Q1 2026 Earnings Call Transcript

Good morning, and welcome to the 2026 First Quarter Earnings Conference Call hosted by The Bank of New York Mellon Corporation. At this time, 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 The Bank of New York Mellon Corporation's consent. I will now turn the call over to Marius Merz, The Bank of New York Mellon Corporation Head of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to our first quarter earnings call. I am here with Robin Vince, our CEO, and Dermot McDonogh, our CFO. As always, we will reference the quarterly update presentation, which can be found on the Investor Relations page of our website at bny.com.

I will 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, 04/16/2026, 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 will begin with a few broader comments before Dermot takes you through our financial results. Referring to page two of the quarterly update presentation, The Bank of New York Mellon Corporation has started the year with a strong performance in the first quarter.

Earnings per share of $2.24 grew 42% year over year, both on a reported basis and excluding notable items. Record revenue of $5.4 billion was up 13% year over year, reflecting broad-based growth across our Securities Services and Markets and Wealth Services businesses. We delivered over 800 basis points of positive operating leverage while making meaningful investments in new products, capabilities, AI, and critically, our people and culture. Taken together, this combination of strong top line growth and significant operating leverage resulted in pre-tax margin expansion to 37% and improved profitability with a return on tangible common equity of 29%.

The Bank of New York Mellon Corporation’s position at the heart of global financial markets, with platforms across custody, security settlement, collateral, payments, trading, wealth, investments, and more, supports durable financial performance for our company, enabling us to power our clients' growth as they navigate an increasingly complex landscape. While the path of global markets is difficult to predict with certainty, what is clear is that the underlying trends—higher levels of activity, greater complexity, new technologies, and a resulting need for scale, efficiency, and connectivity—are more relevant than ever for our clients.

As I mentioned in my shareholder letter earlier this year, the portfolio of The Bank of New York Mellon Corporation’s businesses is unique, but it is how we are embracing new ways of working, our adoption and integration of new technologies, and our strong culture that allows us to create truly differentiated solutions. Clients are increasingly recognizing the value of holistic solutions that support the full life cycle of their activity, whether it is managing liquidity, optimizing, supporting higher trading volumes, or getting ready for the future of financial market infrastructure. Our work to operate together as one The Bank of New York Mellon Corporation, through both our platforms operating model and our commercial model, better enables us to bring the full breadth of our capabilities together in service of our clients.

A good example of this from the first quarter is our work with Allianz Global Investors, one of the world's leading active asset managers. AGI has selected The Bank of New York Mellon Corporation to support optimizing their investment operating model, leveraging the breadth of our global capabilities. This integrated model will help AGI deliver exceptional experience front to back while placing AI and modern data infrastructure at the heart of their operations to enhance productivity, enable faster work, clearer insights, and better outcomes for their teams and clients alike. Another example, PayPal has selected The Bank of New York Mellon Corporation to provide institutional-grade digital asset custody, supporting their digital payments wallets, financial services for millions of users globally.

And just last week, the US Treasury Department announced that they have selected The Bank of New York Mellon Corporation as financial agent for Trump accounts, the US government's investment savings initiative for children aimed at building a strong financial foundation for our next generation. The Bank of New York Mellon Corporation will manage the national infrastructure for the program and collaborate with Robinhood, which will provide brokerage and initial trustee services. These examples illustrate our strategic evolution toward deeper integration between our products delivered with the technology and scale of The Bank of New York Mellon Corporation’s differentiated platforms.

Over the next phase of The Bank of New York Mellon Corporation’s transformation, one of the most significant enablers of being more for our clients and running our company better is AI, and so we felt that this was an opportune time to spotlight how we are going about AI at The Bank of New York Mellon Corporation. Turning to slide three of the presentation, as a reminder, our work to set the foundation for reimagining our company has included intentional and consistent investments in AI over the past several years. We took a very deliberate approach to AI through the lens of integration, adoption, and importantly, our people and culture.

We embraced the platforms approach to embedding AI across the company, creating our AI Hub in 2023, so we could develop the enterprise capabilities, strong governance framework, and training to empower every employee to embrace AI. More than two years ago, in collaboration with NVIDIA, The Bank of New York Mellon Corporation became the first global bank to deploy a DGX SuperPOD, and in the same year, we launched Eliza, The Bank of New York Mellon Corporation’s AI platform. Outlined on page four, our vision for AI at The Bank of New York Mellon Corporation is that it is for everyone, everywhere, and everything.

As is the case with many things, the key to making it work is culture. We took a people-first approach. Over the last year, we focused on broad adoption. We made Eliza available to 100% of our employees, and supported advanced learning and development through a series of training programs.

This approach to enterprise-wide enablement has already allowed us to develop more than 200 AI solutions and to introduce digital employees, multi-agentic solutions that operate alongside human colleagues. In 2026, we are doubling down on depth, moving from AI point solutions to using AI to enhance end-to-end processes, reducing manual touch points, improving cycle times, strengthening control outcomes, and building more connected intelligence by linking data, workflows, and expertise to enhance the service and value proposition for our clients. On page five, we show just some of the initial outputs—tangible results of AI enablement and impact across improved business and operating performance—driving greater efficiency and product innovation.

