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Good morning and welcome to the 2025 Third Quarter Earnings Conference Call hosted by The Bank of New York Mellon Corporation. At this time, all participants are in a listen-only mode. 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 The Bank of New York Mellon Corporation's consent. I will now turn the call over to Marius Merz, The Bank of New York Mellon Corporation's Head of Investor Relations. Please go ahead.

Good morning, everyone, and welcome to our third quarter earnings call. I'm here with Robin Vince, our Chief Executive Officer, and Dermot McDonogh, our Chief Financial Officer. As always, we will reference the quarterly update presentation, which can be found on the Investor Relations page of our website at bnymellon.com. And I'll note that our remarks will contain forward-looking statements and non-GAAP measures. Actual results may differ materially from those projected in the forward-looking statements. Information about these statements and non-GAAP measures is available in the earnings press release, financial supplement, and quarterly update presentation, all of which can be found on the Investor Relations page of our website. Forward-looking statements made on this call speak only as of today, October 16, 2025, and will not be updated. With that, I will turn it over to Robin.

Thanks, Marius. Good morning, everyone, and thank you for joining us. Let me start with a few highlights before Dermot takes you through our financials for the quarter in greater detail. As summarized on Page two of our quarterly update presentation, The Bank of New York Mellon Corporation reported another quarter of strong results. Record revenue of $5.1 billion was up 9% year over year. We saw broad-based strength, including double-digit revenue growth across the platforms that make up our Security Services and Market and Wealth Services segments, and we drove approximately 500 basis points of positive operating leverage. Our pretax margin improved to 36%, and we generated a return on tangible common equity of 26%. Taken together, we reported earnings per share of $1.88, up 25% year over year. The third quarter presented a largely constructive operating environment. Despite a cooling labor market and inflation lingering above the Federal Reserve's 2% target, the U.S. economy remained resilient. Equity markets continued to climb, credit spreads remained tight, and the Fed ultimately resumed rate cuts. Across our platforms, we saw solid growth in client balances as well as robust trading, clearing, and settlement activity. While the finalization of U.S. tax legislation and the prospect of deregulation are positives for the economic outlook, uncertainty and multiple tail risks remain. Geopolitical conditions, trade policies, fiscal deficits around the world, and the sustainability of enthusiastic markets, to name a few. Against this backdrop, we continue to execute on our mission of reimagining The Bank of New York Mellon Corporation. This includes our two core transformation programs: a new commercial model and our platforms operating model. Both are continuing to show results, and both have a lot of runway ahead. We recently reached the one-year anniversary of the new commercial model. Year one was about bringing the company together, aligning our teams, and proving that when we show up as one The Bank of New York Mellon Corporation, we can win. Now we are raising the bar. The next phase of our commercial model is about embedding the habits of operating as one The Bank of New York Mellon Corporation into our daily rhythms and shifting from just connecting the dots to also delivering integrated solutions with pace and scale. We were pleased to announce several wins in the third quarter that demonstrate how The Bank of New York Mellon Corporation is powering growth for our clients, both long-standing and new. Franklin Templeton, a client for nearly three decades, expanded its relationship with The Bank of New York Mellon Corporation to provide a full suite of asset servicing and FX capabilities for its U.S.-listed ETF products, tapping our market-leading platform to support one of its fastest-growing businesses. And TIAA, which has had a twenty-year relationship with The Bank of New York Mellon Corporation Pershing, yesterday announced that they have selected our Wove platform as the unified wealth solution across TIAA Wealth Management's broker-dealer, investment advisor, and bank custody businesses. Our early commitment to the digital asset space, paired with the principles of safety, scalability, and innovation that have defined The Bank of New York Mellon Corporation for centuries, now positions us to support the growing institutional adoption of digital asset products. In just one example from this past quarter, Open Eden, a leading platform for the tokenization of real-world assets headquartered in Singapore, appointed The Bank of New York Mellon Corporation as investment manager and primary custodian for the underlying assets of its flagship tokenized U.S. Treasury Bills Fund. As global capital markets move toward an always-on operating model, blockchain technology and digital asset adoption are becoming important enablers. In a meaningful step toward enhancing the utility of money market fund shares, we announced a collaborative initiative with Goldman Sachs to maintain on blockchain technology a mirror record of customers' ownership of select money market funds live and available through our Liquidity Direct platform. This includes a new token-enabled share class of our own The Bank of New York Mellon Corporation Investments, Dreyfus Treasury Securities Cash Management Fund. We are encouraged by developments in the U.S. regulatory environment that will further enable tokenized products and allow us to support clients as they consider moving to a more on-chain financial world. All of this product innovation, combined with our Commercial Model 2.0, is allowing us to be more for our clients and drive higher and more sustainable organic growth in the years to come. Turning to another one of our transformations, the ongoing transition into our platforms operating model. More than 70% of employees are now working in the model, and we expect to complete the remaining transition over the course of the next year. It is still early days, but we continue to gather meaningful proof points of benefits. For example, faster client onboarding, more automated delivery of complex NAVs, and more modern billing processes. Our progress in the model is creating real capacity to invest in growth, to innovate for clients, and to power our culture. Our experience has been that it takes twelve to eighteen months after the initial activation of a platform for teams to start realizing the full benefits of this new way of working. That means that while we will be entirely operational in the new model by the fall of next year, we don't expect to see the full benefits of these new operating rhythms until early 2028. As we continue making steady progress on both of our two transformations, as well as the broader reimagining of our company, we are always focused on what's next. A prime example of this is how we are embracing the power and benefits of AI. This past quarter, we announced a collaboration with Carnegie Mellon in Pittsburgh to create the The Bank of New York Mellon Corporation AI Lab at CMU. By bringing together CMU's academic leadership and The Bank of New York Mellon Corporation's market expertise, we will advance AI research, responsible governance, and deployment. At The Bank of New York Mellon Corporation, AI is for everyone, everywhere, and for everything. The investments we've made have been focused on creating the foundation to go faster, but adoption success is ultimately driven by culture. By putting AI in the hands of everyone at The Bank of New York Mellon Corporation, we intend to develop fluency and create capacity for our people to focus on higher-value work. This translates to how we show up for our clients and innovate more broadly. Last month, we launched the next version of The Bank of New York Mellon Corporation's AI platform, ELISA 2.0, smarter, faster, and easier to use. Across the company, our people are working together to embed AI solutions into our workflows. By the end of the third quarter, we had 117 AI solutions in production. That is an increase of 75% compared to the prior quarter. And it includes agents that help identify new business leads, write code, automate payment processing, accelerate client onboarding, and increase automation of reconciliations. We are also leveraging AgenTiC AI to deploy digital employees. Over 100 of them are already working side by side with our people on tasks such as payment validations and code repairs. We believe our AI opportunity is significant, and we are pursuing it with urgency. Before I hand it over to Dermot, I want to close by acknowledging the tremendous work of our people. As I visit our offices around the world and spend time with our teams, the excitement and drive within the company are palpable. It is our people and culture that propel us forward on our mission to unlock The Bank of New York Mellon Corporation's full potential for our clients and our shareholders. We are executing with purpose, powering our culture to run our company better so that we can be more for our clients. We have a lot of work ahead of us, but the clear signs of progress, both in terms of our reported financials and the leading indicators for future success across the company, give us confidence that the strategy is working. With that, over to you, Dermot.

