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BNY is the world’s largest custodian bank and securities services company, holding over $55 trillion in assets. It’s also one of the biggest asset managers in the world with roughly $2.1 trillion in funds. BNY serves over 90% of Fortune 500 companies, as well as central banks and sovereign wealth funds, family offices, and other financial institutions. Founded in 1784 by Alexander Hamilton, the Bank of New York merged with Mellon Financial Corp. in 2007 to create the current company.

Q4 2025

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Q4 2024

Bank of New York (BNY) (BK): Company Profile, Stock Price, News, Rankings

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Bank of New York (BNY)

bank of new york (bny)

Good morning and welcome to the 2025 Fourth Quarter Earnings Conference Call hosted by BNY. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference call and webcast will be recorded and will consist of copyrighted material. You may not record or rebroadcast these materials without BNY's consent. I will now turn the call over to Marius Merz, BNY Head of Investor Relations. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to our Fourth Quarter Earnings Call. I'm here with Robin Vince, our CEO, and Dermot McDonogh, our CFO. As always, we will reference our Quarterly Update presentation, which can be found on the Investor Relations page of our website at bny.com, and I'll note that our remarks will contain forward-looking statements and non-GAAP measures. Actual results may differ materially from those projected in the forward-looking statements. Information about these statements and non-GAAP measures is available in the earnings press release, financial supplement, and Quarterly Update presentation, all of which can be found on the Investor Relations page of our website. Forward-looking statements made on this call speak only as of today, January 13, 2026, and will not be updated. With that, I will turn it over to Robin.

Thanks, Marius. Good morning, everyone, and thank you for joining us. I'll begin with a strategic update, and then Dermot will take you through our financial performance in the fourth quarter, our outlook for 2026, and our increased targets for the medium term as we look ahead toward the next phase on our journey to unlock BNY's full potential over the long term. Starting on page three of our Quarterly Update presentation, 2025 was another successful year for BNY. In short, we delivered record net income of $5.3 billion on record revenue of $20.1 billion and generated a return on tangible common equity of 26%. Total revenue grew by 8% year over year. In combination with expense growth of 3%, we drove 507 basis points of positive operating leverage on a reported basis and 411 basis points excluding notable items, resulting in an improved pre-tax margin of 35%.

Consistent execution delivered four consecutive quarters of positive operating leverage in 2025, bringing us to eight consecutive quarters overall. Taken together, we grew earnings per share by 28% year over year to $7.40 and returned $5 billion of capital to our shareholders through common dividends and share repurchases. This strong financial performance was the output of our work to reimagine BNY and was enabled by tangible progress across strategic priorities over the past year, which we highlight in the four boxes on slide four. First, our commercial model is working. Operating as one BNY, we are starting to bring the full breadth of the company together to deliver more products and services to meet our clients' needs.

This includes embedding sales practices and behaviors that enable our teams to deliver more and better for clients with greater consistency to drive deeper relationships with existing clients and open the door to new ones. We achieved record sales performance for the year, and we announced several noteworthy wins in the fourth quarter. Further deepening our relationship, WisdomTree selected BNY as their banking-as-a-service provider for the WisdomTree Prime platform. This solution brings together banking, payments, custody, and digital assets to support the growth of WisdomTree's new retail distribution model and its strategy on being a leading digital asset forward investment manager. Jupiter, an active asset manager, selected BNY for a suite of capabilities from front to back, from investment operations and data management all the way through to custody, streamlining their operating platform and positioning them for the future.

Japan's Government Pension Investment Fund selected BNY to deliver integrated data and analytics for private markets. This solution aims to help them manage complexity, enhance transparency, and improve decision-making across their growing alternative investments portfolio. Second, we continued to make progress in unlocking the scale and growth potential of our platforms by transitioning approximately half of our people into the platform's operating model over the course of 2025, which brings us to more than 70% of our people working in the model today. This initiative has been a core component of rewiring BNY to make us more agile and intentional in how we deliver to clients, but forms part of a larger collection of initiatives that are at the heart of running our company in a fundamentally different way. Third, in 2025, we made significant advances in the adoption of AI, underscoring our industry leadership in this burgeoning space.

Built upon very deliberate investments over the past several years, our enterprise AI platform, Eliza, is unlocking capacity for our people, allowing them to focus on higher-value work for our clients. We recently announced a collaboration with Google Cloud to integrate Gemini Enterprise capabilities into our Eliza platform, enhancing our ability to support deep research, analysis, and data-intensive workflows across the company, building on existing collaborations with OpenAI and others. These collaborations underscore our commitment to deploying AI responsibly and at scale. We expect that over time, AI will allow us to remake many of our processes and systems in new and exciting ways, and that together with embedding AI in our products and services represents a significant opportunity for our company in the years ahead.

Fourth, BNY has a rich 241-year history of innovation, from issuing the first loan to the U.S. government to becoming the first U.S. GSIB to offer digital asset custody. Our focus on innovating new products and solutions is centered on building trusted market infrastructure for the long term and serving our clients in new and evolving ways, including increasing delivery of new capabilities connecting the traditional and digital asset worlds. This past quarter, for example, we launched the Dreyfus Stablecoin Reserves Fund, a government money market fund designed to support stablecoin issuers and institutional participants to manage eligible reserve assets, providing BNY's cash and liquidity solutions expertise to the growing digital payments ecosystem. Our recently announced tokenized AAA CLO strategy in partnership with Securitize brings high-rated structured credit product onto the blockchain, with BNY serving as sub-advisor and custodian of the underlying assets.