None of these metrics individually show a complete picture of AI at The Bank of New York Mellon Corporation, but taken together, they show something important: that we are systematically embedding AI in our workflows across the entire company. Already, AI is helping us increase the pace at which we innovate our technology, accelerate onboarding, improve client service, and streamline processes. In combination with our broader efforts to run our company better, AI is starting to contribute to the improved financial performance trajectory at the bottom of the page. Building on our deliberate strategy and the solid foundation we have laid over the past several years, we are confident that AI will enable us to evolve our business model and enhance how we deliver for clients.

Our commitment, not just to deep AI enablement but the full reimagination of our company, combined with the role that we play in global financial market infrastructure, the breadth of our businesses, and our trusted and deep client relationships together, represents a powerful competitive advantage. Taking a step back and reflecting on the operating environment, while AI was an ever-present theme in markets over the past few months, the first quarter also presented a dynamic market backdrop. Significant volatility was driven by shifting expectations for the paths of growth, inflation, and interest rates amid geopolitical conflicts and evolving policy outlooks.

Within this constantly changing environment, our diversified business model, combined with our strong balance sheet, allows The Bank of New York Mellon Corporation to serve as a pillar of strength for our clients and for global markets. Before I hand it over to Dermot, I want to take a moment to recognize our employees around the world for rising to the challenge to execute on our long-term plan to unlock The Bank of New York Mellon Corporation’s full potential for our clients and shareholders. We have had a strong start to the year, supported by increasing client engagement and continued progress on our strategic priorities.

I would like to thank our clients for their trust, our employees for their commitment and hard work, and our shareholders for their continued support. With that, over to you, Dermot.

Thank you, Robin, and good morning, everyone. I will pick up on page six of the presentation with our consolidated financial results for the first quarter. Total revenue of $5.4 billion was up 13% year over year. Fee revenue was up 11%.

This included 10% growth in investment services fees, reflecting higher client activity, net new business, and higher market values. Investment management and performance fees were up 6%, primarily driven by higher market values and a favorable impact of a weaker US dollar, partially offset by the impact of the mix of AUM flows. While not on the page, I will note that firmwide AUCA of $59.4 trillion increased by 12% year over year. This reflects net client inflows, higher market values, and the favorable impact of the weaker dollar.

Assets under management of $2.1 trillion were up 6%, primarily driven by higher market values and the weaker dollar, partially offset by cumulative net outflows. Foreign exchange revenue was up 49% year over year on the back of higher volumes resulting from elevated market activity and supported by new products and capabilities. Investment and other revenue was $271 million in the quarter, including approximately $135 million of investment-related gains and $50 million of net securities losses. Net interest income increased by 18% year over year, primarily driven by continued reinvestment of investment securities at higher yields and balance sheet growth, partially offset by deposit margin compression.

Expenses of $3.4 billion were up 5% year over year, both on a reported basis and excluding notable items. This was primarily driven by our commitment to higher investments in our businesses, higher revenue-related expenses, the unfavorable impact of the weaker dollar, and employee merit increases, partially offset by continued efficiency savings. Provision for credit losses was a benefit of $7 million in the quarter, primarily driven by improvements in commercial real estate exposure, partially offset by changes in macroeconomic and other factors. On the back of significant positive operating leverage of 833 basis points, pre-tax margin expanded to 37%, and return on tangible common equity was 29%.

Taken together, we reported earnings per share of $2.24, up 42% year over year. On to capital and liquidity on page seven. Our Tier 1 leverage ratio for the quarter was 6%, flat sequentially. Tier 1 capital increased by $532 million, primarily driven by preferred stock issuance and earnings retention, partially offset by a net decrease in accumulated other comprehensive income.

Average assets increased by 2% on the back of deposit growth. Our CET1 ratio at the end of the quarter was 11%, down 89 basis points sequentially. Our CET1 capital remained approximately flat; this decrease was primarily driven by higher risk-weighted assets reflecting a single-day increase in overnight loan balances on the last day of the quarter along with higher client activity in agency securities lending and foreign exchange. Over the course of the first quarter, we returned $1.4 billion of capital to our shareholders, representing a total payout ratio of 87%, and our Board of Directors authorized a new $10 billion share repurchase program.

Our consolidated liquidity coverage ratio and net stable funding ratio were 111% and 131%, respectively. Turning to net interest income and balance sheet trends on page eight. Net interest income of $1.4 billion was up 18% year over year and up 2% quarter over quarter. Like the year-over-year increase described earlier, the sequential increase was primarily driven by the continued reinvestment of investment securities at higher yields and balance sheet growth, partially offset by deposit margin compression.

Average deposit balances increased by 3% sequentially, reflecting 2% growth in interest-bearing and 6% growth in non-interest-bearing deposits, and average interest-earning assets were up 2% quarter over quarter. Cash and reverse repo balances were flat. Loans increased by 6% and investment securities portfolio balances increased by 2%. Turning to our business segments starting on page nine.

Securities Services reported total revenue of $2.7 billion, up 17% year over year. Total investment services fees were up 10%. In Asset Servicing, investment services fees grew by 11%, reflecting higher market values and broad-based client activity. ETF AUCA were up 33% year over year, on the back of higher market values, client inflows, and net new business.

