Glenn Schorr

Glenn Schorr from Evercore inquired about the recently announced data center investment with Energy Capital Partners (ECP), asking if the project is speculative or pre-leased and about the timing of cash flow generation.

Answer

Craig Larson, Partner & Head of IR, confirmed that KKR is not a speculative builder and that the project has already been leased to an attractive counterparty. Co-CEO Scott Nuttall added that construction is underway with an expected completion in Q4 of the following year, giving a sense of the timeline for it to become operational.

Glenn Schorr of Evercore asked if the current environment is different for the private equity industry and whether to expect a major shakeout or rather a dispersion of results and consolidation towards top performers.

Answer

Co-CEO Scott Nuttall responded that he expects more dispersion of results and a concentration of capital with fewer players rather than a broad industry shakeout. He noted that institutional investors have been consolidating relationships with global, multi-asset class managers who can perform through cycles, a trend he believes will accelerate.

Glenn Schorr asked if recent industry developments have altered KKR's perspective on asset prices or future demand in Real Assets, particularly for data centers.

Answer

Executive Craig Larson affirmed that long-term demand for data center power and infrastructure remains strong. He explained that KKR's original underwriting was not based on AI demand, which now represents potential upside. He emphasized KKR's disciplined approach, including not building speculatively and maintaining a diversified portfolio where data centers are about 6% of infrastructure AUM.

Glenn Schorr of Evercore ISI asked for more detail on the asset-backed finance (ABF) business, including where the assets are held, the sources of origination, and the strategy for growing platforms versus forming partnerships.

Answer

Executive Craig Larson highlighted the ABF business's rapid growth to $66 billion in AUM, up 40% year-over-year, with origination on a $30 billion annual run-rate. He noted sourcing comes from 35 internal platforms and partnerships with major firms like PayPal and Discover. Co-CEO Scott Nuttall added that assets are held in various structures including funds, separate accounts, and on Global Atlantic's balance sheet, emphasizing that in a $5 trillion market, KKR's current scale is just the beginning.

Glenn Schorr inquired about the strategy to incentivize traditional asset managers to partner with private market firms, given that it might involve giving up some assets and fees, despite the potential for better returns and diversification for their products.

Answer

CEO Marc Rowan explained that partnering with traditional asset managers leverages their distribution, making it margin accretive for both parties. He highlighted that providing good performance, unique client solutions, and turning outflows into inflows offers a win-win, especially as Apollo anticipates excess demand for private assets versus supply, allowing for diversified and cost-efficient distribution.

Glenn Schorr of Evercore questioned whether the Apollo Business Finance (ABC) product could scale as successfully as the Apollo Debt Solutions (ADS) product, inquiring about its approval pipeline and scalability.

Answer

President Jim Zelter affirmed that they believe ABC can follow the successful trajectory of ADS. He highlighted a first-mover advantage in asset-based finance, a strong origination pipeline fueled by the Atlas acquisition, and robust early approvals from clients. Zelter noted that the product's underlying investment-grade counterparty risk is particularly appealing to investors late in a credit cycle.

Glenn Schorr of Evercore ISI asked for a simplified breakdown of the lower Spread-Related Earnings (SRE) guidance, seeking to distinguish between conservative asset positioning and market-driven pressures like higher cost of funds.

Answer

CEO Marc Rowan explained that in Q1's unhealthy competitive environment, Apollo prioritized building liquidity over chasing risk, preparing for wider spreads. CFO Martin Kelly added that headwinds from additional rate cuts, retail competition, and higher asset prepayments led to the revised mid-single-digit SRE growth guidance for 2025, which assumes a return to normal spreads and has potential upside if volatile conditions persist.

Glenn Schorr questioned the thesis of public-private convergence, asking why banks with excess capital would transition more asset-backed and private investment-grade business to partners like Apollo.

Answer

CEO Marc Rowan acknowledged that some large banks might retain more assets but argued that the fundamental banking model of borrowing short and lending long is ill-suited for the long-dated, complex assets needed for the global industrial renaissance. He emphasized that Apollo provides flexibility and solutions unavailable in public markets, creating a symbiotic relationship where banks retain client relationships while Apollo takes on the long-duration assets, enhancing bank ROE without requiring capital.

Glenn Schorr asked about Invesco's fixed income flows and performance, particularly in light of October's market volatility and potential credit issues, and the go-forward expectations for the global fixed income platform.

Answer

President and CEO Andrew Schlossberg noted no material implications from October's events, highlighting continued strength in the $680 billion fixed income platform, driven by broad-based organic growth and strong SMA platform performance in the U.S. CFO Allison Dukes added that while bank loan flows softened slightly in October, CLO demand remains high, and investment performance is strong across the platform.

Glenn Schorr asked about the impact of October's market volatility on fixed income flows, particularly bank loans, and Invesco's expectations for the fixed income platform going forward, given its global nature.