And just last week, we announced that we have taken the first step in our strategy to tokenize deposits by enabling the on-chain mirrored representation of client deposit balances on our digital assets platform. As we reflect on the scope of our market-leading businesses, our central position as a provider of financial market infrastructure, and the depth and breadth of our client relationships, traditional and digitally native, we believe that we are particularly well-positioned to advance the future of financial markets. From the very beginning of our work three years ago, we have taken a long-term view toward unlocking BNY's full opportunity as a financial services platforms company, with a commitment to disciplined execution and sustained value creation for our clients and shareholders over time. I'm going to touch briefly on some of the work that has brought us here, described on page five of our presentation.

Two years ago, we communicated our strategic roadmap and a set of medium-term financial targets for what we viewed as the first foundation-setting phase in a multi-year transformation of BNY. While there are elements of that work that will continue well into the future, we consider that this is the right moment to begin to turn the page toward our next phase. But before we get to that, I'll take the opportunity to reflect on our efforts, the impact that we've seen across our businesses and operations, and how this has started to translate into improved financial performance. As we embarked on the journey, we recognized early on that we had to work across several fronts at the same time, simplifying how we operate, improving execution, and delivering for our clients, and that how we did it as a team was essential to creating deep and enduring change.

Thorough strategic and financial business reviews demonstrated to us the powerful combination of capabilities within BNY. We are the number one custodian in the world and the number one collateral manager, the leading provider of issuer services, and the primary settlement agent for U.S. government securities. We operate a top-tier payments and liquidity franchise and offer our clients leading investments and wealth capabilities. Individually, these are market-leading businesses. Together, they represent a set of highly adjacent financial services platforms operating at the center of global financial markets, difficult to replicate at scale and increasingly valuable to our clients. To organize the company around execution, we deliberately framed our work across three simple elements of strategy, which we continue to focus on.

The first was clients, to be more for them, to deliver more of our existing products to our existing clients, to add new clients, to add new products, and to meet clients where they are with solutions tailored to their needs and responsive to market trends and opportunities. The second was on how we run our company. We knew we could do that better, simplifying, improving financial discipline, breaking down barriers, challenging the status quo, and reimagining our operating model as a platforms company. The third was culture. Simple to say, hard to do, but magical when it works. A collective sense of ownership, teamwork, and accountability all coming together to bring the other two key strategic pillars to life. This spirit of ownership and accountability is at the heart of our delivery.

It was important to us to build credibility and momentum through consistent execution toward better business and operational performance, some examples of which you can see on slide six. What has been and continues to be the single most compelling growth opportunity for BNY is doing more business with our existing clients. In 2024, we launched our new commercial model, designed to encourage our sales and service teams to raise their ambition, equip them with new tools, and to enable our people to deliver solutions from across BNY, leveraging the full breadth of our platforms. Over the last two years, the number of clients buying three or more of our services increased by more than 60%, and organic fee growth has climbed to 3%, reflecting good progress with even greater opportunity ahead.

In combination with stronger organic growth, we took steady, deliberate actions to reduce sensitivity to interest rates, driving more resilient top-line revenue growth in a range of macroeconomic environments. At the same time, our ongoing transition and increasing maturity in the platforms operating model is reducing friction and driving further productivity improvements. For example, investments in digitization and automation have meaningfully lowered the unit cost for processes like striking a NAV and settling a trade, and our people are building innovative AI solutions that we expect over time will have a meaningful impact across the company. We're proud that in 2025 alone, we deployed over 130 digital employees, industry-leading multi-agentic AI capabilities. Our digital employees work alongside our people, supporting them with tasks like validating payment details and remediating code vulnerabilities, allowing teams to focus on higher-value work and client outcomes.

Taken together, these metrics give glimpses into the how of our execution, milestones and examples, not endpoints, but helpful indicators that our strategy is working and that there continues to be meaningful opportunity ahead. Turning to slide seven. By centering the company on positive operating leverage as our north star, we created a clear, intuitive framework for our teams to execute on. The cumulative impact of our steady improvement year after year, while capitalizing on a relatively supportive market backdrop, has resulted in a meaningful improvement in BNY's financial performance over the last few years. More consistent revenue growth and deliberate expense management have resulted in positive operating leverage, margin expansion, and improved profitability, together driving double-digit annual earnings per share growth. Turning to slide eight.

When compared to BNY's financial performance over the prior decade, we can see the difference that consistent discipline, clear intent, and sustained execution make over time. More resilient top-line revenue growth has started to build, and better control of our expense base has allowed us to continue to self-fund important investments in future growth. While we're encouraged by this progress, we are not satisfied. Our work is far from complete. We remain humble and intensely focused on the opportunity ahead. To that point, I'll wrap up on slide nine with where we are headed next.

With the foundations largely in place and more of the people in their seats to help us execute, the next phase of our journey to unlock BNY's potential is about realizing scale and growth opportunities across our company as we mature in our new commercial and platform models, unlock capacity using AI, and in so doing, serve our clients in new and better ways, enabling the global financial markets and infrastructure of the future. Taken together, our focus for 2026 and over the medium term represents an exciting shift built on the work done over the past three years to enable higher growth and deliver on the competitive advantages embedded in BNY as we remain steadfast in our commitment to create value for you, our investors. I want to thank our teams around the world for their dedication to our clients and their commitment to reimagining our company.