And our Alternatives [inaudible] 20%. I want to highlight that, consistent with our strategy to deliver the breadth of The Bank of New York Mellon Corporation to our clients, over 50% of the clients that awarded Asset Servicing new business in the first quarter also awarded new business to at least one of our other lines of business. In Issuer Services, investment services fees were up 4%, reflecting growth in both Corporate Trust and Depositary Receipts. I will note that for the first time in our history, Corporate Trust reached $15 trillion of total debt serviced, and we are particularly pleased with our continued market share gains in CLO servicing.

Once again, the breadth of our capabilities is a powerful differentiator. Our clients clearly recognize the superior value proposition of a single provider for Corporate Trust, Asset Servicing, collateral, liquidity solutions, and more. In Securities Services overall, foreign exchange revenue was up 44% year over year, reflecting higher client volumes. Net interest income for the segment was up 20% year over year.

Segment expenses of $1.6 billion were up 5% year over year, primarily driven by higher investments and revenue-related expenses, the unfavorable impact of the weaker dollar, and employee merit increases, partially offset by efficiency savings. Securities Services reported pre-tax income of $1.0 billion, a 46% increase year over year, and a pre-tax margin of 39%. Investment-related gains added three percentage points to pre-tax margin in the quarter. Next, Markets and Wealth Services on page 10. Markets and Wealth Services reported total revenue of $1.9 billion, up 11% year over year.

Total investment services fees were up 10%. During the quarter, we formed our Wealth Solutions business by realigning Archer’s managed accounts solutions from Asset Servicing to Pershing. This integration further strengthens our capabilities to serve wealth advisors by adding Archer’s market-leading distribution and managed accounts expertise to deliver fully integrated end-to-end solutions across the entire wealth ecosystem. In Wealth Solutions, investment services fees were up 6%, reflecting higher market values and client activity.

Net new assets were $22 billion in the quarter, representing an annualized growth rate of 3%, and AUCA of $3.3 trillion were up 14% year over year. In Clearance and Collateral Management, investment services fees increased by 19%, reflecting broad-based growth in collateral balances and clearance volumes. Average collateral balances of $7.8 trillion increased by 18% year over year, reflecting higher market activity and growth on the back of a robust environment for financing with US Treasury securities, strong money market fund balances, and increasing client demand for non-cash collateral. Ahead of the central clearing mandate for US Treasuries, we are engaging with central counterparties and our clients.

We are delivering innovative solutions from across The Bank of New York Mellon Corporation that help them find new ways to access the market, clear transactions, and manage collateral and margin. In the quarter, we also saw strong growth in clearing volumes reflecting net new business wins, particularly in international clearance and from expanding wallet share with existing clients doing more with The Bank of New York Mellon Corporation. In our Payments and Trade business, investment services fees were up 5%, primarily reflecting net new business. Payments and Trade delivered another solid quarter with continued sales momentum, including numerous multi-line-of-business wins, particularly with FX and Global Liquidity Solutions.

Net interest income for the segment overall was up 15% year over year. Segment expenses of $937 million were up 6% year over year, primarily driven by higher investments, employee merit increases, higher revenue-related expenses, and the unfavorable impact of the weaker dollar, partially offset by efficiency savings. Taken together, our Markets and Wealth Services segment reported pre-tax income of $961 million, up 18% year over year, and a pre-tax margin of 51%. Turning to Investment and Wealth Management on page 11. Investment and Wealth Management reported total revenue of $825 million, up 6% year over year.

Investment management and performance fees were up 6%, primarily driven by higher market values and the favorable impact of the weaker dollar, partially offset by the impact of the mix of AUM flows. Segment expenses of $726 million were up 2% year over year, primarily driven by the weaker dollar, employee merit increases, and higher investments, partially offset by efficiency savings. Investment and Wealth Management reported pre-tax income of $90 million, up 43% year over year, and a pre-tax margin of 11% versus 8% in the prior-year quarter. As I mentioned earlier, assets under management of $2.1 trillion increased by 6% year over year.

In the first quarter, long-term active flows were flat, reflecting net inflows into fixed income and LDI strategies, and net outflows from equity strategies. We saw $10 billion of net outflows from cash and $7 billion of net outflows from index strategies. Wealth Management client assets of $339 billion increased by 4% year over year, reflecting higher market values. Page 12 shows the results of the Other segment.

I will close with an update on our financial outlook for the year. In light of our strong performance in the first quarter, we are raising our outlook for total revenue, excluding notable items, for full year 2026 and now expect approximately 6% year-over-year growth. That includes our expectation for full year 2026 net interest income to be up approximately 10% year over year. We expect full year 2026 expense growth, excluding notable items, to be at the top of the 3% to 4% year-over-year growth rate range that we provided in January.

We continue to expect a quarterly tax rate of approximately 23% for the remaining quarters this year. I want to leave you with three important points. First, we delivered a strong financial performance in the first quarter and continue to serve as a pillar of strength for our clients amid a dynamic market environment. Second, the combination of our unique portfolio of businesses, our role in global financial market infrastructure, our deep and trusted client relationships, our diversified business model, and the strength of our balance sheet represents an exceptional client value proposition and a powerful competitive advantage.