Answer

President and CEO Andrew Schlossberg noted no material implications from October's events, highlighting continued strength in the $680 billion fixed income platform, driven by organic growth and broad-based flows. CFO Allison Dukes added that while bank loan flows softened slightly in October, CLO demand remains high.

Glenn Schorr from Evercore inquired about how Invesco balances using incremental revenue for growth initiatives, particularly in private markets, against the ongoing priority of deleveraging the balance sheet.

Answer

CFO L. Allison Dukes stated that growth and deleveraging are not mutually exclusive goals, as improving operating cash flow provides the optionality for both. She confirmed that while deleveraging is a focus, the company remains open to inorganic growth in private markets. President & CEO Andrew Schlossberg added that investments are also being directed toward ETFs, SMAs, and international expansion to drive growth.

Glenn Schorr asked about the outlook for the operating margin in 2025, considering the dynamics of controlled expense growth, strong inflows, and fee rate compression. He also inquired about Invesco's strategy to defend its Fundamental Equity business and the potential role of active ETFs in that effort.

Answer

Chief Financial Officer Allison Dukes expressed bullishness on the margin, stating that disciplined expense management and a focus on organic revenue growth should drive expansion. She noted the key to this is narrowing outflows in Fundamental Equities. President and CEO Andrew Schlossberg added that the strategy for Fundamental Equities centers on improving investment performance and differentiating the product line. He confirmed that active ETFs are a growth area, leveraging the firm's scale and investment capabilities.

Glenn Schorr inquired about Invesco's strategy regarding partnerships to expand its product offerings and the specific growth opportunities with its major shareholder and distribution partner, MassMutual.

Answer

President and CEO Andrew Schlossberg confirmed that partnerships are a key part of their growth strategy, citing the India JV as a recent example. Regarding MassMutual, he highlighted significant opportunities in providing model portfolios to their broker-dealer network and expanding sub-advised mandates for their insurance products, building on the existing $13-14 billion relationship.

Glenn Schorr of Evercore asked how Invesco plans to balance using incremental revenue, such as from the QQQ change, for growth initiatives like private markets versus continuing its focus on deleveraging the balance sheet.

Answer

Senior MD & CFO L. Allison Dukes stated it is not a binary choice and the company wants both growth and to delever, aiming to improve operating cash flow for optionality. She emphasized a continued focus on private markets growth through partnerships and potential acquisitions. President, CEO & Director Andrew Schlossberg added that investments will also target ETFs, SMAs, and international opportunities.

Glenn Schorr inquired about how the maturation of Blackstone's assets aligns with the anticipated pickup in M&A and IPO activity, and whether realizations would increase incrementally with overall volumes or be more IPO-dependent.

Answer

Jon Gray, President and Chief Operating Officer, confirmed that a pickup in M&A and IPO markets directionally increases Blackstone's ability to monetize accrued net carry, with more expected in 2026. He noted that healthier, more liquid markets accelerate realizations, although IPOs and sales processes take time, indicating the 'deal dam is breaking' for future realizations.

Glenn Schorr asked about the impact of the expected M&A and IPO calendar on Blackstone's accrued carry monetization, and whether an incremental pickup in realizations is expected in line with overall volumes or if it's more IPO-dependent.

Answer

President and COO Jon Gray confirmed that as M&A and IPO markets pick up, Blackstone's ability to monetize accrued net carry increases, with expectations for acceleration into 2026. He noted that healthier, more liquid markets generally lead to more realizations, although the timing for IPOs and sales processes takes time.

Glenn Schorr asked for a mark-to-market on the expected recovery in real estate, questioning the key drivers like pricing, financing, deal flow, and whether the recovery is solely dependent on lower interest rates.

Answer

President & COO Jonathan Gray stated that the recovery is a matter of 'when, not if,' citing key building blocks falling into place. He highlighted a sharp decline in new construction supply, which will create a favorable supply-demand dynamic. He also noted that the cost of capital is improving through both lower base rates and tighter credit spreads. Gray observed 'early green shoots' in transaction activity for smaller assets and renewed client interest, concluding that while lower rates would accelerate the recovery, the path is clear regardless.

Glenn Schorr sought clarification on Blackstone's comment about 'limited direct first order tariff impact' on its portfolio and asked about the current credit stresses in the market, particularly how the direct lending business is performing.

Answer

President and COO Jonathan Gray defined 'first order impact' as direct supply chain cost effects on manufacturers and retailers, which is a limited part of the portfolio. Regarding credit, he stated the system is far less leveraged than in past cycles (e.g., 40-45% LTV vs. 70%+ pre-GFC), resulting in fewer stresses. While he expects the current 50 bps default rate to rise, he does not foresee systemic issues like those seen in the GFC.

Glenn Schorr asked for a comparison of the market size for asset-backed lending versus direct lending and questioned if Blackstone has established enough partnerships to capture its share.