Thank you, Robin, and good morning, everyone. I'll start with our consolidated financial results for the third quarter on Page three of the presentation. Total revenue of $5.1 billion was up 9% year over year. Fee revenue was up 7%. That included 10% growth in investment services fees from our Security Services and Marketing and Wealth Services segment, driven by net new business, higher client activity, and market values. Investment management and performance fees were down 2%, reflecting the mix of AUM flows, the adjustment for certain rebates we discussed in prior quarters, and lower performance fees, partially offset by higher market values and the favorable impact of a weaker U.S. Dollar. While not on the page, I will note that firm-wide AUCA of $57.8 trillion were up 11% year over year, reflecting client inflows and higher market values. Assets under management of $2.1 trillion were flat year over year, reflecting higher market values offset by cumulative net outflows. Foreign exchange revenue was down 5% year over year, reflecting the impact of corporate treasury activity, partially offset by growth in client activity. Investment and other revenue was $28 million in the quarter, including a $12 million disposal gain. Net interest income of $1.2 billion was up 18% year over year, driven by continued reinvestment of maturing investment securities at higher yields as well as balance sheet growth, partially offset by changes in deposit mix. Provision for credit losses was a benefit of $7 million in the quarter, primarily driven by changes in the macroeconomic forecast, partially offset by higher reserves related to commercial real estate exposure. Expenses of $3.2 billion were up 4% year over year, both on a reported and an adjusted basis. The variance, excluding notable items, reflects higher investments, employee merit increases, higher revenue-related expenses, and the unfavorable impact of the weaker dollar, partially offset by efficiency savings. Taken together, we reported earnings per share of $1.88, up 25% year over year. Excluding the impact of notable items, earnings per share were $1.91, up 26% year over year. Our reported pretax margin was 36%, and our return on tangible common equity was 26% in the quarter. Turning to capital and liquidity on Page four. Our Tier one leverage ratio for the third quarter was 6.1%, unchanged from the prior quarter. Our CET1 ratio was 11.7%, up from 11.5% in the prior quarter, reflecting capital generated through earnings, a net increase in accumulated other comprehensive income, partially offset by capital returns through common stock repurchases and dividends. Risk-weighted assets were up 1% sequentially. Over the course of the third quarter, we returned approximately $1.2 billion of capital to our common shareholders, resulting in a 92% total payout ratio year to date. With regards to liquidity, the consolidated liquidity coverage ratio was 112%, flat sequentially. And the consolidated net stable funding ratio was 130%, compared to 131% in the prior quarter. Next, net interest income and balance sheet trends on page five. Net interest income of $1.2 billion was up 18% year over year and up 3% quarter over quarter. Sequentially, net interest income increased due to reinvestment of maturing securities at higher yields, partially offset by changes in deposit mix. Average deposit balances were flat sequentially as the typical seasonal decline over the summer was offset by idiosyncratic client balances related to CLO activity and M&A escrows. Non-interest-bearing deposits grew by 3%, and interest-bearing deposits were down by 1% quarter over quarter. Accordingly, average interest-earning assets were also flat sequentially. Cash and reverse repo balances decreased by 2%, loans increased by 2%, and investment securities balances increased by 1% quarter over quarter. Turning to our business segments. Starting on page six. Security Services reported total revenue of $2.5 billion, up 11% year over year. Total investment services fees were also up 11% year over year. In asset servicing, investment services fees increased by 12%, representing strong year-over-year growth driven by higher client activity and market values. As we support our clients in building their businesses on the strength of our platforms, we are also benefiting from secular growth in attractive markets. In the third quarter, our ETF AUCA outperformed market growth and increased by 35% year over year, driven by higher market values, client inflows, and net new business. And alternatives, 12% year over year, with particular strength in our private markets segment. It is also worth highlighting that almost half of all Asset Servicing wins in the quarter represented multiline of business solutions, underscoring the growing effectiveness of our One The Bank of New York Mellon Corporation strategy and the enablement through our new commercial model. In Issuer Services, investment services fees were up 10%, primarily driven by strong client activity in depository receipts. Across the segment, foreign exchange revenue was up 4% year over year, on the back of higher client volumes. Net interest income for the segment was up 10% year over year. Segment expenses of $1.7 billion were up 6% year over year, driven by higher investments, severance, revenue-related expenses, and employee merit increases, partially offset by efficiency savings. Security Services reported pretax income of $806 million, up 26% year over year, and a pretax margin of 33%. Onto Markets and Wealth Services on Page seven. In our Markets and Wealth Services segment, we reported total revenue of $1.8 billion, up 14% year over year. Total investment services fees were up 9% year over year. In Pershing, investment services fees were up 7%, reflecting higher market values and client activity. Net new assets were $3 billion in the quarter, driven by inflows from existing and new clients, partially offset by the deconversion of business lost in the prior year. Going forward, we expect net new asset growth to reaccelerate as we completed this previously disclosed deconversion in the third quarter. In Clearance and Collateral Management, investment services fees were up 12%, driven by broad-based growth in collateral management balances and clearance volumes. Average collateral balances increased 14% year over year, growth from both existing and new clients. And in Treasury Services, investment services fees were up 7%, primarily reflecting net new business. Net interest income for the segment was up 26% year over year. Segment expenses of $895 million were up 7% year over year, driven by higher investments, employee merit increases, and higher revenue-related expenses, partially offset by efficiency savings. Taken together, our Markets and Wealth Services segment reported pretax income of $875 million, up 24% year over year, and a pretax margin of 50%. Turning to Investment and Wealth Management on Page eight. Our Investment and Wealth Management segment reported total revenue of $824 million, down 3% year over year. Investment management fees were down 1% year over year, driven by the mix of AUM flows and the adjustment for certain rebates, partially offset by the impact of higher market values and the weaker dollar. Segment expenses of $640 million were down 5% year over year, driven by lower revenue-related expenses and efficiency savings, partially offset by employee merit increases, higher investments, and the unfavorable impact of the weaker dollar. Investment and Wealth Management reported pretax income of $184 million, up 5% year over year, and our pretax margin expanded to 22%. As I mentioned earlier, assets under management of $2.1 trillion were flat year over year. In the third quarter, we saw $33 billion of net outflows from long-term strategies, $34 billion of net inflows into cash. Wealth management client assets of $348 billion increased by 5% year over year, primarily driven by higher market values, partially offset by cumulative net outflows. Reflecting on our Investment and Wealth Management segment for a moment. Under new leadership over the past year, we have begun taking important steps to reorganize, streamline operations, and start enabling the business to leverage The Bank of New York Mellon Corporation's broader portfolio of platforms. Additionally, we have started bolstering the team with a number of strategic hires and internal moves to further strengthen product, distribution, and client coverage expertise. Along the way, we are being mindful of protecting the unique investment processes of our individual investment firms. While we are still in the very early stages of unlocking the growth opportunities associated with investment and wealth management, security services, and Pershing truly pulling in the same direction, we are encouraged by the progress over the past few months. Page nine shows the results of the Other segment. For this segment, I'll just note that the year-over-year decrease in revenue was primarily driven by higher net securities losses, and the sequential increase primarily reflects gains realized on the sale of real estate. For the remainder of the year, I'll close with our financial outlook. On the back of a strong third quarter, we expect net interest income in the fourth quarter to be approximately flat sequentially, which would ultimately result in full-year 2025 net interest income to be up 12% year over year. We continue to expect expenses, excluding notable items, for the full year to be up approximately 3% year over year. We currently project our effective tax rate for the fourth quarter to be approximately 21%, which would bring our effective tax rate for the full year into a range of 21% to 22%. And finally, we expect to continue returning capital at a pace that is consistent with a total payout ratio of 90% to 100% for the full year 2025. To conclude, our results reflect the disciplined execution and collective effort of our teams around the world. We're encouraged by our progress and remain focused on delivering consistent long-term value for our clients and shareholders. With that, operator, can you please open the line for questions?

