Robin Vince: So, Ken, it’s Robin. I’ll start off. Dermot might want to add something. Look, I think about this at a fairly high level of us being focused on positive operating leverage, at least until the point that we get to the sort of margin targets that we’re talking about, and there’s a little bit of work between here and there. And we also recognize that each year is going to have unique factors. And so the year in which we have a fairly significant NII jump of the 24% is going to create different conditions. That allowed us to have a fee year, which was fine but not growing in a meaningful way, and that allowed for some headroom on expenses, which is something that we’ve used in order to be able to make investments. Now, 2024 is a different year.
It’s got a different composition, but every one of the years that we faced has each of these inputs. It has fees, it has NII and it has expenses. And we’re trying to be very purposeful around solving for operating leverage in the context of the year that we actually are faced with. And we think that that’s the right thing to do, recognizing that markets move around and each year brings — serves us something different. We manage what’s in our control.
Dermot McDonogh: So, Ken, I go a little bit off-script here. It’s a bit of a cultural moment for us on just expense management, financial discipline, running our company better. I talked with one of the executive committee yesterday, and he said, Dermot, you have a very high bar for yourself on flat expenses for 2024. And I said, no, we have a high bar, we as a firm, and that’s down to all of us. And we talked to our Managing Director Population earlier today, and we’re all in it together about running our company better. And I think that’s an important cultural pivot that we’ve managed to achieve over the last 12 months.
Ken Usdin: Yeah, got it. Thank you guys. Appreciate it.
Operator: Our next question comes from the line of Glenn Schorr with Evercore ISI. Please go ahead.
Glenn Schorr: Thanks very much. So just one big question, if I could. So I think you’ve been talking about getting clients to do more business with The Bank of New York Mellon, which — and you’re executing on getting them better and you invested a lot. I did hear you today talk about improve the service and then clients will consolidate business. So my question is high level, it feels — it’s natural and it feels like it’s working, but you’re putting a lot of effort and expense at improving and modernizing and digitizing your businesses that actually haven’t been growing as much and/or need to modernize more and have lower margins to improve them. But is there any thought towards maybe you’re supposed to put capital towards actually your highest profitable business and ones that grow? It’s a question on do you need the whole portfolio, basically?
Robin Vince: Yeah. So the short answer to your question, Glenn, is, yes, we do. And as Dermot has laid out, and we’ve laid out in the materials particularly, there is a subtly different flavor to the investments that we are making in each of our segments. And so in the Securities Services segment, our focus is on the efficiency and cost to serve as well as growth. We haven’t ignored growth, but we recognize that making sure that our margin in that business continues to improve will allow us to be even more competitive because we’re the world’s largest custodian. We want the benefits of our scale to fully translate into our pricing with customers and the service that we can provide. So it’s got a tilt towards efficiency in that business, and there’s a lot of digitization that can be brought to bear there.
We are excited about the medium-term potential of AI. We’re excited about the shorter-term benefits of our new leadership team in operations. And the things that Emily and her team are working on are really targeted to that. But we haven’t forgotten about growth in the space, and that’s why Dermot mentioned we actually had our best sales quarter at the end of last year in that business. Now, you’re right. In our Market and Wealth Services business, which has a margin that, frankly, we’re quite happy with and you haven’t heard us talk about growing that margin. We really want to grow that business at that margin, and that’s our focus there. So that’s really where our drive, drive, drive around more revenues, a lot of our investments around our new business.
That’s where we built Wove is in that business. And Dermot talked about the Clearance and Collateral Management business, where we’ve had very significant growth over the course of this year. He talked about the investments that we’re making in our Treasury Services business as well, where we’ve got new. So that’s where we are really wanting to try to grow the overall revenue. And then in our Investment and Wealth Management business, where we’ve had higher margin before, and now we’ve been subject, of course, to the more difficult market environments that’s driven it down. But that’s a place where we’d like to return to our prior margins. A little bit of market would help on that, but also some of the structural changes that we’ve been making, the new product launches that we’ve been doing, the opportunity to make investment management part of BNY Mellon as opposed to just a separate piece, not availing itself of the $2.5 trillion-plus of distribution we have, which at the end of the day, was completely orphaned previously from the $2 trillion worth of manufacturing.
So the way in which we’re solving the problem varies according to the segment.
Dermot McDonogh: And what I would add there, Glenn, is it’s in my remarks, but we invested $0.5 billion last year in things that we wanted to do that was going to grow the company while keeping our expense growth rate at 2.7%. So we’re very disciplined about what we want to do, getting value for money, while at the same time manage the expense base of the firm.
Glenn Schorr: Thanks so much for all that.
Operator: Our next question comes from the line of Manan Gosalia with Morgan Stanley. Please go ahead.
Manan Gosalia: Hey, good afternoon. Can you talk about your assumptions around QT in your NII guide? And are you assuming it continues at the current rate? So if the Fed does slow and doesn’t QT early, would that be a big benefit to your deposit growth and to NII?