Answer

President & COO Jonathan Gray framed the opportunity as massive, estimating the asset-based market at $25 trillion, where private players have only 1-2% penetration, compared to the $5 trillion leveraged finance market. He explained that while Blackstone prefers direct origination, it strategically uses partnerships in areas like home improvement and fund finance, and leverages its equity platforms for significant deal flow.

Glenn Schorr inquired about the 6 basis point increase in Northern Trust's deposit rate paid on savings, money market, and other deposits, despite a rate cut in the quarter, asking for the underlying causes. He also requested more details on the private market initiatives, specifically the 50 South Capital feeder fund and developments on the asset servicing side.

Answer

CFO David Fox suggested multi-currency deposits as a potential factor for the deposit rate increase and offered more granular detail. Chairman and CEO Michael O'Grady explained the 50 South Capital feeder fund leverages existing relationships to offer wealth clients direct access to top-tier single-fund offerings, addressing access issues. He also highlighted innovation in evergreen funds and the expansion of LTAF/LTIF vehicles in European asset servicing.

Glenn Schorr questioned why the deposit rate paid on savings, money market, and other deposits increased by 6 basis points in a quarter with a rate cut, and asked for insights into this trend. He also requested more details on Northern Trust's private market initiatives, specifically the 50 South Capital feeder fund structure and ongoing developments in asset servicing.

Answer

David Fox, Chief Financial Officer, suggested that multi-currency deposits might explain the increase in deposit rates and offered to provide more granular data. Michael O'Grady, Chairman and CEO, explained that the 50 South feeder fund leverages existing relationships to offer specific single-fund offerings, providing wealth clients with exclusive access to top-tier alternative managers. He also highlighted innovation in evergreen funds and asset servicing work in hedge funds, private capital administration, and LTAF/LTIF vehicles in European markets, which are expanding alternative distribution.

Glenn Schorr inquired about the strategic drivers behind Northern Trust's expansion in alternatives and the launch of 11 new fixed-income ETFs, asking whether these initiatives are company-pushed or client-demand-pulled.

Answer

Chairman and CEO Michael O'Grady characterized the initiatives as primarily 'pull' driven by client demand. He noted that in alternatives, wealth clients are under-allocated to private markets, and the firm raised approximately $2.5 billion in the first half. For the new ETFs, he explained they are designed to fill specific fixed-income needs for their client base, such as municipal securities and bond ladders, developed in collaboration with the wealth management business.

Glenn Schorr asked about the alternative investment initiatives in asset and wealth management, specifically the mix of proprietary and third-party products. He also inquired if the technology backbone successful in UK semi-liquid funds could be applied to the U.S. market.

Answer

CEO Mike O'Grady explained the strategy involves both proprietary funds from 50 South Capital and an expanded platform of third-party funds for wealth clients, with a goal to nearly double fundraising. For servicing, he confirmed that while the capability is transferable, the technology and expertise must be customized for different regulatory structures like those in the U.S., Luxembourg, and Ireland.

Glenn Schorr requested more detail on the growth strategy for the Wealth Management business, including investments in people and products, and asked about the recently announced collaboration with Hamilton Lane.

Answer

Jason Tyler, new President of Wealth Management, detailed a strategy to invest more aggressively in the ultra-high-net-worth segment, leveraging the firm's deep expertise. CEO Mike O'Grady clarified that the Hamilton Lane partnership is with the Asset Servicing business to provide enhanced data and analytics for institutional clients' private market investments.

Glenn Schorr with Evercore asked John Woods for his fresh perspective on why State Street's net interest income (NII) has struggled to grow compared to peers, inquiring about client mix differences and expectations for NII performance in 2026 and beyond. He also asked about institutional outflows in investment management and State Street's longer-term aspirations for actively managed products outside its core ETF and passive business.

Answer

CFO John Woods stated that deposit levels and mix are key drivers for the balance sheet, anticipating macro tailwinds from an easing rate cycle and strong AUC/A growth. He noted that rate stability outside the U.S. would reduce headwinds. CEO Ron O’Hanley clarified that institutional outflows were mostly from one client and emphasized expanding actively managed fixed income and partnerships (e.g., Apollo, Blackstone) while maintaining a focus on scalable, repeatable revenues.

Glenn Schorr of Evercore inquired about the dynamics of State Street's Net Interest Income (NII), noting its trend appears different from peers, and also asked for thoughts on recent M&A rumors in the custody banking sector.

Answer

Interim CFO Mark Keating detailed the puts and takes for NII, reaffirming the 'roughly flat' full-year guidance. He cited headwinds from lower short-term rates being offset by strong loan growth and higher deposit levels, albeit with a less favorable mix. CEO Ronald O'Hanley declined to comment on specific market rumors but reiterated that while their M&A bar is high, they consistently evaluate opportunities that complement their organic growth strategy.

Inquired about market share potential from the back-office-focused sales strategy and how relationships are expanded from there. Also asked about the reinvestment strategy for incoming deposits and its impact on NIM.