Finally, what truly differentiates The Bank of New York Mellon Corporation today is our ability to mobilize all of the above for the benefit of our clients and shareholders. With that, operator, can you please open the line for Q&A?

As a reminder, we ask that you please limit yourself to one question and one related follow-up. We will take our first question from Brennan Hawken with BMO Capital Markets.

Good morning. Thanks for taking my questions. I wanted to start with deposits. The deposit trends were stronger than expected. I was hoping maybe you could speak to quarter-to-date trends and around betas. Specifically for the euro and pound deposit betas, given we have hikes now in the forward curve. How should we be thinking about the betas for those currencies? Thanks.

Okay. Thanks for the question, Brennan. Let me start with overall balances and trends. As you will recall from our call on January 13, we finished last year with strong momentum on deposits and, with the macro uncertainty and just how events of the quarter played out, we saw clients holding higher levels of liquidity.

As a consequence, you see the overall balance being a little bit elevated, and then you saw the mix between interest-bearing and non-interest-bearing. We attracted more non-interest-bearing than anticipated. Overall, on the US dollar side, it really was the balance and the mix that drove the NII outperformance in the quarter. Within particular businesses, it really was in Issuer Services and Asset Servicing specifically and Corporate Trust that were the two businesses that saw the notable benefit.

As it relates to the non-dollar side of things, euro and sterling is really a smaller part of our overall portfolio. It only accounts for roughly 25% of the overall book, so it is not a meaningful contributor to NII. For euros and sterling, the betas roughly peaked at 80% on the way up, and for dollars and non-dollars, we expect betas to perform in a symmetrical fashion going up as well as going down. That is how we see it.

Great. Thank you for that. And then on, I guess, the artist formerly known as Pershing, we had really robust year-over-year both DARTs and AUC growth, but the revenue growth was not quite as robust as those two metrics. So could you maybe help unpack the primary drivers of the revenue growth and help us understand how we should model that going forward?

Wealth Solutions, as we now are going to call it going forward, will be as good as the artist formerly known as Pershing. You saw net new asset growth in the quarter of roughly 3%, and I would just like to reaffirm our belief and commitment that we can grow the business’ net new assets at mid-single-digit growth over the coming years. Also, for the first time in a few quarters, it is pleasing that we have not had to talk about a deconversion, so it was a relatively clean quarter with lots of volume. With macro uncertainty, we did see a lot more volume as clients were rehedging and rebalancing their portfolios, so it was more of a volume-driven quarter.

To highlight the point about Archer, we really feel that Archer, in Wealth Solutions, will be able to drive more capabilities and more product innovation for our clients. We feel really good about the outlook and what Archer can do in the Wealth Solutions space.

Great. Thanks for that color.

We will move to our next question from Alex Blostein with Goldman Sachs.

Hi, good morning, everybody. Thank you. Obviously very strong performance in the quarter underscoring the benefits of various verticals within The Bank of New York Mellon Corporation, and part of that, I guess, is sort of transitory. I was hoping we could unpack that both on the fee side and NII—perhaps how much of the benefit the elevated market volatility contributed this quarter to think about the right baseline?

And then for NII, the non-interest-bearing performance was obviously quite strong, and it feels like in your guide you are largely kind of mean reverting that. It does not sound like you are assuming much of that is going to stick around, but I was hoping you can unpack what is baked into the NII guide and the drivers. Thanks.

Okay. For your first question—that was a lot of questions, Alex—here is what I would say. Robin spoke about it well on Squawk Box this morning. We are setting the firm up for a diversified revenue stream and durable performance.

What was very pleasing from a CFO lens this quarter was the diversity of the revenue stream, the mix between fees from balances and fees from volumes. There was a lot of uncertainty in the market over the course of the first quarter, and our clients were doing a lot of rebalancing, so we were there to help and support that. Volatility can be a good enabler for The Bank of New York Mellon Corporation in terms of the business model because it generates volumes. You saw that across all of our platforms, and then you saw the mix was roughly 50/50 between balances and volumes, which was pleasing to see.

The balance between equities and fixed income was also pretty balanced. Overall, it was very pleasing to see in terms of the backdrop. To be honest, we hope that continues, and we have scaled platforms that we have invested in over the last couple of years. With the record sales quarter, you are beginning to see the proof points of clients coming to the platforms wanting to do more with us across multiple lines of business.

It really is clients doing more against a macro backdrop that was uncertain that generated the volumes. Overall, very pleasing quarter. As I said in my prepared remarks, there are a few one-offs; we particularly highlighted that in Securities Services, which is a 3% contributor to the margin of 39%. But if you back that out, it is a 36% margin—still a pretty exceptional quarter for that segment.

Got you. And then just a follow-up on non-interest-bearing and what you are assuming is sort of temporary deposits given the volatility that could reverse itself over the next quarter or so, and how does that inform your 10% NII guide?

We expect deposit balances to revert to more seasonal patterns from here. We expect Q2 to be moderately down from Q1. Q3 is usually our weakest quarter, with Q4 being our strongest quarter. Over the balance of the year, we expect balances to be modestly higher relative to 2025. We have run a bunch of scenarios—different rate environments, different levels—take the feedback from the businesses, and that gives us confidence around the 10% guide.

Perfect. All right, thank you. I will leave it at that.

Thanks, Alex.

