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BNY Mellon (BK)
Goldman Sachs Financial Services Conference
December 11, 2013 10:50 AM ET
Gerald Hassell - Chairman & CEO
Todd Gibbons - CFO
Alex Blostein - Goldman Sachs
Alex Blostein - Goldman Sachs
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Thank you very much Alex, we’re delighted to be here today and Todd and I will be happy to answer some questions at the end of this. Before I get started I do want to remind you of the cautionary statement in the back of the presentation. Today we’re really just going to just focus a little bit on our business model, our opportunities for growth, expense controls and of course our strong capital position and ability to redeploy that capital back internally and to shareholders.
I know we want to try to have a little bit of a different format today. So I’m going to literally no pun intended power through these slides and allow for more time on Q&A. Just to remind everyone we’re the investments company for the world. We help our clients at every stage of the investment life cycle and we help create, clear, settle, custodized, risk manage financial assets of any different kind anywhere in all over the world. Now we also manage those assets through our various investment management boutiques as well. And we offer technology platforms that would connect investment advisors and asset managers including our own to our various platforms and capabilities so that we get access to the retail and institutional investor.
We have a very, very distinctive business model and as Alex said it's probably the most comprehensive model around the management and servicing of financial assets. I like to think of it as being very solely focused on the entire investment management process and we have in essence basically a neural network that we provide that connects to various market participants all around the world servicing and clearing their various financial assets. And as part of that neural network we have a very strong brain, a very smart brain in our investment management area that provides a lot of intelligence on how we should design and manage that network.
Now this next slide highlights how we organize, we’re in two main segments, investment services and investment management. In investment services we’re clearly the largest custodian and the leader in almost every aspect of servicing financial assets.
Now I don’t want you to think of us, I want you to think of us as more of rather than just a collection of individual businesses but really as a series or a collection of solutions that we offer the marketplace and it facilitates the movement and control of all the fin assets. Many times you all think of us a lot of individual business lines. We don’t think of ourselves that way, we think of ourselves in a way of providing solution sets, as sophisticated investment managers. So we provide the technology network that allows the financial markets to work. Think of us the financial markets internet and the applications that we develop and others develop are plugged into that network and we manage that process. Now we’re also one of the Top 10 global asset managers. We do it through 16 individual boutiques and we’re the 8th largest U.S. wealth manager as well.
You can see our businesses are global in nature, 36% of our revenues in our investment services area are outside the U.S. and 46% in the investment management area. Now you saw a good strong core fee based growth through the third quarter of this year. Investment management certainly benefited from the higher equity markets but very, very importantly we have had 16 consecutive quarters of net long term inflows and so that’s resulted in about a $107 billion of inflows, the long term inflows into our investment management sector.
Investment services enjoyed solid growth across the Board and I would say particularly in our clearing services area. And clearing services is really again the technology platform that allows advisors all around the world to utilize our platform to interface with retail investors. So that’s where why you’re seeing so much growth there. In terms of priority clearly the priority is around generating organic revenue growth. Transforming for a success which really extends beyond our original operational excellence initiatives and I will talk about that more in a moment. Our other priorities around disciplined capital management making sure we’re investing in our businesses and very, very importantly returning capital to shareholders.
Now this investment management slide as you can see we’re a multi-boutique model and we combine it with our wealth management area. So our boutiques and their investment strategies are offered to our wealth management conditions in addition to our institutional clients all around the world. And we have a number of opportunities for growth, one of the ones that we really are concentrating very heavily on. If you think about us we’re very relatively underexposed to the retail investor. So we’re investing more in our retail products and our access to the retail investor by investing in people who really work with the various channels and platforms and wholesalers to make our products more available to that marketplace.