• BNY Mellon aims to improve its Return on Tangible Common Equity (ROTCE) to 23%, up from approximately 21.5%, by focusing on higher organic growth, expense management, and stock buybacks over the medium term.
• The company is optimistic about achieving higher organic fee growth through strategic investments, appointing a Chief Commercial Officer, and de-siloing the organization to enhance efficiency and integration.
• Strong momentum in Asset Servicing and Market and Wealth Services, along with investments like the Wove platform, are expected to drive revenue growth and improve pretax margins, with Q4 sales being the strongest of 2023 and a positive outlook for 2024.

• The company expects net interest revenue to decrease by approximately 10% year-over-year in 2024, which could impact overall profitability.
• Reluctance to provide specific revenue growth targets due to past inconsistencies in achieving organic growth, indicating potential challenges in sustaining revenue growth.
• Dependence on favorable market conditions, such as increasing equity markets and normalization of FX volatility, to achieve projected fee revenue growth, which poses risks if these conditions do not occur as expected.

1. NII and Deposit Outlook with Expected Rate Cuts
   Q: How will rate cuts affect NII and deposits?
   A: We expect net interest income to decrease by 10% in 2024 due to anticipated rate cuts. If rates decline as projected with six cuts this year, deposit balances might increase; however, if rates remain higher for longer, we anticipate continued deposit outflows. We begin the year strong with $273 billion of average deposits in Q4, feeling confident about our net interest margin for 2024.

2. Fee Revenue Growth Guidance
   Q: Are fees expected to grow only 3% in 2024?
   A: While your calculations might suggest a 3% fee growth, we haven't provided specific fee revenue guidance due to various factors influencing the year. We are committed to achieving flat to positive operating leverage and are focusing on the areas we've discussed.

3. Medium-term Return Targets
   Q: How will you increase returns to 23% medium-term?
   A: We aim to boost returns through a combination of higher organic fee growth, driven by de-siloing the organization and investments in growth areas, and by enhancing efficiency. We expect FX revenue to normalize and are optimistic about mid-single-digit equity market appreciation supporting fee growth. Additionally, we'll continue digitizing and automating processes to deliver more for clients, enabling us to buy back more stock and drive higher ROTCE and pretax margin.

4. Impact of Automation on Securities Services Revenue
   Q: Will digitization boost revenue or just reduce costs?
   A: By automating processes and improving client experience, we expect not only to reduce the cost to serve but also to enhance revenue as clients consolidate business with us. In 2023, we had our strongest sales quarter in Asset Servicing and enter 2024 with a healthy pipeline.

5. Expense Management and Operating Leverage
   Q: How will you manage expenses with NII declining?
   A: We are committed to achieving positive operating leverage and plan to maintain flat expenses in 2024 despite a projected 10% decline in NII. Our focus is on running the company better through financial discipline and engaging all employees in expense management.

6. Use of Capital: Buybacks vs. M&A
   Q: Will you consider M&A over stock buybacks?
   A: We prioritize investing capital profitably in the business and returning surplus capital to shareholders through buybacks. While we're focused on improving our existing operations, we remain open to M&A opportunities that could accelerate our strategy, but we maintain a high bar for such deals.

7. AI Implementation and Impact
   Q: How will AI affect your business?
   A: We're excited about AI's potential over the medium term. We've established an AI Hub, developed use cases across businesses, and have applications already in production. While we haven't quantified the impact yet, we anticipate AI will provide benefits on both the top and bottom lines over the next decade.

8. Deposit Trends and QT Impact
   Q: How will QT affect deposits in 2024?
   A: Our net interest income outlook assumes that quantitative tightening (QT) continues. If QT ends, it could positively impact deposit balances, but that's not our base case. We expect deposits to decrease in 2024 but remain prepared to adjust if conditions change.

9. Pricing Environment in Securities Services
   Q: Is pricing pressure intensifying in Securities Services?
   A: The pricing environment remains stable, and we've become more sophisticated in pricing our services. By analyzing client profitability and adjusting our strategies, we see positive momentum in pricing.

10. Asset Servicing Sales and Backlog
    Q: What is the status of new business wins and backlog?
    A: While we don't provide specific numbers, we had our strongest sales quarter in Asset Servicing in 2023 and feel very positive about mandates won and the pipeline heading into 2024. We're optimistic about opportunities ahead.

[Numbers in brackets refer to the document index in the provided materials]