Answer

Management believes they are gaining share, noting that back-office wins are often part of broader Alpha deals and typically include FX and securities finance relationships. They are front-loading back-office installations for faster revenue. Regarding deposits, they confirmed the assumption that reinvestments will be kept short in the current environment, which could cause the NIM to float down slightly.

Glenn Schorr from Evercore ISI asked for details on the prime services business and its role in client support, and also questioned the key factors driving the recent organic growth inflection at State Street Global Advisors (SSGA).

Answer

CFO Eric Aboaf explained that prime brokerage is an integral part of supporting hedge fund and multi-manager clients, where providing capital drives significant cross-sell opportunities in servicing, FX, and deposits. CEO Ron O'Hanley attributed SSGA's rejuvenated growth to launching around 60 new products (mostly ETFs), expanding into the retail intermediary market with low-cost funds, and forming strategic sub-advisory partnerships.

Glenn Schorr inquired about BNY Mellon's net interest income (NII) growth, balance sheet de-risking, and interest rate risk management approach in a potentially lower rate environment, following strong NII performance.

Answer

CFO Dermot McDonogh attributed NII strength to sophisticated tools, risk management, and proactive balance sheet positioning. He noted that seasonal deposit declines were offset by capital markets activity, CLO space, and M&A escrows, guiding Q4 NII to be approximately flat sequentially.

Glenn Schorr inquired about BNY's NII growth, specifically the 18% this quarter and the 12% year-on-year projection for next quarter, and how the company has adjusted its interest rate risk management approach in anticipation of a lower rate environment.

Answer

CFO Dermot McDonogh highlighted the significant investment in BNY's risk management tools and scenario analysis over the past three years, providing confidence in the balance sheet's strength. He attributed Q3 NII strength to proactive management and client activity in CLO and M&A escrows, which offset seasonal deposit declines. He projected Q4 NII to be flat sequentially and confirmed that Q4 serves as a solid base for 2026 NII, reflecting proactive balance sheet repositioning.

Glenn Schorr of Evercore ISI focused on the Investment Management segment, asking about the investments and strategies being implemented to improve its performance, given recent outflows and margin pressure. He also questioned why the full-year fee revenue outlook remained cautiously worded despite strong first-half results and a good market backdrop.

Answer

CFO Dermot McDonough credited the new segment leader with rightsizing the business for efficiency and noted a significant margin improvement from Q1 to Q2. CEO & Director Robin Vince added that a key focus is on improving product development and distribution, leveraging the firm's strong manufacturing capabilities (like Insight and Dreyfus) with its vast distribution channels (like Pershing) more effectively. Regarding guidance, McDonough stated that while momentum is strong, the firm is not yet ready to give specific fee guidance due to market dependency and the newness of its commercial model.

Glenn Schorr noted the contrast between strong year-over-year growth and flatter sequential results, asking if the sequential performance was indicative of the outlook for 2025 or simply a matter of timing.

Answer

CFO Dermot McDonogh confirmed that the sequential flatness was due to the timing of client onboarding and revenue recognition. He affirmed that the business backlog and client pipeline remain strong, and that momentum is expected to continue into the new year.

Glenn Schorr inquired about areas where Morgan Stanley could deploy more excess capital at a higher pace to drive growth, whether organically or inorganically, to broaden the platform and enhance future growth.

Answer

Chairman and CEO Ted Pick affirmed the sacrosanct dividend and opportunistic buybacks, but emphasized a strong bias for internal organic investment in adjacent or orthogonal areas like digital assets, E*TRADE Pro, workplace, Zero Hash, and the bank. He outlined a 'strategy, culture, timing, price' test for inorganic opportunities, noting the firm's successful integration history but cautioning against 'winner's curse.'

Glenn Schorr of Evercore asked why Asset Management was not highlighted for capital deployment and how the firm balances its business mix. He also requested an outlook for Net Interest Income (NII) in a falling rate environment.

Answer

Chairman & CEO Ted Pick clarified that the omission of Investment Management was unintentional, praising its strong flows, but noted the firm is very selective about acquisitions, preferring strategic fits over simple roll-ups. EVP & CFO Sharon Yeshaya explained that while lower rates can be a headwind for NII, they typically drive inflows to sweep accounts, and highlighted that growing lending balances provide a positive forward indicator.

Glenn Schorr asked for clarification on the drivers of Morgan Stanley's strong trading results, seeking to distinguish between a favorable market environment and durable, structural improvements within the Institutional Securities Group (ISG).

Answer

Executive Ted Pick explained that the strong performance is a result of a multi-year strategy to create an 'integrated investment bank' by mobilizing talent across equities, fixed income, and investment banking. He highlighted prudent deployment of risk-weighted assets (RWAs) and a focus on expanding wallet share in a growing market. Pick noted that the firm gained approximately 100 basis points in investment bank wallet share in 2024 and is well-positioned for the M&A cycle ahead, emphasizing the goal is for durable, not concentrated, share gains.