We are entering 2026 with positive momentum, and we are excited for the work ahead of us. With that, I'll turn it over to Dermot to take you through the financials for the quarter in greater detail before reviewing our outlook for 2026 and our next set of milestones. Dermot.

Thank you, Robin, and good morning, everyone. I'm picking up on page 12 of the presentation with our results for the fourth quarter. Total revenue of $5.2 billion was up 7% year over year. Fee revenue was up 5%. This included 8% growth in investment services fees, primarily driven by net new business, higher market values, and higher client activity. Investment management and performance fees were flat, as growth primarily resulting from higher market values was offset by the impact of the mix of AUM flows and the adjustment for certain rebates we discussed in prior quarters.

Firmwide AUCA of $59.3 trillion increased by 14% year over year, reflecting client inflows, higher market values, and the favorable impact of a weaker U.S. dollar. Assets under management of $2.2 trillion were up 7%, reflecting higher market values and the weaker dollar, partially offset by cumulative net outflows. Investment in other revenue was $135 million in the quarter, including $43 million of other investment losses and $15 million of net securities losses. Net interest income increased by 13% year over year, primarily reflecting the continued reinvestment of maturing investment securities at higher yields and balance sheet growth, partially offset by deposit margin compression. Expenses of $3.4 billion were flat year over year on a reported basis and up 4% excluding notable items. This reflects higher investments and revenue-related expenses, employee merit increases, and the unfavorable impact of the weaker dollar, partially offset by efficiency savings.

Provision for credit losses was a benefit of $26 million in the quarter, primarily driven by improvements in commercial real estate exposure and changes in the macroeconomic forecast. Pre-tax margin was 36% on a reported basis and 37% excluding notable items, and return on tangible common equity was 27%. Taken together, we reported earnings per share of $2.02, up 31% year over year, and excluding notable items, earnings per share were $2.08, up 21%. Robin touched on our results for the full year earlier, but turning to page 13, I'd like to expand on some of the most important items. We grew total revenue by 8% year over year to a record $20.1 billion for the full year of 2025. Fee revenue was up 6%. We grew investment services fees by 8%, primarily driven by net new business, higher market values, and client activity.

Investment management and performance fees were down 2%, reflecting the mix of AUM flows and lower performance fees, partially offset by higher market values and the weaker dollar. Net interest income was up 15%, primarily driven by the reinvestment of maturing investment securities at higher yields and balance sheet growth, partially offset by deposit margin compression. Expenses of $13.1 billion were up 3% both on a reported and an operating basis. Excluding the impact of notable items, the increase reflects higher investments, employee merit increases, higher revenue-related expenses, and the unfavorable impact of the weaker dollar, partially offset by efficiency savings. Pre-tax margin was 35% on a reported basis and 36% excluding notable items, and return on tangible common equity was 26% for the year. As Robin noted earlier, we reported earnings per share of $7.40. Excluding notable items, earnings per share were $7.50, up 24% year over year.

On to capital and liquidity on page 14. Our Tier 1 Leverage Ratio for the quarter was 6%, down 9 basis points sequentially. Average assets increased by 3% on the back of deposit growth, and Tier 1 capital increased by $439 million, driven by capital generated through earnings and a net increase in accumulated other comprehensive income, partially offset by capital returns through common stock repurchases and dividends. Our CET1 ratio at the end of the quarter was 11.9%, up 17 basis points sequentially. Over the course of the fourth quarter, we returned $1.4 billion of capital to our shareholders, representing a total payout ratio of 100%. Our consolidated Liquidity Coverage Ratio, as well as the consolidated Net Stable Funding Ratio, remained unchanged at 112% and 130%, respectively. Next, Net Interest Income and balance sheet trends on page 15.

Net interest income of $1.3 billion was up 13% year over year and up 9% quarter over quarter. Like the year-over-year increase discussed earlier, the sequential increase was primarily driven by the continued reinvestment of maturing investment securities at higher yields and balance sheet growth, partially offset by deposit margin compression. Average deposit balances increased by 4% sequentially, reflecting 4% growth in interest-bearing and 1% growth in non-interest-bearing deposits. Average interest-earning assets were up 3% quarter-over-quarter. Cash and reverse repo balances increased by 4%, loans increased by 5%, and investment securities portfolio balances increased by 2%. Turning to our business segments starting on page 16. Security Services reported total revenue of $2.5 billion, up 7% year over year. Total investment services fees were up 11%. In asset servicing, investment services fees grew by 11%, primarily reflecting higher client activity and higher market values.

Asset servicing continues to show strong momentum as clients increasingly access the breadth of capabilities across our platforms to help them evolve their operating models. Sales wins over the course of the year showed broad-based growth across products and segments, with particular strength in custody and with alternative asset managers, banks, and broker-dealers, a testament to our targeted investments in the fastest-growing segments of the market. ETF AUCA of $3.8 trillion ended the year up 34% year-over-year, reflecting growth from the more than 2,500 funds serviced on our platform, which was up 22% year-over-year. Alternatives AUCA were up 10% year-over-year, including double-digit growth in private markets. We continue to invest in capabilities to support our clients' growth, including in retail alternatives with solutions spanning custody, fund servicies, corporate trust, FX, and hedging.