We'll take our first question from Mike Mayo with Wells Fargo Securities.

Hi. My question is how much of this growth year over year would you attribute to actions that you've taken versus just a generally good market backdrop? And I recognize that you have One The Bank of New York Mellon Corporation, is now the new commercial model. Recognize that your platform operating model, you said it's 70% done. Also recognize that you had ELISA 1.0. So you have a lot of initiatives taking place. So sure you can claim some credit, but probably not all credit. And it's probably going to be a quarter at some point where markets tank and things don't look as good. So how much is due to what you're doing and how much is due to the market?

Hey, Mike. Good morning. It's Dermot here. So let's reflect on the past several quarters and in both Robin and I's prepared remarks, the intersection of the commercial model and the platform operating model really kind of positioned the company in a much better way than previously to take advantage of the market opportunities when the markets are constructive, and they have been constructive for the last few quarters. And now we're in a position to be able to take advantage of that. So that's point I think that's important point number one. That hasn't always previously been the case when markets have been constructive and The Bank of New York Mellon Corporation have been able to take advantage of that. The second thing I would say, with the one-year anniversary of the commercial model and a multiyear phased approach to the platform operating model, now being able to stitch together solutions for our clients and do that cross-selling thing that we've talked about in prior quarters but now you can see it in execution. And in the prepared remarks, we talked about the wins in asset servicing this quarter, nearly half of them were due to us being in a position to be able to sell multi-line of business solutions to the existing clients of asset servicing. So when you take a step back and look at that 7% fee growth, it's a mixture of organic growth, higher market levels, and then FX. So it's all of the above, and the proportion of each one is pretty balanced, I would say. So very pleased about how we've been able to drive organic growth for the company, particularly this year. Mike, I'm going to just add a couple of quick things on top of that because we talked about nine months ago about this concept of beta and megatrends and the fact that you're right, the backdrop of the market has been very constructive. But what we've done is we've gradually repositioned and evolved the company to be able to take more advantage of that backdrop. And as Dermot mentioned that, but it really is worth a quick click into it because this diversified set of platforms and the way in which we've been emphasizing the growth in some of them is important. Remember, our businesses collectively fire on different cylinders. So equity markets up, good for some businesses. Fixed income markets up, good for different businesses. Transaction volumes up, good for other businesses. Capital markets activity up, good for other businesses. The execution and clearing and settlement volume type of activity under the hood, GDP growth, which is more correlated to our payments and treasury services business, and of course increasingly software and services. And so this orientation of ourselves to be more diversified, more platforms oriented is a very definitive strategy in order to be able to make more money in more different types of markets over time. And the de-risking of the balance sheet, you can see that in the consistency of NII is part of it. And just to give you a couple of facts around it, you're fond of our trust bank businesses. And if you define for a second asset servicing investments and wealth, as that core of the Trust Bank businesses, which I think most people would think is the case, that now represents less than 40% of the company's pretax income. Now those businesses have been growing, we love them, but the non-trust bank more platform-like businesses, corporate trust, depository receipts, treasury, clearing, collateral management, Pershing, pretty long list. They now represent about two-thirds of the pretax income of the company. And that's up from three years ago when it was only 55%. So everything's growing. The trust businesses are growing. The non-trust businesses are growing faster. They have higher margin, and we're positioning ourselves for more different types of environments with a more diversified platform.