Glenn Schorr questioned the drivers behind the 10% increase in Risk-Weighted Assets (RWA), asking if it was temporary or part of a strategic plan. He also inquired if this implied any material shift in the firm's business mix away from Wealth Management.

Answer

CFO Sharon Yeshaya clarified that the RWA growth was primarily in the Institutional Securities Group (ISG), driven by corporate lending to support the investment banking recovery, not episodic trading. Co-President Ted Pick added that ISG revenues grew 20% year-over-year while trading risk (VAR) remained flat, demonstrating operating leverage. They did not signal a material shift away from the current business mix.

Glenn Schorr contrasted the firm's strong trading results with the typically negative outcomes of regulatory stress tests, asking for perspective on this difference. He also requested details on the Q1 loan loss provision and the source of gains in 'Other' revenue.

Answer

CFO Sharon Yeshaya explained that regulatory stress tests are broad, blanket exams that differ from the firm's more tailored internal tests, advocating for a holistic review of the capital regime. She clarified the Q1 provision was driven by a more cautious GDP outlook and that the gain in 'Other' revenue came from the successful sale of corporate loans, which created new balance sheet capacity.

Glenn Schorr asked about the potential for AI to drive significant efficiency and margin improvement across the franchise, beyond current digitization efforts.

Answer

Chair and CEO Brian Moynihan explained that applied technology, including AI, consistently drives efficiency, citing a reduction in headcount over 15 years and the Erika platform handling 2 million customer interactions daily. He noted that while AI's impact on expenses is felt, some savings are reinvested for faster growth, and implementation requires careful data management and regulatory compliance.

Glenn Schorr inquired about the potential of AI as a significant efficiency driver for Bank of America, questioning why its impact on future margins isn't more explicitly discussed, despite acknowledging current operating leverage.

Answer

Brian Moynihan (Chair and CEO, Bank of America) explained that applied technology, including AI, consistently drives efficiency, citing a reduction in headcount over time despite increased activity volumes. He highlighted the scale of Erika's customer interactions (2 million in 24 hours) and its application across businesses, emphasizing that AI's impact on expenses is felt, with some savings reinvested for faster growth. He cautioned against specific timelines due to the need for accuracy in a regulated environment.

Glenn Schorr questioned the strategy for the sales and trading business, asking if the revenue gap to top peers was a conscious choice related to capital or risk. He also asked why the bank provided extra detail on its credit book now, and what was driving the increased attention.

Answer

An unnamed executive explained the trading business strategy is a "relentless climb" focused on consistent share gains rather than volatile grabs for revenue, supported by ongoing investment in capital and systems. CEO Brian Moynihan stated the enhanced credit disclosure was to remind investors of the bank's strength and preparedness for any potential economic downturn, similar to disclosures made in past periods of uncertainty.

Glenn Schorr asked about the bank's relative trading performance, noting its consistency versus peers' volatility, and questioned the implications for the economic outlook if the unemployment rate rose to the ~5% level used for reserving.

Answer

CEO Brian Moynihan explained that the trading business is designed for consistent, steady growth, resulting in less volatility than peers, as evidenced by 11 straight quarters of year-over-year growth. He clarified that the ~5% unemployment figure is a conservative input for reserve methodology, incorporating adverse scenarios, and not the bank's actual economic forecast, which anticipates unemployment remaining in the low 4% range.

Glenn Schorr asked for the current duration and mix of the securities portfolio and followed up on the impressive growth in Global Markets, asking where the lion's share of investments in people and balance sheet have been directed.

Answer

CFO Alastair Borthwick explained the securities strategy is to let the HTM portfolio run off to reinvest at higher yields and fund loan growth, rather than taking a specific rate view. Both Borthwick and CEO Brian Moynihan attributed the sustained Global Markets success to a long-term, multi-year investment strategy across the platform to fill gaps with existing clients, not a recent push in one specific area.

Glenn Schorr asked about the pace of stablecoin adoption, its importance to Citi's traditional banking and payments pipelines, and Citi's competitive position in this evolving space, including the potential for tokenization of all securities.

Answer

CEO Jane Fraser explained that Citi focuses on tokenized deposits for institutional clients, offering real-time, low-friction, and low-cost money movement. She highlighted the integration of Citi Token services with the 24/7 U.S. dollar clearing network. While stablecoins are an option, she noted more friction compared to tokenized deposits. She confirmed the potential for tokenization of all securities (e.g., oil, equities) to transform financial markets, with Citi ready to provide solutions in a regulated environment.

Glenn Schorr inquired about the pace of Stablecoin adoption, its importance to Citi's traditional banking and payments pipelines, and whether Citi is positioned to profit from this evolution. He also asked about the potential for tokenization of all securities.