We will take our next question from Ebrahim Poonawala with Bank of America.

Good morning. Maybe, Dermot, following up on your response to the previous question, I want to make sure we get this right. Very clear on deposit and NII outlook. On fees, the guidance implies like 2% to 3% growth for the rest of the year.

Is that right? What are the puts and takes—do we need a materially better or worse macro for the 2% to 3% to be much higher or lower? What are the market assumptions you are making in the guidance for the rest of the year on the fee revenue side?

It is a tricky question you ask, Ebrahim. If you go back to January 13, when we gave the guidance for full year, we went with 5% on top line growth. When I was pressed on that, we said a little bit higher on NII, a little bit lower on fees. We are one quarter into it.

Under the hood, we said this on the call in January—we continue to believe that we are grinding organic growth higher than where it was. It was 3% in 2025. You will remember way back to 2022 it was flat, and 2023 it was 1%. We are very focused on it and, as Robin said in his remarks, record sales quarter this year in the first quarter and two record sales quarters last year. That is going to drive into the organic growth.

We feel pretty good about the outlook for the year, but we are only one quarter in, three quarters to go, a lot of uncertainty, so we are not really changing our outlook on the fee at the moment.

Got it. And then a bigger picture question for Robin. You talked about the use of AI and other efficiency improvements at the bank. I would argue there are few banks deploying AI more efficiently than The Bank of New York Mellon Corporation.

Is there a risk that you are underinvesting? When we look at the pre-tax margin, could you be doing more in terms of investing in the business using some of these revenue tailwinds? There are a lot more productivity boosts the firm should see due to AI. Why not invest more to further improve the growth algorithm for the firm?

Sure, Ebrahim. Let me split it in two. First, investments versus operating leverage: it is very important to do both. We are investing in growth, and we are driving positive operating leverage and margin expansion.

We have said we are going to do that consistently. We are setting ourselves up for peer-leading levels of operating leverage while also investing in the long term. Sometimes people ask whether we are investing enough. The flip side is whether we have full control of expenses if the environment changes.

We are very careful about both—leaning in when there is space to do so, but not setting ourselves up with such expense momentum that it becomes problematic if we want to calibrate later. We feel like we are doing that well. On AI, we have been investing for three years in a meaningful way. We have a lot of investment heft with our $4 billion technology spend.

Five years ago, that spend was heavily geared toward infrastructure as we rewired our underlying infrastructure to build more modern technology and applications on top. Now we have the gift of AI exactly when we are leaning into those capabilities. We wanted to give you a sense of breadth. We are not going to sit here and talk about all the leading-edge AI things we are doing, but we do want to show the breadth so you can sense it is everywhere.

We have 218 AI solutions in production right now across the company—up four times year over year. We have digital employees working side by side with our teams, and we have a lot in pilot. We feel very good about our AI investments. If we felt we needed to do more, we could and we would.

Got it. Thank you both.

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

Hi. I guess AI is the topic of the day. You brought it up front in the deck—AI for everyone, everywhere, and everything. You talked about doing this for three years and you have 200 solutions.

You said you are starting to see the financial benefits. It all sounds deliberate, thoughtful, and clear, but the big question is: what will the financial benefits be? What are the financial benefits now, and in five years what are your financial expectations as the end result of all these efforts?

Sure, Mike. It is a critical topic. We see AI as a catalyst for real transformational change. We have said from the beginning that the technology would move incredibly rapidly and scale in an exponential way.

We are seeing that now. Adoption and integration risk being the limiting factors. As a user of AI, it is incredibly important that we embed it and have our people pulling it in, as opposed to pushing it away. Foundational investment in culture and technology allows it to be the superpower that it is and a capacity multiplier for our people.

We would like a 47,000-person company to deliver like one many times larger. Our $4 billion technology spend gives us the scale to deploy AI properly, which is incredibly important. If you are a smaller spender, you risk lock-in to someone else’s ecosystem and become subject to token price wars and other unpleasant consequences. To your question, we think the financial outcomes show up in different ways.

First, productivity for our people—47,000 people doing more and delivering more for clients—will show up over time in revenue per employee and pre-tax per employee. The progress so far has been driven by the platforms operating model, rewiring, and the commercial model; the next leg of growth is the maturing of those programs, powered by AI wrapped around everything. Second, capabilities and features of our software and platforms as we deliver for clients—we are already seeing that with client wins. Our AGI win in Europe—an inside look at what we are doing on AI made them excited about joining us; they saw AI was not just for our productivity but for theirs, viewing us as an extension of their operating model.

Third, there are things we can do in an AI-enabled world that did not make sense before—things at the edge of profit, things clients asked for that did not warrant resources. With AI creating an abundance of capacity, we can start doing things that previously sat below the line. So we see a triple play: capacity creation, revenue enablement, and expanding the firm’s perimeter. Collectively, those excite us for the future.

It is early days, and that is fine.

Understood, and it is clear you are in the debate—are banks, or The Bank of New York Mellon Corporation, an AI beneficiary or victim—obviously you are saying beneficiary. But the other side is the bad actors with these AI superpowers. Bank CEOs have been summoned to DC due to new tools out there and the big risk of cyber. I have a tough time dimensioning the new cyber risk given the new AI tools.