All right. Thank you.

We'll move to our next question from Glenn Schorr with Evercore ISI. Your line is now open.

Hi, thanks. Thanks a lot. So great question on NII and the reposition you talked about. So 18% this quarter, you call this next quarter will be up 12% year on year. We've had a couple of rate cuts, a couple more coming forward. Can you expand a little bit more about derisking the balance sheet and how you've changed your approach towards interest rate risk management as we head into this potentially lower rate backdrop? Thank you.

Good morning, Glenn. Thanks for the question. So I would say, look, I said this to Robin earlier in the week when we were preparing for this call. When I was going through it with what we now kind of fondly call the tripod within the firm, which is Leida, who runs our deposit platform, Tiffany, who's our Treasurer, and Jason, who is our CIO. The sophistication and the investment that we've made over the last three years in our tools and our risk management and how we analyze, run scenarios, talk to all the different businesses to predict where deposits will be, just gives us a real confidence around the baseline and strength. And look, our balance sheet is very clean. It's very liquid. And we talk a lot about the $1.7 trillion liquidity funnel that we have. So every day when we come in, we see this funnel, and we can see where we can help clients maximize the return on their cash and at the same time kind of optimize our kind of deposit mix and where we are. And I think the reason for the strength in NII this quarter was really around that in my prepared remarks. And if you reflect back on, I talked about it on the Q2 call, we kind of said Q3 was going to be a tough comp given last year in terms of there was a lot of activity. This year, we did see some seasonal decline in deposits. But that was more than offset by a pickup in, as Robin said in the answer to the last question, capital markets activity, strong activity in the CLO space, and we're able to serve clients in a very differentiated way. Then there's a nice bit of M&A activity, and we have a nice M&A escrow business we're able to serve our clients in that space too. And so that drives fees. And then it also drives healthy deposits, which can attract NII for us. And so going forward from here, I kind of said some of that activity will moderate into Q4, which kind of I kind of give the prediction that our base case is that we expected the balances for the balance of the year to be kind of flat sequentially.

Thanks, Rob. Thanks, Dermot.

Great. Thank you, Glenn.

We'll move to our next question from Brennan Hawken with Bank of Montreal.

Good morning. Thanks for taking my questions. Dermot, you just touched on this a little bit. With the point around M&A escrow business. But we've been in sort of capital markets for a while, and we're starting to see M&A announcements of IPO activity, which generally bodes well for securities lifting. What early trends have you seen on the back of that? And how should we be thinking about modeling those revenue lines if the capital markets environment remains?

So you broke up a little bit on the question. So could you just repeat it again? So the capital markets activity has to which aspect of our business, sorry?

Yes. Sorry about that, Dermot. Securities lending? Securities lending part, like we've seen hard to borrow. Start to pick up on the back of M&A merger arb, IPO activity, and the like. So was curious about how we would think about what that impact could be on securities lending going forward?

So like we haven't seen like on that specific one, we haven't seen anything a note change in that or there is nothing that I would kind of bring to your attention that we kind of see as a step function change that I would highlight as it relates to kind of forward potential for us in that business. But as you'll know, we are the world's largest agency lenders. So we expect that and very nice business for us. We're very focused on it. But there's nothing there for me to highlight to you on this call.

Yes. And I would just add to that, Brennan, that it's a good business. It's an important business, but its greatest value is actually adjacent to our broader collateral management franchise because it's the lending, but it's also the reinvest. It's also our new product Collateral One, which adds in the broader collateral management globally to the whole mix. And so, become one-stop shopping for clients across all of these different components. If they do securities lending with us, some of these other things become particularly attractive. But I think the heart of your question, which is around capital markets activity and how it drives us is actually more to the corporate trust platforms as you referred, it's depository receipts, it's debt capital markets, its markets overall. And while the lending activity is part of it, I would say in the grand scheme of our capital markets footprint, it's a smaller part of it.

Got it. Thanks for that color. I appreciate it. And Dermot, you spoke to the fact that the offboarding, I believe you said, was finished. So within Wealth, just a couple of questions. DARTs for Pershing was a little soft. Was that it looked a little bit more pronounced than typical summer slowdown. So maybe if there was any color around that. And then you also landed a nice Wove win recently with the TIAA wealth management business. I'm certainly familiar with TIAA's Management business, but could you help us understand the size of the wealth business? And what we could expect from that?

So look, on Wove, we've signed over 50 clients onto the platform now. We're very pleased and proud of the TIAA announcement. It's been a lot of discussion with us, very important client, as Robin said. They've been with us for a long time, and we're happy to be able to serve them in a new and differentiated way. And I think when you take a step back, and look at Pershing overall as a business, this over the last twelve months, we've had this deconversion. Over the prior twelve months, we had the First Republic conversion. So as a general matter, there's been kind of noise flowing through the results. And sometimes we don't see the underlying performance of the business because of the deconversions. But I would say, overall, this year, Pershing has performed well for us. Q2 had high levels of activity, and I would say the DARTs were high because of all the activity that we saw in terms of client behavior around Liberation Day, and then Q3 kind of being a seasonally quieter business. And look, when we take a step back and we'll think about Pershing, and it's a $3 trillion AUM business, within the wealth tech sector space, and you see new entrants into it. And we like competition, and the fact that new entrants are coming in kind of allows us to show what we have to offer clients. So a, we're excited about the business. We're excited about the growth potential. And we're now with the deconversion behind us, we expect growth in net new assets to reaccelerate for the balance of the year.

Excellent. Thank you for taking my questions.

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

Hey, good morning. You mentioned some potential turbulence and headwinds in the money market ecosystem. Coming up right now with the rise of stablecoins on the one hand, coming amidst the backdrop of falling rates. You think either of these could put pressure on fee rates? Is this an area of the fund space that has seen less pressure than equities and fixed income over the last decade or two?

