State Street Corporation (STT) Earnings Call Transcript & Summary

So good morning, everyone. For those on the webcast, this is Susan Katzke. I cover the large-cap banks at Credit Suisse. And thank you all for joining us at the 23rd Annual Credit Suisse Financial Services Forum. I am pleased to introduce and be joined by State Street's CFO, Eric Aboaf; and Global Head of IR, Ilene Fiszel Bieler is here as well. I will tell you, Eric, for better or worse, you are the last of the bank speakers at this year's conference. Last but not least, we've got a lot to cover in this session in the fireside chat format. And by all means, if you have questions, please raise your hand and wave at me and we'll pick up the Q&A along the way, and I'll work those in. I know you want to read your disclaimer.

Yes. The lawyers always ask me to read my forward-looking statement disclaimer. So good morning, Susan, and everyone else. I think I'm just going to remind everyone that today's discussion may contain forward-looking statements. And you know that actual results may differ materially from those statements due to any number of important factors, including the risk factors in our 10-K and our SEC filings. Our forward-looking statements speak as of today, and we may not update them, even if our views change. And with that, let's jump in.

Okay. So I want to start with a focus on growth, fee revenue growth, in particular. But let's wrap it into the total revenue growth target of 4% to 5% that was reiterated last year. It also came with a target of $1.5 trillion in new servicing asset additions annually. And let's level set against last year and kind of looking forward. Last year, fee revenue growth was in that zone. There was the NII headwind. This year, presumably you're going to get an NII tailwind. You had 2x the $1.5 trillion -- more than 2x the $1.5 trillion. And so looking ahead to 2022, in terms of your guidance, the fees are now targeted at that -- at the lower end of that range. Total revenue growth with the NII tailwind puts you in the target range. So let's go and kind of breakdown the 3% to 4% fee revenue guide, in particular for 2022. Walk through it in the context of the record new business last year? And why that's the right number? How much of the new business generated actually contributes to growth in '22?

Sure. And let me do it in several different layers.

As you wish.

We guided to a 3% to 4% total fee growth this year. That's on a nominal basis. And remember, there's a percentage point of headwind from currency translation with the rising dollar. And so it's on an adjusted for currency basis, 4% to 5%. So we're in the zone that we'd like to be. There are some businesses that we expect to grow a little faster than that given their trajectories, our Charles River business, our asset management business. And there are some that tend to grow a little more slowly than that. The FX business because of volatility trends, and then the underlying core custody and accounting business. On servicing fees, which I think of as our bellwether for State Street, accounts for about half of our fees of -- in the company. We expect that to grow adjusted for currency at 3% to 4% this year. And what we're really feeling is the momentum we've built up not only of last year's sales, which were $3.5 trillion, but the year before sales. Because, as you know, it takes for -- simpler deals, it takes relatively short 6 months to install, and for longer deals, 24, 36 months, sometime. When we peel it apart, we are -- we're seeing I think the benefits of some of our intense execution efforts. So if you think about the 3% to 4% servicing fee growth, there's always a bit of equity market tailwind. Why? Because equity markets rose over the last 4 quarters. There's some tailwind from client flows and activities because our clients are doing well. We expect this year to have core growth in net new business about 2%. That's up from about 1 percentage point in '21 and flattish in 2020. And then we usually have the couple of points of fee headwinds. So we're feeling that there's momentum in the business. Part of that is the sales activity and part of that is the execution focus that we've brought to bear.

And since you touched on it, maybe this is a good point to just jump in and ask in terms of market value sensitivity. And you talked about rising asset prices for the last few years. It's been great. But how do we factor in now considering the more volatile market of 2022 year-to-date? Are you even thinking about it?

I think it's really early to think about it. And really, we've seen a lot of volatility. But if you try to look through it and say, how we really -- what have we really seen in equity markets? Global equity markets, on a daily average basis, because that's how we bill, are down about 1% in the last 45 days versus fourth quarter, down 1%. Is there -- could it be down any further? It's -- off of the December 31 peak, it's down 3%. And so you say down 1%, 3%, that's not a very big impact on our servicing fee revenues or management fee revenues, in particular, because the daily averages matter. So it's just early, Susan.

Okay.

We're 45 days into the year. There's another, whatever, 315 days to go. I think this a year we've all felt we'll have more volatility between economics, rates, politics. But we're -- daily averages are within a percentage point of last quarter. I think we're comfortable proceeding on plan.

Okay. So let's go back to some of the fee generation and a lot of the deals you won last year, and really over the last 2 years have been Alpha assets, in particular. So walk us -- again, these are the -- take longer to install. Walk us through the Alpha client revenue generation life cycle, if you will. So from the contractual revenue accrual and the relationship expansion, when those transactions or piece of the business become accretive to your fee margin if you will?

