Dermot McDonogh: So our NII guidance is based on market-implied forward rates at the end of the year with QT continuing. And so with QT continuing, we expect deposits to roll off. If QT were to change, then obviously, we would revisit and see what the benefit of that would be and run our models again, and then we will come and talk to you. But that is not our base case, QT ending anytime soon.
Manan Gosalia: But on a net basis, that should help the non-interest-bearing deposit balances.
Dermot McDonogh: It should help, yeah, but I couldn’t give you a sensitivity to it here today, and it’s not our base case.
Manan Gosalia: Got it. Okay, great. And then if you could help us with how we should think about the securities book with six rate cuts? Is there still a large chunk of the securities book that still reprices higher even if we get six cuts?
Dermot McDonogh: So Q4 — I’ll start with Q4. As you will see in the financial supplement, the securities book rolled down by about $4 billion, largely deployed into cash and some mortgages, et cetera. And we had a yield pickup there of about 300 basis points in 2024. We expect the yield pickup from the roll-down to be about 150 basis points to 200 basis points. So rolling off at about 3% into current market rates. It’s very liquid, quite like short in duration. So overall, we feel good about the outlook for the book in 2024.
Manan Gosalia: Great. Thank you.
Robin Vince: Thanks, Manan.
Operator: Our next question comes from the line of Gerard Cassidy with RBC. Please go ahead.
Gerard Cassidy: Goof afternoon, Robin and Dermott.
Robin Vince: Hey, Gerard.
Gerard Cassidy: Dermot, I know you touched on this with the net interest revenue already in terms of your expectations for 2024 being down 10% following, I think, the forward curve, correct me if I’m wrong there. If the forward curve is incorrect, currently six rate cuts and it comes in closer to two or three for the year, how does that affect that 10% guidance?
Dermot McDonogh: So I would say the theoretical answer to that is you’re higher for longer, and so therefore people will continue to optimize their deposits into higher-yielding assets. So you could see the base case, you know, you could see balances run off more. But we’ve kind of analyzed this top down, bottom up, left to right, and so the best guidance we give you is 10%. But if it transpired to be a different number, obviously, the NII number would be different.
Gerard Cassidy: Sure. No, understood. Okay. Thank you. And maybe Robin, and I apologize if you guys already talked about this or it’s in the deck. Your new business wins this quarter, what was the dollar amount of that, and what’s the installed base that you have for next year?
Robin Vince: So we don’t give specific guidance on the installed base or backlogs, but I would say — look, I said it in answer to an earlier question and it’s in my prepared remarks. We had Q4 sales was our strongest of 2023. We won mandates in the Middle East, asset managers, largest clients given us more business. So, look, we feel very good about what we accomplished in asset servicing in 23, and the team feel very kind of bulled up about 2024 and what the opportunities are in front of them.
Gerard Cassidy: Good. Okay, I appreciate it. Thank you.
Operator: Our next question comes from the line of Rob Wildhack with Autonomous Research. Please go ahead.
Rob Wildhack: Hi, guys. A couple more on deposits. Dermot, you mentioned a couple of times that you’ve had four straight months of deposit growth to close 2023. It seems that a lot of the things that would weigh on deposits in 2024 were or already are headwinds in 2023, and yet despite that, you’ve been able to grow deposits. So I’m curious if there’s anything else that you think might change or become more of a headwind from the last third of 2023 and into 2024? And if there’s a possibility or an environment where deposits actually do come in better than what’s in the guide?
Dermot McDonogh: So, look, overall, a big part of the deposit base — our deposit base, too, is NIBs and where that goes. So, look, the reality is Q4 was clients and hard work by our team, and it worked out, and we outperformed by $100 million. And we take it, but hindsight is everything, and it’s behind us, so we bank it and we move on. When I sit here today, and I sat here last January, 2023 didn’t turn out the way everybody thought it was going to turn out. And so who knows what’s going to happen in 2024, and so there is a lot of uncertainty out there. So I feel very comfortable with the down 10%. And if that changes to the upside, we’re going to be the first people to tell you because we would like it to be not that number. We’d like to be a better number. But that’s the number we give you today.
Robin Vince: And, Rob, I’ll just add. It’s easy to forget. We’ve still got a lot of complexity in the world. As Dermot said earlier on, if QT continues, that’s one thing. If QT ends, maybe that’s to the plus. You’ve also had a massive run-up in liquidity over the course of the — in money market funds and other places. We have to see how that gets put to work, or not, as the case may be. Stock market therefore becomes a little bit of a wild card as we see the flow of funds. So we’ve still got the complexity of we talk about the fact that the Fed might cut in March. The Fed talks about the fact that they might not cut in March. And so there’s enough variation in the exact way that this is going to play out. And that’s why Dermot answered one of the earlier questions in the way that he did, around our 10% and the path of it because we just don’t have that type of visibility, but we do have the sense that we can kind of work the problem to our current guidance.
Rob Wildhack: Okay, thanks. And then I think earlier you mentioned something about deposits that were not yet seasoned or not yet operational, and I was just wondering if you could expand on that. What’s the criteria for a deposit to be considered operational? And then how long does it take for something like that to play out?