Broadly speaking, approximately half of all asset servicing wins this past year represented multi-line-of-business solutions, reflecting the growing effectiveness of our new commercial model and client demand for consolidating with trusted partners. In issuer services, investment services fees were up 12%, primarily driven by higher client activity in depository receipts, and in our corporate trust business, we're pleased with the momentum across our franchise and see significant multi-line-of-business opportunities ahead, especially with corporate and municipal clients. We maintained our number one position in conventional debt servicing, and in CLOs and munis, where we hold number two positions, we increased our market shares by 4 and 3 percentage points year over year, respectively. In security services overall, foreign exchange revenue was down 3% year over year, reflecting lower spreads on the back of lower volatility, partially offset by higher client volumes.

Net interest income for the segment was up 8% year over year. Segment expenses of $1.7 billion were flat year over year, reflecting higher investments and revenue-related expenses, employee merit increases, and the unfavorable impact of the weaker dollar, offset by efficiency savings and lower litigation reserves. Security services reported pre-tax income of $838 million at a 30% increase year over year and a pre-tax margin of 34%. It is worth highlighting that for the full year of 2025, security services reported a pre-tax margin of 33%. That was an improvement of 4 percentage points year over year and exceeded the medium-term target of equal to or greater than 30% that we established for this segment in December of 2021. Next, Markets and Wealth Services on page 17. Markets and Wealth Services reported total revenue of $1.8 billion, up 8% year over year. Total investment services fees were up 4%.

In Pershing, investment services fees were down 2%, reflecting client activity in the prior year quarter related to the deconversion of lost business, partially offset by higher market values. Net new assets were $51 billion in the fourth quarter, representing healthy growth from both new and existing clients. Over the course of 2025, we earned numerous wins from new $1 billion-plus wealth firms, and the business accomplished several multi-year contract renewals with key clients. Our commitment to serving multi-billion-dollar growth-minded wealth firms across a full suite of custody, clearing, lending, investment products, and wealth services is met with interest from existing and new clients. And we remain focused on capitalizing on the important opportunity to enable growth for breakaway advisors as their platform of choice.

For example, this past quarter, 71 West Capital Partners and VestGen Wealth Partners selected BNY Pershing to provide custody and clearing for their new independent full-service or RIA firms. In Clearance and Collateral Management, investment services fees increased by 15%, reflecting broad-based growth in collateral balances and clearance volumes. Average collateral balances of $7.5 trillion increased 15% year over year, and average settlements exceeded $1 million per day in the fourth quarter, reflecting higher market activity and new clients on our platform. Against a supportive backdrop from continued issuance and demand for U.S. Treasuries, we're focused on innovating solutions that help our clients optimize capital, meet evolving regulatory requirements, scale operational efficiency, and access market infrastructure and liquidity. In our Payments and Trade business, previously called Treasury Services, investment services fees were up 3%, primarily reflecting net new business.

Over the course of the year, this business has shown strong performance on the back of broad-based growth across products and regions. Solid growth and sales wins over the course of the year, enabled by our strategic investments in capabilities and talent, give us good momentum into 2026. Net interest income for the segment overall was up 20% year over year. Segment expense of $930 million were up 9% year over year, reflecting higher investments and revenue-related expenses, employee merit increases, and higher severance expense, partially offset by efficiency savings. Taken together, our Markets and Wealth Services segment reported pre-tax income of $882 million, up 9% year over year, and achieved a pre-tax margin of 49%. Turning to investment and wealth management on page 18. Investment and Wealth Management reported total revenue of $854 million, down 2% year over year.

Investment management fees were up 1%, driven by higher market values and the favorable impact of the weaker dollar, partially offset by the impact of the mix of AUM flows and the adjustment for certain rebates, which I mentioned before. Segment expenses of $703 million were flat year over year, as the impact of higher investments and the weaker dollar was offset by efficiency savings. Investment and wealth management reported pre-tax income of $148 million, down 14% year over year, and a pre-tax margin of 17%. As I mentioned earlier, assets under management of $2.2 trillion increased by 7% year over year. In the fourth quarter, we saw net outflows of $3 billion, including $23 billion of net outflows from long-term strategies and $20 billion of net inflows into cash. Wealth management client assets of $350 billion increased by 7% year over year, reflecting higher market values.

Over the past year, we've worked hard to bring our investment and wealth management business closer to our other BNY platforms, streamline operations, and build towards stronger top-line growth, including by making several key strategic hires. We expect that 2026 will be the year in which this work will start to translate into improved financial performance. I'll close with our financial outlook. Page 21 shows the current expectations for 2026. Notwithstanding a very dynamic operating environment, positive operating leverage continues to be our North Star, and so we have set ourselves up for another year of more than 100 basis points of positive operating leverage in 2026. This reflects our current expectation for total revenue, excluding notable items, to grow by approximately 5% year over year in 2026, market dependent, and accordingly, a plan for approximately 3%-4% growth in expenses, excluding notable items.

Specific to the first quarter, I would like to remind you that staff expenses are typically elevated due to long-term incentive compensation expense for retirement-eligible employees, and on taxes, I'd like to note that over the course of 2026, we expect a quarterly tax rate of approximately 23%, with the exception of the first quarter, in which we currently expect to see a tax benefit from the annual vesting of stock awards. Finally, turning to page 22 for our outlook for the medium term. Two years ago, we communicated our first set of medium-term financial targets, which were to improve BNY's pre-tax margin to equal to or greater than 33%, and our return on tangible common equity to equal to or greater than 23%, while maintaining a strong balance sheet. Today, we are raising the bar.

