NII Guidance and Seasonality
Q: Explain factors affecting NII guidance and seasonal impact?
A: Dermot highlighted that NII guidance remains cautious due to expected seasonal declines in Q3, as Q1 and Q2 are typically strong, while Q3 is usually quieter. Despite outperforming expectations in the first half, he sees no point in changing guidance now, remaining "cautiously optimistic" and expecting NII to be somewhat seasonally lower in Q3.

Impact of Potential Fed Rate Cuts
Q: How would Fed rate cuts affect NII and balance sheet?
A: Dermot stated the balance sheet is positioned to be "roughly flat" in response to expected rate cuts. With cumulative betas in the "low 80s" for dollars and "high 50s to low 60s" for euros and sterling, NII wouldn't be significantly impacted by small rate moves, and they feel "very well positioned" for expected cuts.

Fee Revenue Growth Drivers
Q: What drives fee revenue growth amid stable NII?
A: Robin explained that their strategy focuses on fueling organic growth and positioning businesses to respond to market growth tailwinds. Investments in innovation, such as in the U.S. treasury market and the 1BNY campaign, aim to build momentum in fee revenue despite market dependencies.

Repo Activity Contribution
Q: How significant is repo activity to NII growth?
A: Dermot noted that cleared repo makes up about 5% of NII today and is not a material driver of year-over-year NII change. However, it's an important product meeting client needs, with BNY Mellon being a top 3 provider in the space.

Pershing Business and Wove Platform
Q: What's the outlook for Pershing and Wove platform?
A: Dermot mentioned that client departures will be fully out by Q3, and they've signed 21 clients for Wove this year, with revenue guidance of $30 million to $40 million for the year. They expect mid-single-digit underlying core growth through the cycle.

Operating Leverage and Expense Management
Q: How are expenses managed to maintain operating leverage?
A: Dermot emphasized focusing on "running the company better," aiming for flat expenses despite revenue-related pressures. The goal is to deliver positive operating leverage, investing where necessary without just increasing expenses because revenues are better.

1BNY Initiative and Client Solutions
Q: How is the 1BNY initiative impacting growth?
A: Robin stated that integrating products into true solutions for clients is maturing their commercial model. Dermot added that business won touching more than one line of business has increased by one-third, reflecting success in breaking down silos and offering bundled solutions.

Deposit Mix and Seasonality
Q: What's driving the expected decline in deposits?
A: Dermot explained that both the overall deposit balance and non-interest-bearing deposits (NIBs) are expected to decline due to seasonal factors, which is the main driver of the NII change.

Corporate Trust and CLO Activity
Q: How is Corporate Trust performing?
A: Dermot highlighted Corporate Trust as a "very good opportunity." Investments in technology and leadership have led to doubled activity in CLOs over the last 12 months, improving market share.

T+1 Settlement Impact
Q: What's the impact of T+1 on revenue and expenses?
A: Dermot stated that T+1 is not about revenue or expenses but about delivering a "complicated change project" with "A+ execution" for clients and the financial market infrastructure.

Effect of ECB Rate Cut
Q: How did the ECB rate cut affect deposit costs?
A: Dermot mentioned that euros represent roughly 10% of the total portfolio. The cumulative betas in euros, at high 50s to low 60s, held up as expected when the ECB cut rates, behaving as anticipated.

Balance Sheet Positioning Amid QT
Q: How is the balance sheet positioned amid QT easing?
A: Dermot stated they do extensive modeling for various scenarios, maintaining a "vanilla, liquid" balance sheet prepared to withstand a wide range of outcomes. Robin emphasized being prepared for different possibilities due to global uncertainties.

Investment and Wealth Management Margins
Q: Timeline for returning to 25%+ margins in Investment and Wealth Management?
A: Dermot affirmed the goal of returning to a 25% margin over a few years, with a 200 basis point increase over the last year due to tough decisions and expense discipline.

Breaking Down Organizational Silos
Q: How is BNY Mellon breaking down silos?
A: Robin attributed progress to cultural initiatives, investing in people, and creating a flywheel effect where employees deliver integrated solutions for clients, leading to better outcomes. Though not complete, significant strides have been made.

Balance Sheet Asset Growth
Q: What's driving growth in loans and securities?
A: Dermot credited the CIO team's strategic deployment where they see opportunities, including picking up up to 200 basis points as securities roll off into higher-yielding assets, and extending credit to clients as part of their business activities.

Clearance and Collateral Management Growth
Q: Source of higher clearance volumes?
A: Dermot said growth is due to both increased client activity from market volatility and winning new business through innovation. He expects this positive trend to continue in the near term.

T+1 Costs and Capital Impact
Q: Does T+1 reduce costs or free up capital?
A: Robin explained that the P&L impact is "pretty de minimis," with no significant changes in costs or spreads. It's more about assisting clients and improving market efficiency during this market inflection.

Depository Receipt Fees Outlook
Q: How to think about depository receipt fees?
A: Dermot mentioned they have good market share in depository receipts and expect that to continue, with opportunities to leverage scale and technology similar to Corporate Trust.

Effectiveness of 1BNY Culture Change
Q: How effective is the culture shift in breaking silos?
A: Robin emphasized that focusing on culture is key. By investing in people and fostering a collaborative environment, they've seen better client outcomes and bottom-line results, though there's still work to do.

Investment in Wove Attracting New Clients
Q: Are Wove clients new or existing?
A: Dermot stated it's both new and existing clients, and they're not cannibalizing existing business. Robin added that Wove is expanding to deliver broader capabilities, attracting clients beyond clearing and custody services.

Impact of Quantitative Tightening on Balance Sheet
Q: How will QT affect the balance sheet over 12–18 months?
A: Dermot said they model various scenarios, ensuring preparedness. Robin added they're maintaining a conservative and agile balance sheet to handle different outcomes amidst global uncertainties.

Trajectory of Core Servicing Fee Growth
Q: Where will core servicing fee growth go?
A: Robin indicated that while each year may vary, the focus is on delivering positive operating leverage, with higher fee growth being an important component over time.

Impact of Seasonal Deposit Decline on NII
Q: Is NII decline driven by seasonal deposit changes?
A: Dermot confirmed that the expected NII decline reflects seasonal decreases in deposits, particularly NIBs, which is the main driver.