David, I would not describe what's been happening as turbulence. I would regard it as frankly as opportunity. You're right, the money market funds have reached record levels as essentially rounding to $8 trillion, making new highs pretty much each quarter. And we're in that business, but we're in that business from lots of different angles. I think it's worth reflecting on it for a second because we're there with our Dreyfus money market fund. It's a large fund. Again rounding call it $450 billion. That's a significant part. But then we're also participating with our liquidity business. We're participating with our collateral businesses. We're participating with our custody businesses. We're with our trustee businesses. And so this is another example of an industry which we touch very broadly across all of our different platforms. Now there's an evolution, and we're talking about on-chain capabilities for money market funds. I don't view that as turbulence for them. I view that as an evolution. And the question is, do we have platforms that can serve that technological evolution? The answer is yes, because of our investment in digital assets. And so our ability to help manage that transition from traditional money market funds to a more digital asset money market fund is something that we've clearly set out that we can do. And that's not dissimilar to the mutual funds to ETF to separate accounts evolution of market structure. It's not threatening when market structures evolve unless you can't catch the next evolution. And so we've invested to be able to catch it. Now, on top of that, we now have stablecoins. You're right, they can be a competitor to a money market fund, but they're very similar to a money market fund. Essentially, it's a collection of high-quality assets, but they have the additional feature of mobility. And we are in the mobility business because we have our treasury services businesses. We have our clearing businesses, we have our collateral management businesses. And so being in the transaction mobility business actually gives us a new feature that doesn't exist for money market funds because they aren't mobile assets. So we're quite excited about this evolution. And again, this is the philosophy of our strategy is to say, where are the megatrends, and are we set up with our platforms to be able to capitalize on that evolution that we invested properly and critically do we have the breadth of range of services that allow us to touch those evolutions from multiple perspectives.

Thank you. And then Dermot, I think you said that almost half of the servicing wins in the quarter were multiline of business solutions. Can you help us frame how that compares to 2024 to the first half of this year?

So I don't have a crisp number for it because over time, we're kind of as with the commercial model being a year old, we're building out the to be able to track that more and more. So going forward, we'll be more sophisticated in how we communicate these metrics to you. But so we started to track it this year, and we didn't go back last year or the year before and track it back then because it's a lot of manual work to do going back in time. But the trend is there, and we just see the cross-selling. And as we've both talked about a number of times, the bringing together of the firm under the commercial leadership of Katinka is really driving a very powerful transformation. And so it's just we're more connected. And so that's what I would say.

Just directionally, would you say it's somewhat higher or a lot higher? It's hard to really put a frame on it?

I would say it's higher, yes. Much higher is probably too strong, but I would say it's meaningfully higher. In terms of when we talked about last year, we had WisdomTree, which we sold four lines of business to one client. And this year, we're kind of seeing more and more of the WisdomTree type solutions being delivered to existing clients, whereas last year, WisdomTree was a new, new client. So we're delivering more to existing clients, which is a core part of the strategy.

Thank you.

Our next question comes from Alex Blostein with Goldman Sachs.

Thank you. Hey, Robin. Hi, Dermot. Good morning. I wanted to ask you guys about operating leverage over time. Obviously, really strong progress this year, continued in the third quarter. And obviously acknowledge the fact that margin expansion is both a function of revenues and expense controls and efficiencies. But as you look out and you sort of point into a lot of the efficiency gains, from the platforms will come through, towards maybe the '27 and 2028, plus you've got a variety of AI efficiencies underway as well. So as you think about firm-wide margin in this kind of mid-30s year to date and as you think about the forward opportunity set, you guys think this could land, understanding that you might not want to set a firm target on this call, but helpful just to kind of hear your thoughts on how you would frame.

Okay. So there were a few questions rolled up into that one. So when we kind of take a reflection and if you're going to go back, actually and you kind of timestamp it from the Goldman Conference of Fall Conference of 2022 to now. Over the last nearly three years, we've consistently delivered positive operating leverage and in some cases have outperformed. And so I think this is our fifth or sixth quarter of consistent positive operating leverage that we've delivered. And so this really is kind of I kind of go back to this whole notion of the flywheel of the three pillars that Robin has laid out in terms of be more for clients, run our company better, and power our culture. You get 50,000 people kind of working in harmony and pulling together, to deliver on that. That is what is really creating the outperformance. And so we're very pleased and each quarter is just another sign of steady execution. And so it is a flywheel of momentum that's powered by culture. And so if you kind of take we studied all the peer group over the last fifteen years, and we kind of said, what's been the average positive operating leverage of the firm. And so that best in class was 150 basis points positive operating leverage. So over the last three years, we've kind of consistently beaten that. But internally, we feel like and somewhat we're still in early innings. And Robin wrote his first shareholder letter, he was taking the decade-long view of what our strategy was going to be. So if you take the decade view, we're three years into that. So I would say relatively early innings all the things that we're doing. And when you take the two transformation projects that we both double-clicked on, commercial model, platform operating model, we really haven't talked about what we want to do in the product and innovation space, and we've recently hired Carlin Weinberg to kind of stand up and lead that business. So we expect Carlin to have the same success as has had over the last couple of years. And we really haven't factored in the opportunities both in growth and in efficiency that AI is going to bring to the firm over time. So we will be quite optimistic about our ability to deliver these kinds of returns into the future.

Great. That's very helpful. My second or the follow-up question rather just to clean up around NII. I believe in the past, you guys sort of talked about that internally you're sort of trying to focus on '26 and try to neutralize the balance sheet to sort of headwinds from lower interest rates. Just curious if that's still the case. And if you think about Q4 guide, is that a reasonable jumping-off point for NII for all of 2026? Again assuming you guys can succeed at keeping NIM roughly flat?