Answer

CEO Jane Fraser highlighted Citi's focus on tokenized deposits for institutional clients, offering real-time, low-friction, and low-cost solutions. She detailed the integration of Citi Token services with the 24/7 U.S. dollar clearing network. While Stablecoin is an option, tokenized deposits are seen as more efficient. She confirmed the potential for tokenization of all securities to transform financial markets.

Glenn Schorr of Evercore ISI asked about the progress in Investment Banking and Markets, particularly if growth in areas like prime services and leveraged finance is being driven by new hires and an increased willingness to deploy the balance sheet. He also inquired about the outlook for loan yields across the businesses amid excess capital in the system.

Answer

CEO Jane Fraser confirmed there is a good opportunity to deploy more balance sheet for high-return RWA in areas like prime brokerage and private capital financing, guided by a disciplined allocation process. CFO Mark Mason added that while there is some spread compression, the firm is seeing good loan growth at good yields in areas like trade finance and cards, and expects to see continued growth in private credit, contributing to NIM improvement.

Glenn Schorr of Evercore ISI asked about the progress in Investment Banking and Markets, particularly if recent share gains required greater balance sheet commitment. He also inquired about the outlook for loan yields amid excess capital in the banking system.

Answer

CEO Jane Fraser confirmed that there are good, high-return opportunities to deploy more balance sheet in areas like prime services and private capital financing while maintaining discipline. CFO Mark Mason noted that while there is some spread compression, the firm is seeing good loan growth and yields in trade finance, cards, and private credit, and feels good about the returns being generated.

Glenn Schorr asked for an update on Citigroup's Treasury and Trade Solutions (TTS) business, specifically regarding the opportunities and risks presented by global retariffing and the redrawing of economic lines.

Answer

CEO Jane Fraser explained that Citigroup's diversified business mix and broad suite of products position it well to help clients reposition for a new trade order. She highlighted that client engagement is 'off the charts' and that while the revenue mix might shift, the bank's deep, long-standing local presence makes it less vulnerable to geopolitical dynamics. She reaffirmed the firm's 2026 ROTCE targets of 10% to 11%, noting the drivers remain the same even if the revenue composition changes.

Glenn Schorr inquired about the trajectory of card losses in Retail Financial Services, the 2024 exit rate, and the rationale behind the private credit partnership with Apollo.

Answer

CFO Mark Mason explained that Retail Services loss rates are impacted by lower spend volumes and payment rates but remain within guidance, supported by healthy reserves. CEO Jane Fraser described the Apollo partnership as a way to offer clients more innovative financing solutions at scale, noting the potential for more such partnerships in the future.

Glenn Schorr asked about the private equity cycle, questioning why TPG is seeing strong fundraising and performance while industry surveys suggest LPs are overweight and facing low distributions.

Answer

CEO Jon Winkelried explained that TPG's success stems from strong, consistent performance and intentional fund management, particularly in driving exits and returning capital. He stated that TPG is gaining market share with its largest LPs, who are increasing their commitments, and that the private equity asset class remains durable for alpha generation.

Glenn Schorr asked for details on TPG's strategy to broaden its scale in credit post-Angelo Gordon acquisition and how recent market pressures might affect its plans for expanding into the insurance sector.

Answer

CEO Jon Winkelried outlined several growth drivers for credit, including scaling the Twin Brook platform, moving into larger lending opportunities, growing the CLO platform, and expanding in Europe. Regarding insurance, he reiterated a focus on strategic partnerships to drive long-dated capital flows, noting TPG is in dialogue with potential partners but aims to remain mindful of its balance sheet and not become an insurance company.

Glenn Schorr asked how Fee-Related Earnings (FRE) growth is expected to correlate with the firm's AUM growth aspirations and requested a more quantitative definition of the 'significantly more capital' TPG expects to raise in 2025.

Answer

CEO Jon Winkelried described FRE growth as a 'stair-step function' that follows the scaling of new strategies. CFO Jack Weingart added that as AUM approaches the $400-$500 billion range, operating leverage should increase, pushing the FRE margin into the 50s. He projected that FRE should ultimately expand faster than AUM.

Glenn Schorr asked for more specific guidance on the potential FRE growth range over the next few years and questioned why the Hudson Yards lease and IT integration costs were classified as 'noncore' expenses.

Answer

CFO Jack Weingart clarified that the expenses are considered noncore because they are one-time strategic costs related to office consolidation and IT platform integration, which are expected to be accretive to FRE in the long run. CEO Jon Winkelried added that significant fee-related revenue growth is expected in 2025 and 2026, driven by flagship funds, which supports the FRE margin guidance of approaching the mid-40s by the end of 2025.

Glenn Schorr of Evercore ISI questioned if strong returns in the secondaries space could be sustained given the large capital inflows into the industry and potentially narrowing discounts.

Answer

CFO John Redett expressed confidence, citing strong secular tailwinds and comparing the industry to private equity 10-15 years ago. CEO Harvey Schwartz added that as a "hyperscaler," Carlyle's Alpinvest is not just a secondaries player but a broad solutions business encompassing co-invests, primaries, and portfolio finance, which provides a competitive advantage.