We are increasing our pre-tax margin target by 500 basis points to 38%, and we are increasing our return on tangible common equity target also by 500 basis points to 28%. These new medium-term financial targets represent the next milestones on our path to unlocking BNY's full potential over the long term. What remains unchanged is our commitment to prudent balance sheet management, and with it, our philosophy for capital deployment and distributions. Our Tier 1 leverage ratio management target remains unchanged at 5.5%-6%, and we will continue to manage ourselves conservatively to the upper end of that range for the foreseeable future. Robin talked about our strategic priorities for this next phase on our multi-year transformation of BNY earlier.

These new medium-term financial targets are a reflection of our confidence in the solid foundation we've built over the past few years, and they demonstrate our determination to continue driving positive operating leverage as we realize greater scale and growth opportunities across our platforms. And with that, Operator, can you please open the line for Q&A?

If you would like to ask a question, please press star one on your telephone keypad now. As a reminder, we ask that you please limit yourself to one question and one related follow-up question. We'll take our first question from Ebrahim Poonawala with Bank of America.

Hey, Robin. I guess maybe first question for you, Dermot, on the guidance, especially when we look at the revenue growth. Just annualizing your fourth quarter NII gets you to about 9% growth on the NII side. So if you don't mind unpacking that a little bit around what are the assumptions underpinning that revenue growth outlook and on fees as we think about 2026. Thanks.

Okay. Good morning, Ibrahim. I hope you're well. So let me start with saying this year we're doing it slightly differently. We finished the year with $20.1 billion of revenue, and the performance over the last three years has given us confidence to guide top-line growth. And as I said in my prepared remarks, the guide that we're giving to you for 2026 is up 5% plus or minus year on year on the top-line revenue. Now, underneath that, you have both fees and net interest income. And I've said previously that Q4 is a good jumping-off point, but December was a particularly strong month for us in NII. So the way I would think, the way you should think about NII for us this year is a little bit ahead of 5%, fees maybe a little bit lower than 5%. So all in, top-line growth up 5%.

Understood. That's helpful. And I guess maybe one bigger picture question just around as we think about these strategic targets. Maybe, Robin, your thoughts. I guess the one missing piece here is how would you want the Street to think about, I guess, the medium-term earnings growth potential for BNY? And within that construct, for whatever reason, if the revenue growth environment worsens, your level of confidence in defending the margins and the ROTCE targets that you've upgraded today. Thank you.

Sure. So look, I'll take it. It's kind of got two parts. I'll take it both parts of that.

But first of all, on the growth targets, look, we've said all along the positive operating leverage is our North Star, and we've also said that there'll be different components to achieving that in any year. And I think it is important to note that. And that's one of the reasons why, as Dermot just said, we've sort of moved to the total revenue guide because we recognize it's sort of a compositional question. But what you should be able to hear from us, certainly in our prepared remarks, is a bit of an increased conviction inside the company about our ability to win and grow. And we've certainly been setting internal aggressive sales and revenue targets to be able to do that. But to your question, we're certainly humble about the fact that we've got to be careful around any particular assumptions on market environment.

And this is where I come back to the fact that we're all risk managers at heart. We're sort of projecting out a lot of different potential scenarios. And so we take very seriously the fact that we've got to have levers to the extent that the markets might end up disappointing. And so we've created agility in our expense base. And that's been part of our work over the course of the past three years: the platform's operating model work, the work that we originally did around some of the efficiency savings, making choices, and the fact that we've now got the rhythm of saying, "Hey, we could actually make different choices on business development expenses, compensation if needed, the investment book of work." And so this agility is extremely important.

But I'll just also recap with a reminder of the fact that we've also deliberately positioned the platforms inside the company and the whole company to trying to reduce the macro sensitivity to the world. And so you've seen that in NII. We actually specifically called it out in the presentation. But if you look at the different cylinders of the revenue engine of BNY: equity market values, fixed income market values, equity market transaction volumes, fixed income market volumes, government issuance, private sector issuance, capital markets activity, GDP growth, payments, software, services, execution and clearing generally, fixed income and equities. That is all very deliberately positioning ourselves to be able to be more resilient. But then, of course, to your question, to the extent that things happen, we can still react to them. That's how I think about it together.

We'll take our next question from Mike Mayo with Wells Fargo Securities.

Hi. As part of your new hire targets, how much does your thought about tech and AI play into that? And specifically as it relates to AI, you certainly got our attention. You have over 100 digital employees. How many of those AI digital employees do you expect to have over three to five years? And what's the savings from them? And again, how does that play into your new hire targets? Thanks.

Yeah. Thanks, Mike. Look, AI, we think, is super important. We think it's just going to be able to be a catalyst for transformational change. We think that's true for the world. One of the most important evolutions in a technology, frankly, in hundreds of years, is the way that we think about it.

And so given that, it's very hard to project very clearly exactly where we'll be one, two, three, four, five years from now. And so there's always the risk that we haven't properly and fully incorporated it into our medium-term targets because while we've thought about it, it's hard to look into the future that clearly. But the way that we think about AI, and maybe this will be helpful therefore, is we think that the technology has already gotten to a level where it can have a very significant impact, frankly, on all of us individually and companies, and certainly here at BNY. And if that follows, then we think it follows that adoption and integration risk becoming the limiting factors. So what we've focused on is the real cultural side of it. Making AI for everyone, everywhere, and for everything at BNY is our mantra.

