away from us. The change in business model, the growth in the asset management business, the growth in the workplace retirement business, all of these things which, you know, frankly, are very capital friendly. Yeah, that number's gonna keep moving. We have, you know, not an argument, I won't put it that way, but let's just say a different point of view with the Federal Reserve about how they treat financial advisor compensation during a time of stress. We have argued for a long time that financial advisor compensation is obviously variable, so that expense comes down when revenues come down. The Fed has not yet seen it our way, but we're continuing to push that argument strongly. When it does, we believe that'll free up another bunch of capital. Thank you. We'll take our next question from Mike Mayo with Wells Fargo Securities. Hey, James. You've talked about variable expenses for variable revenues, and the revenues were down and comp was down. At what point do you pull the lever on kind of plan B? I mean, you said 50/50 on a recession. Sharon talked about maybe delaying some projects. When it comes to, you know, resource allocation, head count, more aggressive moves to prepare for a difficult environment, you said yourself that it's uncertain, it's not the time to, you know, take too much extra risk, push for market share. Is it time to go to plan B or more recession-like scenario in terms of your resource management? No, it's not. We're overwhelmingly in the U.S. We had 6% revenue growth in the wealth management business. Produced E*TRADE integration, 28% margins. This is a business we definitely don't wanna harm in this environment. We are managing, I mean, I guess it's quasi plan B, managing the RWAs, as we just said in the balance sheet, reflecting more stressed environment. We met as a management committee last September, I think, and I spoke to the management committee about, I felt there was much more downside risk to the market. The magnitude of it I didn't have a strong feeling for, but I thought it was somewhere between significant and really significant. I think we're in the sort of significant phase of it right now. We started pulling back, Mike, at that point. We've got a very clear handle on headcount growth and where that growth is. We've also got a lot of regulatory obligations we've got to continue to fulfill, as all the banks do. Right now, we're definitely not in a sort of crisis mode at all. I mean, that's why if we were, we wouldn't be buying back $20 billion, increasing the dividend 11%. On the other hand, balance sheet growth will be very measured. I think we'll pick up share by banks coming back to us, not necessarily us having to move forward. You know, as I think Sharon articulated very well, we're doing a pretty systematic review of the prioritization of all the projects going on around the firm. Listen, in a big company like this with $60 billion in revenue, we have a lot of stuff going on, and we have choices as to when we do it. I call it a sort of plan A minus, not a plan B, if you will. That's the mindset we're in. However, if things get worse, and in my career, I've seen a lot of recessions, a lot of crises, a lot of damage done to, you know, the environment. If things really deteriorated, particularly in the U.S., then we'd take a much more aggressive position. We obviously have the ultimate weapon, which is comp. Thank you. There are no further questions at this time. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.