Glenn Schorr of Evercore ISI questioned the sustainability of strong returns in the secondaries business, given the large influx of industry capital and potentially narrowing discounts.

Answer

CFO John Redett noted the secondary industry is still developing, comparing it to where private equity was 10-15 years ago, with strong secular tailwinds and only a handful of large-scale players. CEO Harvey Schwartz added that Carlyle is a 'hyperscaler' in the space and that the business is more than just secondaries; it's a 'corporate finance solutions business' encompassing co-investments, primaries, and portfolio finance, which provides a key strategic advantage and value to clients.

Glenn Schorr asked two questions: first, whether asset-backed strategies are being developed in dedicated funds or within existing structures, and second, about the evolution and growth impact of perpetual products within the Global Investment Solutions business.

Answer

CEO Harvey Schwartz confirmed that a dedicated fund for asset-backed finance is being raised, building on the firm's experience with its Fortitude affiliate. Regarding Solutions, he described it as a top growth area and stated that Carlyle expects to continue expanding partnerships throughout the year, implying further development of various products.

Glenn Schorr observed that the 2% year-over-year growth in management fees doesn't seem to reflect the firm's highlighted momentum. He asked about the potential path to achieving double-digit management fee growth as dry powder is deployed.

Answer

CFO John Redett pointed to the 7% growth in total fee revenue, which was significantly driven by a more than 80% increase in capital markets fees—a balance-sheet-light business. He acknowledged headwinds in private equity management fees but highlighted strong growth in solutions (up 45%) and credit (up 11%). CEO Harvey Schwartz added that the firm-wide momentum is just beginning to translate into top-line results.

Glenn Schorr asked about Franklin's private credit strategy, specifically how the firm plans to integrate its acquisition of Apera and grow the platform organically.

Answer

President, CEO & Director Jennifer Johnson explained that the goal is not to have standalone entities but to create a single, integrated private credit group. She referenced the successful integration of Alcentra and stated the combined platform, including Apera, will be viewed as one $90 billion private credit manager, leveraging the broader firm for sourcing and distribution to capitalize on specialized areas like middle-market direct lending.

Glenn Schorr from Evercore ISI asked about the 'Alternatives by Franklin Templeton' advertising strategy, the firm's potential to capture a share of the growing retail alternatives market, and whether it needs to add new asset class capabilities.

Answer

CEO Jennifer Johnson cited the firm's deep roots in the wealth channel, distribution scale, and strong product lineup as key advantages. Head of Global Distribution Adam Spector noted they are broadening distribution for their perpetual funds and educating new advisors. CFO Matthew Nicholls clarified that while the firm has liquid infrastructure and infrastructure debt, they are looking to acquire a private equity infrastructure capability to round out their offerings.

Glenn Schorr from Evercore ISI referenced the success in the retirement channel and asked if the persistent equity outflows were concentrated outside of retirement accounts, and what the fee rate implications were between these different channels.

Answer

President, CEO & Chair Robert Sharps acknowledged elevated equity outflows but highlighted progress in other areas like fixed income, alternatives, and ETFs. He explained that the DC channel is performance-sensitive, which has impacted equity flows. He noted that since the Pension Protection Act, most DC flows go to target-date funds rather than standalone equity. CFO Jennifer Dardis added that the firm has diversified its target-date client base and product suite to access different market segments.

Glenn Schorr asked about client demand for hybrid public and private investment products, particularly in fixed income, and whether the Aspida partnership involves active management across both asset classes.

Answer

CEO Robert Sharps explained that while the convergence of public and private markets is a key topic, the Aspida relationship is based on identifying specific areas where T. Rowe Price and OHA can add value, rather than a set hybrid allocation. He noted that OHA has a long history of managing multi-strategy credit funds that invest across liquid public and private assets, and the firm is exploring similar structures for the wealth channel.

Glenn Schorr asked how close the industry is to seeing private market allocations in target-date funds and how T. Rowe Price plans to leverage its brand and distribution network for private market products.

Answer

CEO Rob Sharps stated that significant adoption is unlikely until there is regulatory clarity, which is currently lacking. He cited key hurdles including the fee-sensitive nature of the DC market, operational challenges like daily pricing and liquidity on recordkeeping platforms, and plan sponsor concerns about litigation. However, he emphasized that when the time comes, T. Rowe Price will be an 'extraordinarily attractive partner' due to its internal capabilities and partnerships, ensuring any offering is compelling for sponsors and participants.

Glenn Schorr of Evercore ISI inquired about Blue Owl's strategy and origination channels for the asset-backed finance market, asking how the firm is building out its capabilities in this significant growth area.

Answer

Co-CEO Marc Lipschultz explained that Blue Owl is in a distinctive position to lead in asset-backed finance, leveraging an expert team, advanced technology, and broad origination capabilities. He compared the strategy to their successful triple-net lease playbook: acquiring a market leader, creating accessible products like the new interval fund, and integrating it with Blue Owl's extensive origination and insurance platforms to deliver superior, less correlated returns for investors.