Yes. They're all a little different. And like most deals, you've got to implement and bring them on in the first year. And it's really in the second year that they become supportive of our margin and our margin targets. We've won and announced 20 Alpha deals over the course of the last couple of years. We've got 10 that are live. Of the 10 that are live, 8 are existing clients. So we've expanded the relationship to our brand-new clients, right? What we found is that as you bring in an Alpha client, you're typically working with a client to transform its operational structure, right? They're effectively outsourcing important parts of their front office systems, right, to our Charles River offering, often times taking their processing operations and turning it over to us. We call that middle office, and then custody and accounting. And what we find is, in the first year, we've got to staff up. We've got to ramp up our technology. We've got to connect. And we're starting to get the first pieces of one of those revenue streams in the door. Sometimes we start with Charles River. Sometimes we start with custody. It kind of depends. It depends on what the client's starting point is itself and also what's natural to convert. It's typically in the second year that you're getting most of the revenue elements that you expect, custody accounting, middle office or the Charles River front office or whatever combination was negotiated as part of the contract. And at that point, you've also lapped yourself on some of the implementation, the professional servicing costs that it takes actually onboard, and you're getting a solid contribution to the margin. And at that point, it's supportive to our margin targets of 31%.

So really, last -- a large portion of last year's business wins are really 2023, 2024 revenue growth?

That's right. That's right. And it's also a reason why we're out there selling Alpha because of the front-to-back offering, it's distinctive, it's bringing a whole set of clients that we either didn't have or expanding our client relationship. We're also systematically out there selling core, what I'll call traditional custody and accounting, right? We know how to bring that on. It's got very strong margins. It's got the kind of processes that we can duplicate and scale. And it's in that area where we're systematically going through client segments, client size groupings and regions. And so it's really both the combination of the continued growth and expansion of our traditional business, supplemented with the Alpha offering, that I think is really what gives us the differential growth rates and gets us to that 4% to 5% that we're looking for.

Okay. And I think this is probably a very good problem to have. But I have to ask you this, where are you in terms of your capacity to onboard new Alpha clients? Because this is -- I mean, your pipeline of wins is now quite substantial?

It's a good problem to have. And -- but it's not something we haven't wrestled with in the past. State Street has been built up through a set of organic sales and lift-outs. And oftentimes, you can think about Alpha -- deals as lift-outs. And we used to do 1 or 2 good size lift-outs a year, some bigger some smaller than others. And so there's some complexity. There's some diligence. There's some integration that you need to do and an Alpha offering takes that. So it's -- we've -- in many ways, we've been to the movie of larger complex deals. We just have a different flavor and a different name to them, and include not only the middle and back office, but the front office. So we've got some history. I think I'd also say that this is something that we're systematically scaling up to do, right? And so we're bringing on the right resources. We got the right expertise. And now that we're -- we've got 10 under our belt live, we've actually become more efficient at bringing them on. So we've been clear about what the playbooks are. We've been clear about what the customer -- what has to happen on the client side. What changes they need to engineer at the same time, and then how to manage through that process. And so it's a good situation to be in, but we're comfortable with the pace and we're comfortable with our ability to scale the pace of our onboardings. And now as we've completed some of those onboardings, we can then take some of those teams, think about it the first 10 teams, and put them on the next 10. And that means we're even more efficient because they built the expertise.

Well, that was kind of my next question, which is you've now onboarded 10 of these clients. And what you've learned through this process, both from an installation standpoint as well as the servicing fee progression?

I think we've learned a couple of things if I kind of step back. First, we've learned that what consummates the sale and clarifies the demand here, the C-suite engagement. This is a CEO, COO, CFO decision. It's no longer the an Operations Head or a Regional Leader in a company, because what the client is doing is systematically changing their operating model and actually making the decision to focus their own activities on investing in their own investment acumen and saying, "Look, this operational and technology backbone, that's better for someone like State Street to run, because we have the scale and the functionality." So it's a C-suite decision is what we've learned. And we actually need to approach it that way at the beginning. We've learned that it brings a lot of revenue opportunities to us, front office, middle office, back-office, FX trading, SEC lending, so that's quite positive. We've learned that clients are doing this both for the functionality they provide and the efficiency that they can create over time. And what we've effectively done is help them replace a fixed cost structure. They've historically had a internal fixed cost structure with the variable cost metered offering that can scale as they grow and as markets go up and down, and that's been helpful to them. And then finally, I'd tell you, we've learned that clients that go through the process, understand the value, they become references and they stayed with us for a long time because many of these contracts are 5, 7, 8, 10 years. And that's longer than a typical custody contract. So there's a lot of -- I think there's a lot of observations and benefits that we've seen here, and it's something we're going to keep developing.

Okay. So let's switch gears a little bit and go to the Brown Brothers acquisition, pending acquisition. So on that pending concept, can you provide any update on the timing, on the approvals and the potential closing of the acquisition?