How should investors think about this type of risk? How do you think about that?

It is an important question. Cyber defense is something that, as one of the world’s leading financial institutions and a GSIB in the US, we are clearly very focused on. Defending our clients and our role in the financial system has been important for decades. As the technology evolves, so do the defenses.

This is a team sport—doing it with AI providers and other technology partners is incredibly important. We have Mithos in-house—we are running it—so it joins the team of defense for us, as does the early access preview capability that OpenAI announced a couple of days ago—again joining the team. AI is a superpower, and it can be used for good or for evil. We are pulling the superpower into our environment to use for good in order to defend ourselves.

We view this as an entirely predictable evolution of technology on an exponential curve—there will be step functions. We have accustomed ourselves to this acceleration and work constantly to stay ahead of the curve. It goes back to culture, humility, and being very focused on our role in the system. All of us have to be vigilant.

As an investor, think about this across all industries, not just financial services. Bad actors can use AI in bad ways across industries. One of the privileges in financial services is that we have been alert to this topic for a long time.

We will take our next question from Analyst with Morgan Stanley.

Hey, good morning. Very clear message on AI. It sounds like with the investment spend already in the run rate and a lot more of the benefit to come, there is actually a lot more benefit here on the expense side. You are already at a 37% margin even before the full benefit of the platforms operating model.

Is the rationale for keeping the medium-term targets at 38% plus/minus that there may be some of these economics you have to share with your customers, and that will get you more market share in the future?

I will take a stab at that first. It goes back to one of the previous questions about investing in capacity. We just updated our medium-term targets in January. We are one quarter into that.

The medium-term targets were based on a three- to five-year horizon, and we feel good about where we are on the decade-long journey. We are continuing to invest, and we are continuing to harvest efficiencies. We think the margin targets and the ROTCE targets that we gave in January were stretch for the firm, notwithstanding the Q1 we have experienced. It is too early to say.

If we see opportunities, like Robin said on AI, we may invest more. We are at the high end of our guide for expenses this year. We believe we have earned credibility with the market on being financially disciplined and good stewards of the expense base. It is something that we actively review continuously.

If we see more opportunity to invest, we will, and at the right time we will update you on how it is turning out for the medium term.

Let us talk for a second about where the value accrues, because this is quite important. Over the long term, we see great value creation with AI, and it is going to accrue to clients, to employees, and to shareholders as well. We think AI over time becomes table stakes and ubiquitous, and to some extent, you are right—some of it will get priced out through the value chain. But companies that have an edge on using and deploying the technology will have an advantage, and there is a benefit to being a bit ahead in terms of product development and cost of doing business.

We see this early-adopter benefit and believe we are one. Strategy matters here—three things. First, culture is an enabler in AI. We have made a lot of investment, and having a team at The Bank of New York Mellon Corporation who see the power of AI and want to use it is a meaningful advantage.

Second, our platforms operating model and commercial model laid the groundwork for being a better adopter of AI, because we brought like things together and did the rewiring, data organization, and other work that is incredibly useful when deploying AI. Third, scale. Do you have the ability to manage yourself such that you are not just providing a ton of revenue to the AI companies and losing control of it? Escalation of token usage and costs—same story we have seen before with cloud.

If you allow yourself to get locked in and do not have breadth of access, you take a real risk on the pricing power point you raised. For us, the “how” of AI is a strategic advantage. We made a bet on AI three years ago; so far, that has been the right strategy, and we are leaning in. We think this accrues well to our company over time.

Very clear. Appreciate all the detail. Maybe just on the capital side, given the new rules a few weeks ago, it would seem to me that The Bank of New York Mellon Corporation would benefit on the GSIB surcharge side. It is not entirely clear to me what the benefit would be on the RWA side. Can you comment on that and whether this changes how you are thinking about the capital targets?

Thanks for the question. The recent rule is broadly favorable for The Bank of New York Mellon Corporation. Before, when we talked about it on previous calls, we gave a preliminary estimate of up 5% to 7% based on the original proposals, and now we expect flat to a modest reduction. It reinforces what we say about our balance sheet—the strength of a clean, liquid balance sheet and the low-risk nature of the balance sheet.

We feel good about where we are and about the current proposals.

Great. Thank you.

We will take our next question from Ken Usdin with Autonomous Research.

Thanks. Good morning. Two environment-related questions. Given the real big sharp period-end balances, the capital ratios went down. Obviously, you have plenty of room. Assuming that being temporary, you would not have any change to your outlook for your expected total capital return for this year?

That is correct. It was really spot balance sheet on the last day of the quarter, and that returned to normal levels on April 1. As you will see from my remarks, the Tier 1 leverage ratio—which is what we are bound by—remained steady at 6%.

Okay. Also, given that it was a very volatile quarter with a lot of benefits from the environmental shift, how does organic growth feel, especially given a little bit more uncertainty out there? You spoke last quarter about trying to be better than the 3% last year. Any changes in terms of business wins and decision-making out there from your client set?

I would reemphasize the point Robin made in earlier answers and in his prepared remarks. We saw three really nice client wins in Q1 across different types of clients, which demonstrated the strength and breadth of the franchise. I highlighted in my prepared remarks that 50% of client wins in Asset Servicing in Q1 also included awards to other lines of business. Clients doing more with us across multiple platforms is becoming more of a thing.