Glenn Schorr asked about the disparity between Blue Owl's strong FRE growth and its more modest earnings per share growth, and inquired about the timeline for diversification benefits to accelerate EPS growth to the company's target of around 20%.

Answer

Chief Financial Officer Alan Kirshenbaum explained that a temporary gap between FRE and FRE per share growth exists due to the integration of recent acquisitions, particularly IPI. He reiterated the company's five-year target of approximately 20% growth in FRE per share, expecting the gap to narrow significantly as they move into 2026 and 2027.

Glenn Schorr of Evercore ISI inquired about the gross-to-net deployment ratio in the credit business, questioning if the recent levels reflect the deal environment or the attractiveness of available deals.

Answer

Co-Chief Executive Officer Marc S. Lipschultz explained that the high gross deployment in a tepid M&A market is a sign of strength. He noted that the gross-to-net dynamic is driven by refinancings, which is a credit-enhancing exercise that demonstrates the power of incumbency, rather than a negative market signal about deal attractiveness.

Glenn Schorr asked about synergies from recent acquisitions beyond the wealth channel, focusing on institutional cross-selling opportunities and the potential to offer a full-solution platform to LPs.

Answer

Co-Chief Executive Officer Marc Lipschultz confirmed that institutional cross-selling is a key part of the strategy, noting the limited LP overlap with acquired firms like IPI presents a significant opportunity. He clarified that Blue Owl aims to be a 'best-of-breed' provider in specific, durable, income-focused areas rather than an 'all things to all people' platform, leveraging the deep expertise of acquired teams like Atalaya and IPI to attract institutional capital.

Glenn Schorr asked about Goldman Sachs's plans for its excess capital following regulatory changes and questioned the difficulty in harvesting investments amid a strong M&A and IPO market.

Answer

Chairman & CEO David Solomon stated that the first priority for excess capital is deploying it for accretive returns by supporting the client franchise. He noted that returning capital to shareholders via dividends and buybacks is the next focus. CFO Denis Coleman explained that while public markets are improving, the environment for monetizing private equity assets remains less robust, though they are making steady progress on the remaining portfolio. David Solomon added that the tail-end of the portfolio contains 'stickier' assets.

Glenn Schorr asked about the impact of recent market deleveraging on Goldman Sachs's financing revenues, particularly given the record prime brokerage balances in the first quarter.

Answer

Denis Coleman, an executive at Goldman Sachs, acknowledged that while record prime balances were achieved, it's reasonable to expect some decline as asset prices reset. However, he did not characterize the impact as 'material or major,' citing offsetting client activities like portfolio repositioning.

Glenn Schorr of Evercore ISI questioned the impact of Goldman Sachs's strong trading performance on regulatory perceptions and asked how to model future returns from the shrinking historical principal investments (HPI) portfolio.

Answer

CEO David Solomon stated that while the firm advocates for a better regulatory process, its primary job is to adapt. He emphasized the durability of the markets franchise, bolstered by growth in financing revenues. Regarding HPI, CFO Denis Coleman advised that as the portfolio shrinks, associated revenue will decrease, but the firm will retain co-invest positions to drive its third-party fund management business. He declined to provide specific future return guidance.

Glenn Schorr asked why the firm's trading results have been so strong amid volatility, questioning if it's due to better systems and risk management or if certain types of volatility are still considered 'bad' for business.

Answer

An executive, likely Jeremy Barnum, explained that while the franchise is always improving, the recent strong performance was also due to very favorable market conditions. He confirmed that 'bad volatility'—dislocated markets with low volume—still exists and can be a headwind. CEO James Dimon added that wider bid-ask spreads are generally better for the business. Barnum concluded that despite the strong quarter, the need for broader regulatory fixes remains.

Glenn Schorr of Evercore ISI asked about JPMorgan Chase's strategy and competitive position in private credit, noting the growth of alternative managers in the space.

Answer

CEO James Dimon detailed a strategy centered on providing clients with an agnostic choice between direct lending and syndicated lending. He revealed the firm has allocated $10 billion, with the potential for more, to make direct loans and will partner with multiple co-lenders rather than a single exclusive partner to maintain flexibility. Dimon acknowledged the capital arbitrage disadvantage for banks but expressed confidence in their ability to compete by focusing on the entire client relationship.

Glenn Schorr questioned why EPS growth was only 5% despite strong revenue and margin growth, and asked if future initiatives are expected to accelerate earnings growth.

Answer

Executive Martin Small clarified that the primary driver for the modest EPS growth was the effective tax rate. The current quarter's 26% rate included a $22 million discrete expense, which compared unfavorably to a significant $223 million discrete tax benefit in the prior-year quarter. He affirmed the firm's goal is to deliver double-digit EPS growth over time.