So I think we're quite pleased last year in terms of how we set up the balance sheet for this year. In terms of what we call the Jackson Hole pivot. And so we did a lot of work over the summer months of 2024 to kind of deliver the results that you're now seeing in 2025. And so we've replicated that thinking in that model and that kind of proactive repositioning of the balance sheet for 2026. So we've done a lot of work and we've done a lot of positioning. And so to your specific, the latter part of your question, I would say Q4 is a good jumping-off point as a base case for 2026.

Awesome. Thanks so much.

We'll take our next question from Ken Usdin with Autonomous.

I just wanted to ask, it's more of a longer term but obviously so many announcements out of the crypto and the stablecoin space in terms of new products and new offerings from both The Bank of New York Mellon Corporation and the industry. And just wondering how you're starting to think about what's the TAM there from a revenue perspective for The Bank of New York Mellon Corporation? Like what is the opportunity set? We see it in terms of the notionals out there in the marketplace, but how does that convert into revenue for BK? Where would you expect it to come through? And is there any perspective on like how quick when that starts to show?

Sure, Ken. Look, we're playing the long game on assets. We started this journey really about three years ago seeing it as a potentially interesting technology. Clearly, it had some very excited fans right at that stage, but it's built and become I think a bit more mainstream accepted as a technology. We saw the promise of the technology. Look, we've been in the technology evolution business for a long time. We still have some of our ledgers which were quill and ink back in the day, then it was printing, and then it was computers. And now we see this as a promise for certain types of assets and certain types of transactions as being a new way of being able to record improving the mobility of assets, improving the efficiency of recording transactions, etcetera, etcetera. So we see that promise of that technology we've invested accordingly and it's quite broad because yes, it's stablecoins, but yes, it's digital asset custody. We can custody. We're the first U.S. GSIB to be able to natively custody Bitcoin and other digital assets. And then it's also this whole mobility conversation that we've talked about, which we think is quite exciting. And so it is more than stablecoins, but we are a big supporter of the stablecoin ecosystem. And interestingly having really lent into this ecosystem earlier on, we became a real go-to partner for many of these firms for our traditional services, because they were like hey, The Bank of New York Mellon Corporation, you get it. And let's do we need all of these traditional services. We need capabilities around agency and custody and on-ramps and off-ramps asset management in order to be able to provide those services. So we've really attached ourselves to those clients. And now we're participating in the next evolution. We're in the rails business, we're in the financial markets enablement business, global capital markets, and there are a variety of different things. You combine our clearing capabilities, collateral capabilities, our mobility capabilities in money movements together, that is able to help stablecoin prospects be able to go faster. And so it's a very interesting space. It's very early days. This is a multiyear thing. But we're positioned for optionality is the way that I would describe it.

Okay, got it. All right. And then a follow-up on the expense side. Alex asked earlier about operating leverage. I just want to confirm, so like 3% full-year expense growth implies more of like a 2% year over year in the fourth quarter. And I'm not suggesting that, that means that you're there's a lot of variability quarter to quarter in terms of how you grow expenses. But just is the platforming starting to help at all in terms of either allowing you to have more gross saves underneath that you can even better control the overall growth rate of expenses as you contemplate leverage? And I know you've said earlier in the year that revenues are better, it's always a good time to spend. So just directional thoughts on how to think about underlying expense growth? Thanks.

So I wouldn't say I said exactly what you just said there. I think given the markets are more constructive, we I wouldn't be an advocate of spending for the sake of spending because revenues are up. Like hopefully that we've earned the credibility of all of you that over the last few years, we're very good stewards of both our capital and our expense base. And we're disciplined in how we allocate our expense budget. So I think with the backdrop being more constructive this year, we've accelerated some investments. And with the change in administration, and everything going on in the digital asset space, we've brought forward some of our investments that previously might have fallen below the line. So we've scaled and gone faster in some of those areas. Importantly, what I would say is, this year we went into the year thinking that we were going to generate about $500 million of efficiency throughout the firm. In terms of running the company better, and we've redeployed that $500 million into growth investments. And we just had our Board here this year this week, and they were kind of always asking the question, are we investing enough? With the market where it is today, should we be doing more? So as we go into the kind of planning season for 2026 and beyond, we're taking a very broad-based look on how we can drive positive operating leverage into the future, which is our North Star, and generate savings while at the same time deploying. But specifically, on your question of feel good about the guide of 3% which in the context of the last three years just kind of 2022 was up 8%, 2023 was 2.7%, last year was roughly flat and this year guided at the start 1% to 2% and now the backdrop of revenue-related expenses a couple of other initiatives that we've embarked upon, we revised our guide up middle of the year to around 3%, and we feel very good about where that is. And overall, think given where we are in inflation, etcetera, etcetera and the CapEx associated with AI, we feel very good about what we've managed to accomplish this year.

Thanks, Dermot.

We'll move to our next question from Ebrahim Poonawala with Bank of America.

Good morning. I just had a couple of follow-up questions, Robin. I think going back to the digital assets piece, appreciating still early days, but would you say if the move towards on-chain tokenization picks up is it disruptive from revenue margins for The Bank of New York Mellon Corporation? Accretive or just a client retention tool where you are more likely to retain the clients who want to move? I'm just wondering in that spectrum, is it a bigger risk factor or is it a tangible revenue opportunity tied to this?

There's certainly tangible revenue opportunity and of course like any market structure change or new technology comes along, there's disruption risk if you stick your head in the sand and do nothing about it. And sort of wish it to be away or ignore it. And I think that's true and has been true over generations of changes in financial markets. And so we view this as a change in circumstance for certain types of assets and for certain types of activity. Probably more suited for some things than others. Remember, take something like loans as an example, Loans are pretty clunky. We're a big loan administrator. We provide huge solutions to CLOs and to other market participants for the loans business. If you just look at it as part of our $15 trillion worth of corporate trustee, they're a pretty clunky instrument to actually manage in the post-trade space. They're quite bespoke, customized, there's a lot of servicing associated with them. And so to be able to see digital assets tokenization come along we actually see opportunities for greater efficiency in markets like that. It's going to be hard, not impossible, but it's going to be hard in a traditional equity, traditional clean government bond to be able to create a whole lot more efficiency. That's probably where digital assets create more mobility 24/7 types of liquidity. So it's either going to make markets more efficient, which we kind of like because we're such a scale player or it can open up new opportunities to be able to trade certain assets 24/7 to be able to convert from collateral into individual securities into individual cash all over the course of seconds in the middle of the night, that's pretty exciting. And that mobility, increased mobilization because we are in the transaction business as well, not just in the storage business, we see opportunities to benefit from that. So look, we're eyes wide open on this. There could be places in our business where margins can be pressured on the revenue side by certain things, but then there are also opportunities on the revenue side. And we think on the efficiency side, there's plenty to participate. But this is about culture, it's about attitude, it's about investing. We've hired our first product and innovation Chief Product and Innovation Officer in the form of Carolyn Weinberg. She's a deep expert in the space. In digital assets. She's done significant things in this space for other companies in her past. And so now she's here and she's innovating for us. So I would say net net pretty excited about it, but also eyes wide open about the fact that we've changed got to get it right.