We launched our AI hub in 2023. That was just after the ChatGPT moment. We now have an enterprise AI platform, ELIZA, that's general intelligence model agnostic, and it supports this multi-agentic functionality that underpins the digital employees that you referenced, and then we've put in place the resources to support that to really enable the scaling of it. That's all of the GPU compute. We've got our own NVIDIA hardware and tech, but we've also got the collaborations with Google that I mentioned in my prepared remarks and OpenAI and others, and then the culture point, again, and you'll see this, it sort of resonates through the whole set of transformation and rewiring concepts that we're talking about for the company. It's as true for AI because if AI is this great capability, it's a superpower. It can therefore be a capacity multiplier for our people.

And so that's what is causing our people to be able to pull AI towards them, hence the digital employees working side by side with our people. Now, it is early days. We will continue to give you mark-to-market in terms of how we're making progress on this, but we are short-term enthusiastic, medium-term excited, and long-term believing that it will have a significant positive impact.

That was helpful, so I get it. The enterprise, the Eliza scaling culture, you're excited about it, but could you put a little bit more meat on the bones if you could? What do you have? 134 digital employees today. And what does that equate to in savings? And where do you think that number goes to? Or just a little bit more detail if you could.

Hi, Mike. It's Dermot here. If you review the materials on page six of our financials presentation, you'll see over the last couple of years that our headcount has trended down a little bit, but that's not really anything to do with AI yet. We talk about, internally, AI is unlocking capacity. We don't think about it in the narrow definition of efficiency. It's all about growing with clients, increasing revenues, and optimizing the potential for our employees, so you have to think that over time, AI as a superpower, as Robin just said, is going to increase revenues, create capacity, and allow us to do more with existing resources, and over the last couple of years, we've been doing this right since the get-go in terms of enterprise-wide strategy. We've been quite constrained in our spending, and we've been very disciplined.

We continue to spend more on cyber resiliency than we do on AI. So the return for our money is very, very high from what we're getting from the enterprise today. And so we only see upside from here.

We'll move to our next question from Ken Houston with Autonomous Research.

Guys, I wonder if you can detail a little bit the pre-tax margin improvement, the five points. Can you go through kind of each of the businesses and talk us to how your individual business line pre-tax margin thoughts are evolving within that too? Where do we get the most juice?

Okay. Thanks for the question. So if you kind of go back to 2023, we delivered an actual performance pre-tax margin of 30% and ROTCE of 22%. And back then, when we initially established the medium-term targets, we went for 33% and 23%. And now we're going with new medium-term targets today of 38% and 28%. So you see real progression there over the last three years. And also today, as I mentioned on the first question from Ibrahim, you see us guiding for the first time top-line revenue growth. Previously, we guided by business. You will have seen us guide four years ago on security services, and we've kind of surpassed that guide. And so that really speaks to the power of the BNY transformation that we've been doing over the last three years. We have three segments: security services. We see upside in corporate trust.

We see upside in depository receipts. We feel that asset servicing over the last three years has really transformed in terms of growing revenues, taking advantage of efficiencies, and driving pre-tax margin. So that kind of disciplined focus on expenses is allowing us to better price for business to win in asset servicing.Markets and Wealth Services is the most akin to a platform's at scale that we have at the moment. As the rest of the firm matures in the platform operating model, the pre-tax margin there is roughly, give or take, around 50%. We would expect to grow that pie at that margin. And so the upside from there on that segment was probably a little bit muted.

But in investment and wealth management, where we've guided 25% and we finished last year at roughly 17%, that's where we see the most opportunity in 2026 and beyond as we kind of begin to see the green shoots of recovery in that segment come back. So BNY overall delivering for clients. As Robin said in his prepared remarks, 64% increase in clients buying from three or more lines of business in the last three years, 10% of new logos coming to the firm last year as a percentage of sales. The clients are noticing what we're doing and want to do more with us.

Remember, there's a compositional thing here as well, Ken, because if you think about the combination of corporate trust, depository receipts, payments, trade, CCM, and Pershing, which are kind of the platformy businesses that Dermot was talking about, that now represents about two-thirds of the PTI of the company. Three years ago, that was just 55%. There's a bit of an averaging here given the fact that those are the segment, MWS, and the businesses, they're actually growing the fastest inside the company. Actually, as a percentage of the whole, they're growing. And that's a factor here too.

Yep. Got it. And just to follow up, Dermot, on your point about how December was a strong month for NII, you guys have done a very good job kind of consistently being conservative about your NII outlook. What would you say about the fourth quarter? Was it deposit balances? Was it pricing? What were the elements that may not run rate forward relative to your exit?

So Q4 really was balances held in quite nicely. And we always say that we don't lead with deposits. And really, NII is an output as a result of franchise activity. And in Q4, we had very strong activity in our asset servicing business, which caused balances to outperform in the last few weeks of December, and that caused the outperformance.

I would just think that just as you're continuing to push, as you mentioned just before, why wouldn't that just be a better organic hold on just activity and overall balances?

So if you kind of take balances overall, for 2026, we expect balances throughout the course to be roughly flat. Q4 is normally our strongest quarter on balances. Q3 is usually the seasonally slowest. And you would expect over the next couple of quarters to moderate down slightly. When we think about the 5% plus, it's really around the asset side of the balance sheet where we have securities kind of rolling off, and we're reinvesting at kind of 100 basis points-150 basis point pickup. So we've narrowed the range of the cone of outcomes as it relates to interest rate volatility. Balances we expect to remain roughly in line are flat, and the pickup will come from assets rolling off into higher yielding securities.