With the record sales quarter, we feel good. We are not guiding on organic growth. It was 3% last year; it was zero four years ago, and we have been working the order book higher. We expect it to grind higher over the balance of this year.

We are excited about the opportunity.

Okay. Got it. Thank you, Dermot.

Our next question comes from Glenn Schorr with Evercore ISI.

Thank you. When we all look at the banks, there is a lot of focus on the NDFI lending into a bunch of the funds out in private credit land. As the biggest servicer of a lot of these products, how much of lending into the funds is an integral part of the servicing relationship? Do you have any dimensionalizing of size and composition of book and how much it has grown for you?

Our exposure from a balance sheet perspective is de minimis and well managed. We feel very good about our risk in that dimension. I would point you over to our Corporate Trust. As I said in my prepared remarks, we went through, for the first time, $15 trillion of total debt serviced, and that is where we service a lot of those clients.

We feel very good about that business, the momentum, and the investments we have made. While it has been noteworthy with other banks in the news cycle over the last several weeks in the private credit space, it has not been materially showing up in our business, and there are no bumps there that I would highlight.

One other one that catches my attention is periodically you will see a certain fund or even stock get tokenized. There are a lot of investments and, I do not know, experiments being done, and I think you are investing in part of it too. Maybe update us on where we are and why—what are we doing? Money market funds I get a little bit.

Why does the world need everything tokenized? What would that mean for your businesses if we do go down that path?

Thanks. I do not think the world needs everything tokenized. But there is no question that global financial market infrastructure is transforming and moving toward more of an always-on operating model. That is not just about blockchain technology immediately replacing traditional systems; it is about the two working in concert, and in some cases unlocking new possibilities that have not been possible before without the always-on model.

We are in the business of moving, storing, and managing money, creating interoperability—all of that is what we do today. We are advising clients to use the right tool for the job. If they want to do real-time payment systems in the United States, we have real-time payments in the US. Same in Europe—they are even more advanced, which is why stablecoin usage in traditional financial markets has not taken up as much in Europe.

In some emerging markets with high inflation, a 24/7 dollar-based stablecoin has advantages to sidestep inflationary friction. It is very much about the use case. Our strategy is to be a bridge and be in both places. We are doing business with traditional clients who want help with careful selection of what to do in digital assets—launch new funds, launch a new share class for digital-asset-focused investors, or Bitcoin custody for ETF providers—we announced one recently with Morgan Stanley.

We are helping clients bridge to the new. New, digital-asset-native clients also need traditional capabilities—cash management, investment management, custody. A stablecoin provider would need all of those. We have invested across the ecosystem and stood up a bigger team with our head of product and innovation and digital assets to deliver against these use cases.

You are right—an S&P 500 on-chain may not add as much value as bringing an asset deeper into the financial system or making an asset a lot more efficient today. S&P 500 equities are pretty efficient; money market funds work well. In loans and commodities, there are opportunities to improve and bring assets deeper into the financial system.

Sounds like evolution, not revolution. Thanks.

Our next question comes from David Smith with Truist Securities.

Hi. You highlighted some big wins with clients working with you in multiple lines of business. Anything you can share on the progress in the percentage of clients with multiple products or lines-of-business relationships at The Bank of New York Mellon Corporation today versus a year or two ago, or the average number of products per client, or any metrics along those lines?

A couple of things, David. We set out in our commercial model to do several things. There are new products to be created; we have a lot of micro-innovation across the company that excites us because those are new opportunities. We have surprised ourselves with the number of new logos we are able to attract to the platform—about 10% of our sales were new logos in recent times, which is exciting.

Dermot highlighted that half of our Asset Servicing wins were not just Asset Servicing—they also came to at least one other line of business. The blocking and tackling of delivering more of who we already are to existing clients is a big opportunity. Some stats: We had a record sales quarter in Q1 last year and another in Q2; it was a record sales year last year; we had another record sales quarter this quarter. We have had three consecutive years of year-over-year growth in core fee sales.

We have had more than 60% growth in the number of clients buying from three or more businesses over the past two years. We have had a 20% annual increase in sales productivity per salesperson. All of these show traction in our commercial model. Remember, we are only 18 months into that journey; we launched it in 2024. We are excited about that.

That is one reason why at the beginning of the year we aimed to grow our organic growth rate from the 3% last year, and we are very focused on growing from that. I want to add one other thing. There is an underlying theme that regular organic growth is somehow completely disconnected from the market. We push back on that for our company because we deliberately aligned our platforms over the past three years to participate in more environments and be a compounder of value largely irrespective of the environment.

Of course, there are always some environments that are not great for us, but it is deliberate. We want to tap into megatrends: scaling with trusted providers, sophistication in wealth markets, private markets demand (you can see AUCA growth there), capital markets transformations, participating in digital assets, and connecting traditional ecosystems with new digital ones. Inputs to diversification: equity market values up; fixed income market values up; cash balances; issuance activity; M&A activity; private credit; public credit; volatility; transaction volumes; equity; fixed income; collateral.

We have created diversified, global, strategic, recurring, durable attachment to different markets so that we can participate across them—wrapped with AI. For us, that strategy is an “as well as” relative to traditional organic growth.

