Bank of New York Mellon Corp Q1 FY2025 earnings call

• Operating environment: Uncertainty due to trade and fiscal policies, geopolitical tensions, with tariff announcements and market volatility. Positioned conservatively with balance sheet strength. • First quarter financials: Earnings per share $1.58, up 26% YoY reported and 22% excluding notable items. Total revenue $4.8 billion, up 6% YoY. Expenses up 2% YoY, with positive operating leverage. • Role in global markets: Central role in global markets with platforms in custody, security settlement, etc. • Transformation strategy: New commercial coverage approach and strategic platforms operating model, with over half of BNY working in the new way. Examples: Trade finance team processing trade loans 60% faster, enterprise onboarding team faster with 30%+ increase in volume, payments team tripling currencies offered. • Innovation: Carolyn Weinberg as Chief Product and Innovation Officer driving innovation in areas like AI. Multiyear agreement with OpenAI for AI use cases in financial services. Over 80% of employees completed AI training, over 8,000 experimenting with personal AI agents, over 40 AI solutions deployed into production.

Securities Services: Total revenue was $2.3 billion, up 8% year-over-year. Pretax income was $708 million, up 20% year-over-year with a pretax margin of 31%. Market and Wealth Services: Total revenue was $1.7 billion, up 11% year-over-year. Pretax income was $816 million, up 20% year-over-year with a pretax margin of 48%. Investment and Wealth Management: Total revenue was $779 million, down 8% year-over-year. Pretax income was $63 million, down 41% year-over-year with a pretax margin of 8%. Other segment: Sequential improvement in both revenue and expenses, reflecting the absence of net losses on sales of securities recorded in the fourth quarter and lower severance expense in the first quarter.

• Full year 2025 NII expected to be up mid-single-digit percentage points YoY. • Some fee revenue growth, market dependent. • Expenses expected to grow 1% to 2% year-over-year, excluding notable items. • Effective tax rate for full year 2025 expected to be in the 22% to 23% range. • Expect to return approximately 100% plus or minus of 2025 earnings over the course of the year. • Continuously manage buyback pace with conservative bias.

• Uncertainty in trade and fiscal policies, geopolitical tensions creating elevated risks in near and medium term. • Market and economic volatility impacting capital markets and real economy. • Potential retaliation for being an international and services company.

Q: Ken Usdin asked about deposits and FX.

A: Dermot McDonogh said Q1 deposits in line with expectations, slight pickup in deposits recently but not like regional bank crisis. Robin Vince said market volumes up across platforms, phasing of activity with de-levering vs long-only liquidation. Dermot added FX firm-wide up 3% YoY, market view for BNY's markets business was solid.

Q: Alex Blostein asked about strategic inorganic opportunities and deposit mix.

A: Robin Vince said carefully looking at opportunities, maintaining discipline, platform operating model additive to integration. Dermot McDonogh said noninterest-bearing deposits roughly in line with current levels, guide for NII based on strong work last summer.

Q: Mike Mayo asked about organic growth and maturity.

A: Robin Vince said number of clients buying from three or more lines of business increased 40% over past two years, conviction in commercial model growing, maturity and operationalization of the concept increasing.

Q: Jim Mitchell asked about organic growth percentage.

A: Robin Vince said clients buying from three or more lines of business up 40% over two years, emphasis on clients doing more with the firm for growth.

Q: Mike Mayo asked about core organic growth rate.

A: Dermot McDonogh said focused on positive operating leverage, Robin Vince said two-thirds of 2024 fee growth was market and currency, one-third organic, aiming to drive growth through various dimensions like products, platforms, innovation, and client coverage.