Okay. Got it. Thank you, Dermot. Appreciate it.

We'll take our next question from Steven Chubak with Wolfe Research.

 Hi. Good morning, and thanks for taking my questions. Morning. So Robin, wanted to start with a question on your newly launched tokenized deposit capabilities and was really hoping you could speak to institutional demand for the offering, what has been some of the early feedback. And as the effort scales over time, how might your monetization approach differ versus some more traditional deposit gathering activities?

Sure. So look, I just sort of step back from the whole thing because this really is part of the overall digital asset opportunity. We see global financial markets as transforming, moving towards more of an always-on operating model. And we're in the business of moving, storing, and managing money. And so we think we're particularly well-positioned to connect the traditional and the digital rails to really be able to enable clients. And so our roadmap has really been, right from the beginning, focus on the innovation, be able to bring the capabilities online, that first with digital asset custody, stablecoin enablement. You just mentioned the tokenized deposits. And so that allows us to be able to serve both the new digital native clients, who, by the way, want the new digital services, but they also want some of the traditional services from us. So we're enabling both with them.

And it also allows us, with our existing clients, to be able to help them to be able to move into this world. For instance, as a client might want to open up a new share class in parallel to their traditional share classes, maybe they want to open up a tokenized share class, we can do that as well. It really is these two things working in concert that we think unlocks new possibilities. We see the value of the improved efficiency, reducing friction that is real value here. When you click in, stablecoins and tokenized deposits are just two examples of all of that. Stablecoins providing the on-chain settlement currency, which is very necessary and is, frankly, because their stable value probably better than some of the other alternatives. Of course, there are choices there in the stablecoins. Tokenized deposits really improving the internal utilization of cash.

And so for a client making a deposit with us, we can actually improve the usability of that deposit. It becomes sort of programmable, if you will, and it allows that money to be able to work harder and faster for them to be able to facilitate other activities. And ultimately, might in fact create the opportunity for clients to be able to do more things with us anchored around some of those types of activities.

Thanks for the fulsome response, Robin. And for my follow-up, maybe for Dermot, just on the clearance and collateral management business, you've delivered four consecutive years of double-digit fee growth in that area, exited this year growing 15%. Given expectations for a meaningful uptick in treasury issuance, how has that informed the outlook for the business? Is this double-digit growth rate sustainable? What are some of the factors that could potentially derail some of the recent momentum?

Great question. The way I would think about this is, as you rightly pointed out, the growth rate over the last couple of years has been quite nice to see. We would say the growth rate from here probably a little bit more modest compared to previous years. We have the treasury clearing mandate coming in, which we expect to kind of influence some of the things that go on there. In the U.S., I would say more treasury issuance, a little bit more stable than we've seen in the prior couple of years because, you know, volumes, etc., etc., are beginning to moderate. Where we see some of the growth opportunities is outside the U.S. And we've said that on prior calls where we're continuing to invest in new products and services around the world. So we expect to continue to grow internationally and moderate in the US.

That's great color. Thanks for taking my questions.

We'll take our next question from Alexander Blostein with Goldman Sachs.

Hi. Good morning, everybody, as well. Thank you for taking the question. I was hoping to zoom out a little bit and talk about the fee revenue outlook as a whole. You guys updated the organic revenue growth for 2025, which looks like came in at 3%. Some businesses are doing better, some doing a little worse. And the ones where you're seeing strength, particularly things like security services, sounds like that momentum is continuing. Then in things that are slower, when I think about pricing, maybe your asset management, there are some idiosyncratic things that you pointed to that should improve. As you think about organic fee growth into 2026 and beyond, any way to frame what that could look like?

Thanks for the question, Alex. I really would look at and study page six of our presentation. There are two graphs that I particularly like on that page. One is the deeper client relationships where you can see that over the last three years, we've grown clients who are buying from more than three or more lines of business has increased by 64%. Then when you pivot over to the middle page, you can see that 2022, flat organic, 2023, flat organic, 2024, 2%, and 2025, 3%.

Then that gives us the confidence to be able to guide 5% to the top line of $20.1 billion. And as I said in an answer to an earlier question, 10% of our sales last year was with new logos. And when you listen to Robin and his answer to the previous question on digital assets, more clients are coming to us because they want thought leadership. And as a consequence of thought leadership in new spaces, frontier products, we're doing stuff in traditional services. So the short answer to your question is it's the portfolio effect of delivering BNY to a broad range of clients. Robin said three years ago, we have a client list that's the envy of the street. We pretty much service most of the S&P 500.

And so clients are seeing the change that's happening at the company, and they want to do more with us. So I would say no one business is doing better than the other. Everything has upside. Everything has opportunity. As it relates to Pershing specifically, I'm pleased to say that the last couple of years, I would have said on most calls, the word deconversion due to M&A activity, that's largely behind us, which reinforces why we feel confident that we continue to grow now at mid-single digits for net new assets. So we feel good about Pershing and the opportunity that's in front of us there. And also, as I said in the answer to a previous question, we feel we've turned a corner in IWM, and 2026 is the year that we're going to begin to see the transformation as we've brought that business closer together with BNY.