Would you say that dampens the upside for The Bank of New York Mellon Corporation in a really strong market environment, or is there a way you can have your cake and eat it too?

We think it gives us better exposure to more markets. Take NII as a proxy—Dermot talks about cutting off the tails in NII. Out of a thousand scenarios, can we create one that is not great for NII? Sure—massively inverted curve or zero interest rates across the curve are not ideal.

Those scenarios do not feel super likely right now. The same will be true in other environments. Yes, we give up some growth if equity markets are up 50% and you want to be all-in on that scenario—I would tell you to buy somebody else’s stock over ours because we represent a more diversified long-term compounding durable play.

Our next question comes from Steven Chubak with Wolfe Research.

Good afternoon, and thanks for taking my questions. A bigger picture question getting more attention that could impact the Wealth Solutions business, pertaining to AI and its growing adoption in the wealth space. There has been talk about the importance of greater control over infrastructure, tech stack, data, and the ability to offer more customized tools. Some believe this may compel more scale firms to transition to self-clearing models over time.

Recognizing you service the largest RIAs and IBD platforms, what are you hearing about this potential structural shift that could take place over years, and how do you ensure you can keep those customers within your ecosystem?

It is an important question. Coincidentally, I was speaking with one of our largest clients yesterday about this. They reaffirmed how excited they were to be on our platform for the reasons you listed. They want to grow and have finite investment dollars.

They want to spend on roll-ups, organic growth, and advisors—the core of their business. They do not want to spend on cyber defense and platform, nor try to compete at our scale—more than $3 trillion—in investing in core capabilities we provide. If you are a $3, $4, or $5 trillion RIA, you have your own scale. But if you are $50, $100, or $200 billion, you do not.

Take AI as an example. If you go it alone, you have to pick a provider, live in their ecosystem, subject to their pricing power and models. You cannot have the cross-platform AI scale that gives you more control over deployment. There is a theme of scaling with trusted providers that applies to Pershing as it does to our other businesses.

As we combined Wealth Solutions and aligned pieces for Pershing, clients continue to tell us they like scaling with us.

Those are great insights, Robin. If I could squeeze in one more—double-click into Glenn’s earlier question on tokenization and implications for the ADR business if tokenized securities become more widespread?

People have been predicting the decline of the Depositary Receipts business for twenty years, but it is a very defiant—and for us growing—business which has performed well. Here it is really about connectivity and services: connections with exchanges and settlement rails. An AI agent cannot just turn up and offer that connectivity because providers do not want to provide that type of access. It is one thing to ask, “What was the price of the ten-year yesterday?” It is entirely different to give an agent full autonomy over how you connect to infrastructure and control assets.

We think there is trust benefit we derive that is relevant in places like this. We will use AI ourselves to make the process more efficient across the lifecycle of many of our products. We are not competing with AI; we are competing with other people who use AI better than us.

Our final question comes from the line of Gerard Cassidy with RBC.

Hi, Robin. Hi, Dermot.

Hi, Gerard.

Two questions. First, in the Securities Services area, specifically Issuer Services—there was a sequential decline from the fourth quarter in revenues, though up year over year about 4%. What were the factors that caused that? Second, is there an opportunity for the Depositary Receipts business to pick up if international equity issuers come into the US capital markets later this year?

On the quarter-over-quarter, Gerard, Depositary Receipts is a seasonal business. It speaks to seasonality rather than any noticeable trend. Corporate Trust, as I said in my prepared remarks, continues to grow—we are growing the revenues and margin. We are investing in the business, and we have grown the margin quite substantially over the last three years.

It is the business where the platforms operating model is most mature—we are beginning to see the most benefits. It is three years in the model. We like what we see in terms of leadership, technology investment, and how we are showing up for clients. It is not an accident that we went through $15 trillion in Q1 in terms of total debt serviced.

Overall, great momentum in that part of the world, and we expect it to continue.

Thank you. And then, Robin, coming back to the AI commentary—can you frame out when AI becomes ubiquitous to your business as well as others? If you turn back the clock and look at the introduction of the internet or digital banking after the iPhone, how long does this take to ramp up AI so that five or ten years from now we say it is just normal operating business and something that everybody is doing?

I think the answer is that it has to be a lot less than those time frames for it to become ubiquitous in a company. If you do not make it ubiquitous inside those time frames, I do not know how you are going to keep up and compete. It is such a powerful technology and accelerating so quickly—we are talking about 10x capabilities in many cases. If you are behind the 10x curve by any meaningful period, you will be in trouble, which is one reason we are so focused on it.

You have to make it ubiquitous, which goes back to culture, integration, and deep embedding—our principles at this point. We aim to make it well inside those time frames.

Thank you. I appreciate that.

That does conclude our question-and-answer session for today. I would now like to hand the call back over to Robin for any additional or closing remarks.

Thank you, and thanks everyone for your time today. We appreciate your interest in The Bank of New York Mellon Corporation. Please reach out to Marius and the IR team if you have any follow-up questions. Be well.

Thank you. This does conclude today’s conference and webcast. A replay of this conference call and webcast will be available on The Bank of New York Mellon Corporation Investor Relations website at 3 PM Eastern Time today. Have a great day.