Got it. That's helpful. And I guess just a separate question. Very narrowly on how you're thinking about share buybacks, I mean, an asset-light model. Do you care about the dilution buybacks have on book value at these levels? Or is any of sort of when we think about just from a valuation perspective, is that influencing your appetite for buying back stock or it still relatively unchanged today versus a year ago?

So I would say broadly the latter relatively unchanged compared to a year ago. We started out the year guiding plus or minus 100%. Look, hasn't been the year I think that most market participants thought it would be in January. And we tend to run on the conservative side of things. So you will you see it at 92%. That's really borne out of more of a conservative bias to running at the higher end of our Tier one leverage ratio given the market turbulence, the geopolitics, etcetera, etcetera. But we kind of and I think I said in my prepared remarks that we will be in the 90% to 100% for the full year. And just as a broader matter, you pointed it out, Ebrahim, a capital-light business model. And if we don't see opportunities to deploy in excess of our cost of capital, we will return it to shareholders as they would expect.

And look, Ebrahim, when we look at our business, and talked about this all across the call in our prepared remarks and the Q and A. We're excited about the journey that we're on. We have yes, we're a year into the commercial model. Yes, we're a year away from finishing the just the implementation of platform's operating model, but twelve to eighteen months after that is when we'd expect to be having the run rate benefits of that. We're right at the beginning of the AI journey, but we see a lot of runway. So for us, we sit here internally and we're pleased of course with the progress of the company. We're pleased with the stock price. But when we look at the runway it doesn't feel to us like it's the type of environment where you'd say, oh my goodness, we should stop buying back and it's overpriced. It doesn't feel like that to us. And so this feels like an opportunity for runway. So we certainly don't feel like we've reached the end of the road.

Very clear. Thank you, both.

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

Hi, good morning. Good morning, Betsy. Hello, can you hear me? Okay. Thank you. So Robin, is that because like how many more years of positive operating leverage do you anticipate you're going to be to deliver here? Maybe that's part of what you're seeing in the outlook for the stock price versus what's what the market is seeing. And so that would be helpful to understand, especially given the fact part of your operating leverage has been delivered by headcount reduction and clearly, at this pace, can't go on for forever obviously. So a little bit of color would be helpful.

Well, the good news is there's a big difference between forever and for a long time. So we see look, the short answer is when we look at the inputs and we used to talk about this a year or two ago, when we didn't have any outputs at that time to be able to talk to you all about. So we only talked to you about the inputs, but we tried to be very transparent with what those inputs were. Now we can talk about the outputs, because we've got delivery and value that's coming out of all of the work that our teams have been doing over the past three years. But we still talk about the inputs for exactly this reason because we want to try to give you all the transparency on the fact that we've still putting a lot of new things in and there's still a lot of runway associated with the value that's going to come out of those. The commercial model is a great example, which is why we keep reiterating it. It's only one year of maturity. And when you look at the combination of how you bring all of our sales folks together new rhythms, embedding them in the company, plus the fact that we've got this full breadth that I answered to Mike's first question. All of these different platforms and the nature of them, we feel that as that matures, there's a lot of runway on sales. Platform's operating model is not just an efficiency play as we've told you before, it is very much a creating an increased speed and agility to be able to deliver for clients as well. And if you add twelve to eighteen months, to something that we won't have finished implementing until towards the end of next year. You get into 2028 before you actually would expect to have the full run rate Agility benefits operating type rhythms, which then allows us to go be going full speed in terms of the technology, the processes and the reimagining of things because platforms is very much a means to an end. So, we look all of that. We look at the broadening out. We look at the fact that we've improved by about 10% the contribution of pretax income from platforms businesses, which are naturally higher in margin than the rest of the company, that's accretive. Investments in wealth, hasn't really kicked in yet to the margin party. So there's opportunity there and Dermot talked about that in his prepared remarks. So we look around and as Dermot said earlier on, we've taken a decade view of this right from the beginning. We're only at year three we've got all of these inputs. And so for us, we sit here and I think our team sit here kind of excited about the fact that we feel like we're still early innings and we're just getting going. So we're that's sort of where we sit right now and that's how it feels in the company. Again, just talking about the inputs that in theory are meant to create and so far attract record is that we've been able to do this, create the outputs of the future.

And then just follow-up question here is on Stablecoin. Do you plan on issuing a The Bank of New York Mellon Corporation stablecoin?

So we're not going to get into very specific situations about our future products. But I would just pull you back to the broader comment, Betsy, which is we are in the infrastructure capital markets enablement business. We're in the rails business. We partner with stablecoins. We enable other people's stablecoins. And that's really the heart of our strategy to enable our clients with their transition into these ecosystems. We support the biggest stablecoin issuers today. There are many people are interested in launching stablecoins. We really have the complete set of services to be able to power them. And what I would expect to see over time is participants who are wanting to do their own versions of using stablecoins internally to be able to companies, but they won't have the scale or the interest in creating all the infrastructure. And so they're going to turn to other stablecoin providers and they're going to turn to partners to be able to power their own use of those things. And I think that's the sweet spot of how we think about the business opportunity.