And Alex, I'll just add one thing, which is, and I understand because we've talked about this a bunch over the course of the past couple of years in terms of, okay, where's the growth going to come from? How are you really thinking about it? We've talked before about the alpha and beta that we see in the overall business model. And so I just want to remind you of the beta point. Dermot touched on it related to digital assets, but just remember there are quite a few mega trends that we think can be quite interesting tailwinds for the company. And so the question is, have we positioned the company in the right way and all of our business platforms to really be able to serve clients as it relates to those various different trends?

So just very briefly to tick through them, capital markets, the growth in capital markets, issuance, trading, movement of assets. Think about it, corporate trust, our payments and trade business, depository receipts, they line up very well with that particular trend. Alternatives and our ability to support clients, alternative clients end-to-end, private market assets, again, corporate trust, asset servicing, very much playing in that space. Wealth, very important segment. Pershing, wealth, investments are all significant players in participating in the growth of that mega trend. Digital assets, which we talked a bunch about already, and that, again, many of our businesses aligned to enabling that. The growth of fixed income, which Dermot touched on, that's relevant not only in the obvious ways, but also in the financing private markets, data centers, U.S. Treasury borrowing.

And then the big one, outsourcing, clients wanting to focus on what they're really good at and asking us to step in because of the breadth of what we can do to do some of the one-stop shopping, being a trusted provider and really giving us that opportunity to serve them more comprehensively. So when you think about that backdrop, we have not only the alpha of all of the individual work that we're doing internally, but we're also positioning to be able to take advantage of that. We think the combination of the two things is pretty interesting.

Yep. No, I agree with that. And definitely like the direction where things going on that chart six or slide six. For my follow-up, guys, real quick on the buyback, I don't think I heard you guys talk about the capital return plans for 2026, 2026 specifically. And then just broadly, when you think about the growth algorithm at the firm, your medium-term targets, obviously, you gave us margins and the return of capital. But as you think about the share repurchases and the total return of capital, how does that play out over the next couple of years?

So big picture, Alex, our capital philosophy remains unchanged. As you both know, Robin and myself, we like to run to the upper end of our Tier 1 leverage ratio. A lot of uncertainty in the markets the last couple of years. The outlook is going to be a little bit uncertain. So we like to kind of be in that kind of 6% zip code of tier one leverage ratio. And when you step back from it, what is BNY? It's a capital light balance sheet with very clean balance sheet, very liquid balance sheet, capital generative.

Over time, we've consistently returned earnings to our shareholders. And so we expect that to continue. And when you kind of solve for the model of what we've guided for 2026, it's going to be consistent. So the buyback number as a percentage is really an output to all the things that we've talked about earlier. So it's going to be in that kind of 95%-105% range. And so we don't really feel that it's necessary to guide on the buyback anymore given the overall algorithm and the model that we have for the future.

Yep. Perfect. Thank you guys very much. Thanks.

Our next question comes from Brennan Hawken with BMO Capital Markets.

Hi. Thanks for taking the question. I actually have a question on organic growth as well. And thanks for all the color given. So you generated 3% organic growth last year. Your assumptions and your outlook are that organic growth would accelerate. Markets are flat, but yet the fee revenue outlook is sub-5%. So this is kind of two possible outputs. Conservative outlook, or was there some over-earning or one-time items that might have elevated the baseline that you're growing off of when we think about 2025 into 2026?

So look, organic growth in 2026 versus 2025, I think if you go back to page six and you see the impact that the commercial model is having, right, on the two graphs of organic fee growth and deepening client relationships, the story is quite compelling. And so we continue to hire new talent. The commercial model is not even two years old.

So we continue to bring in new talent around the world, and we continue to raise the ambition of what we want to do with clients across a wide range of services. So I would expect higher organic growth this year, which reflects the flywheel of the new commercial model and also new product development and the culture that we've kind of changing over the last couple of years at the firm. We haven't really mentioned this, but we have hired a new Chief Product and Innovation Officer who's been with us a little bit over a year. And we would expect a similar impact on the product side of the house that we've had on the commercial side of the house. So we feel quite good about the outlook for organic growth to 2026.

No, no. I totally appreciate that. My question is, if the organic growth is going to accelerate, markets are flat, how do we end up with sub 5% fee revenue growth? And correspondingly, if you've got organic growth, I might as well just throw in my follow-up now. Why would balances be flat? Don't balances tend to move with organic growth as well? So shouldn't that move with organic growth? Or was there something in the baseline that might cause those two metrics to diverge?

You framed the question at the beginning as, were we over-earning? We don't think we're over-earning. We think we are being thoughtful in the way that we're positioning the outlook for 2026. We see, of course, variability on each of the inputs to the total revenue actually overall line. But we recognize that it could come a little bit more or less with NII. It could come a little bit more or less with the organic fee growth. Of course, no one quite knows what's going to happen with markets, which is why we're sort of making what we think is a reasonable baseline assumption there. So you're doing the math, and we're kind of agreeing with you. We're not quite exactly sure how the composition is going to come, but we feel pretty good about the guide.

Excellent. Okay. Well, look forward to seeing that organic growth continue to grind higher. So it's a great outcome. Thank you.

Our next question comes from Betsy Graseck with Morgan Stanley.

Good afternoon. I'm all set. All my questions have been asked and answered. Thanks so much for the time today.

We'll take our next question from Glenn Schorr with Evercore.

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