Okay. So if there is an opportunity for The Bank of New York Mellon Corporation specific stablecoin, you'd execute on it. But if it if not, no. It is for us, it's about enabling the stablecoin ecosystem and the way in which I think we're going to be able to best do that is provide the capabilities for Stablecoins to be able to thrive and help other people be able to make their Stablecoin thrive. Now there may be a lot of things that we have to build right up to the point of is it a BK stablecoin. So you could imagine a world where other people's stablecoins might be running on rails and capabilities that we provide or we might be helping existing stablecoin issuers to be able to insert their products into other people's ecosystems. Is this connection across cash collateral, the mobility of money, and then the infrastructure and capital markets. That's how I would think about it. But I'm not definitively answering your question because we'll remain agile to these questions over time.

Thank you.

And our final question comes from the line of Gerard Cassidy with RBC.

Hi, Robin. Hi, Dermot. Robin, you talked about the business wins on TIAA CREF and then Franklin Templeton. Can you share with us since those are such long-term relationships, was it more cross-selling because of the new policy or the new structure you have is showing success and that's why you made those wins? Or was it new products that they had to they've created and they came to you to help offer those products to their customers with you as a partner?

I think one of the things I don't view this as cross-selling Gerard. What I view it as is for a long time, The Bank of New York Mellon Corporation has had a series of perfectly good products and they've operated in a very separate and we would say siloed way, where they were delivering in a very vertical way, single product, to a client and that was how the client knew us. But we recognized very early on in our journey that delivering more of the things that we already do to the clients that we already have was going to be a huge opportunity. Now that's a big lift because it required the clients to better understand who we were and to understand what we had. Many of our own salespeople did not understand what we had. And so the whole retooling that's come along with the commercial model to be able to equip our sales teams and therefore our clients with knowledge about our company so that they can actually dip in to our businesses and be able to use more of the things that we have. That's a big opportunity. Now the second opportunity, which is very related to that is that it so happens that the many things that we have are quite related to each other. So if you're a clearing client, you might well be interested in collateral. If you're a U. Clearing client, you might well be interested in international clearing. If you do those things with us, you might be interested in some of our other transaction services. You might be interested in treasury services. And so there's a natural adjacency where all of our products and services really are pretty adjacent to each other. So they fit well together. So that's created a depth for those clients who now understand us because the salespeople have been able to equip them with that knowledge and then they see all these things we're doing that look at it and they say, gosh, I should do that with you and that with you because if I do both of them together, it's going to be good for me. I'm going to get more value. Then you layer on top the product innovation, which is we're making the products better and more capable. The examples that we just talked about with digital assets, but AI is very powerful in this regard as well. And then the constant innovation, launching new products, launching new features and making the products individually better. And then the secret further source is we bond them together. So there are some of our products and services that if you actually do them together, one plus one equals three in terms of a capability for the client. Then you add on to that the bigger new innovations, things like Wove, but also things like digital assets, then you recognize that there are more clients in the world and so we're covering clients. We've talked about this in the context of private markets. New growing client ecosystems, new clients and there were no stablecoin clients a few years ago. Digital asset clients, but now we're earning money from those new industries. And so these are the megatrends tuning into them, helping to be part of that journey. So collectively, this is the generating the growth. And it's why in answer to earlier questions, there's a linkage between our organic growth and our capturing of these megatrends that are going on in the market that make it so much more interesting than just is the market up, is the market down. That used to be the way that used to dictate the way that The Bank of New York Mellon Corporation would go. We don't believe that's the case anymore.

On what you just said, Have you guys created a scorecard with your top 100 or top 200 clients and where you are in that journey of giving them those all those different options? As part of that answer, when what percentage of those clients are at an optimal mix where you've where they really are firing on all eight cylinders?

Okay. So you'd expect to hear this from the CEO. None of them are at the optimal mix because all of them can do more with us. But we have quite a few clients who do several of these different businesses. You mentioned eight. In fact, we were having a conversation at our board with a client. We regularly bring in our external perspectives including client perspectives to our board. And we had a client who I was sitting next to talking about our businesses and their perception of us and they actually do eight products with us coincidentally. But I'll give you one stat because I think this is a good one and it kind of goes to the heart of your question. We have a lot more dashboards. We didn't really used to have them. We didn't used to have sales plans and targets and all of that stuff. And that's what I talked about in my prepared remarks about embedding the rhythms of our commercial model into the daily activities of the company because that's the discipline and the relentless execution to make it all happen as opposed to just wishing it be so. But the number of clients who buy three or more of our services is up 40% over the past two years. That's probably a pretty good indication of our direction of travel.

No, it is. And then just last question. Obviously, you guys have plenty of excess capital. Dermot, you talked about returning 90% to 100% of earnings in buybacks and dividends. I think in 2024, you announced the Archer deal. What about inorganic opportunities? Is there any area within your organization that you'd like to enhance with possibly an acquisition? Thank you.

Thanks, Gerard. Look, so it's interesting. We're very open to M&A. We said it before. We're open-minded to inorganic things if they can accelerate what we're doing, derisk us in some way and we recognize it can be a powerful tool in the toolkit for sure. And so we look at opportunities, we've got a team that assesses things constantly. It's a new rhythm for us versus past. As you know, we did the Archer transaction. That was a good stretching of an exercise exercising of that muscle, so that we know we can do it. But we are focused on the discipline here. We have to have great alignment with our strategic priorities. We'd have to have a good cultural fit and of course great financial returns, which will make it the bar for it pretty high. But as you've heard really throughout this call, our organic transformation is working. And we're really seeing the results from it and we still feel that we're in the early innings of that opportunity. And therefore, with that runway, we just feel no pressure whatsoever around M&A. We're open to it. We can be opportunistic. But the momentum we have and the runway that we have to create value near medium and long term means that we're in this wonderful position where we are focused with that as our real strategic focus right now.

Thank you.

Thank you. And with that, that does conclude our question and answer session for today. I would now like to hand the call back over to Robin for any additional or closing remarks.

Thank you, operator, and thanks, everyone, for your time today. We appreciate your interest in The Bank of New York Mellon Corporation. If you have any follow-up questions, please reach out to Marius and the IR team. Be well.