Sure. And we mentioned during the fourth quarter earnings report that we did in January that we're continuing to go through the regulatory review process for the acquisition. We did say it was slower than anticipated. And as you're familiar, there's a lot of global M&A activity around the world as well as a generally slow pace of regulatory reviews, which I think is not completely surprising in retrospect. That said, we've already secured several of the approvals that we need and are just marching through the balance of them. Of course, we have limited transparency or control over the exact timing of the remaining reviews. But at this point, we believe that the regulatory review should be complete by the end of the second quarter so that we can move forward. What we are doing, as we're progressing with the regulatory review process, we're also working very closely with our Brown Brothers colleagues, literally daily on a smooth transition integration. We've got pairwise team setup, operations, technology, client service, client-facing and then all the corporate functions that were extremely prepared for the closing process and then the day 1 operation. And in particular, they're all involved in detailed planning. And so as an example, I'd say -- for example, we've got a voice of the client program set up, where we're working with our clients to review and check with them that they're going to get the best of both offerings. Both product offerings that we and Brown Brothers bring, which gives us the feedback that we need and then prepares us to be in a position where they get the best of the best, and then it will help our franchise as well.

And so beyond preparing for the integration, can you just spend a minute on the rate sensitivity of that balance sheet and how you expect to optimize it? I assume there's even more opportunity in the current environment?

Yes, there is more opportunity in the environment. And in January, I lifted our expectations of our earnings growth for the Brown Brothers operation, the first year of -- in the first year of operation, I described that. We expected that EBIT in the first 12 months would be about 25% higher than the prior year, and that was up from 15% relative to the prior year as we described the deal back in September. The way we think about the balance sheet is in several different layers. So there's an on-balance sheet book of deposits that they have bring to us, which is $7 billion or $8 billion. On a regular basis, we invest that with investments on the asset side and earned 70 to 75 basis points. And that's why you saw in our disclosures back in September that we estimated, but that was worth about $50 million of NII in 2021, and that will obviously grow because their deposits are not dissimilar from ours. They have lower betas at the beginning of the rate cycle and then they rise over time to the 30% level in the middle of the cycle and 50% towards the end. And so we'll build off of that $50 million earnings stream. At the same time, they have the sweep program that's quite unique. It sweeps about $65 billion of deposits to a variety of different banks, primarily U.S. dollars, so they're particularly valuable. And the fee structure there is 9 or 10 basis points at this point in the cycle. So you do the math, and that means we earn $55 million, $60 million in 2021 or they earned, in effect, with the current rate cycle. Now what happens as rates rise is there's a beta there as well. It's a higher beta, just because of the nature of the sweep. It's a 45%, 50% beta. But you can see that, that opportunity will also rise over time as interest rates move up. And then the third layer is there's an opportunity over time to shift the deposits from the sweep to on-balance sheet because you can imagine as prevailing rates reach 100 basis points or 150 basis points, they're more remunerative on the balance sheet, and they'll cover the cost of the preps that we need to hold. And so we're working through at different points in time and under different scenarios how much do we shift and how do we make that accretive, while we maintain the program.

Okay. Fair enough. So -- let's go back to some of the secular trends that are supporting revenue growth in the business. And you know I have had a pretty good dialogue in this venue sometimes around the secular trends supporting revenue growth. But I want to come back to this because I think about the last 5 years of sitting down with you here and talking about revenue growth and we had pricing headwinds and these headwinds and those headwinds. But really in these last few years, something has really changed in terms of the ability to accelerate the rate of new business growth and have an achievable 4% to 5% revenue growth outlook for the medium term. What is it that's changed? Is it the revenue pools? Is it management's focus? What's changed?

I think 3 things have changed. I think, first, we have innovated on the value proposition of the product offering around creating Alpha, that Alpha front-to-back offering, while we continue to build out and deliver on our traditional offerings of custody and accounting. So we've expanded the product proposition and made it distinctive. That's the first thing we've done. The second thing we've done is we've fundamentally changed, I think, our execution discipline as to how we go to market. Remember, State Street was built through a series of large lift outs, some acquisitions over the last 2 decades. And then some attention some very large asset managers who -- and as they grew, we grew with them. And what we've really done over the last, I'd say, 3 years, has shifted the focus to not only the large asset managers, but serving the midsized asset managers. And we've added client groupings, our global client division, our preferred clients are premiered to try to serve them more directly. We've said the asset managers are core to what we do, large asset managers, in particular, but we're going to serve the mid-market asset managers. We're going to reemphasize and focus on insurance and asset owners and official institutions, some of which we tackle in partnership with our asset management business because that's how they tend to buy. And then we've marched across the world, right, the U.S., Europe, onshore, offshore in Europe. And I think what we've done is we've turned the institution from being dependent upon 1 or 2 large deals or 1 or 2 midsized acquisitions to how do you systematically build, develop and expand client relationships. And that's been fruitful. I think that's the kind of execution discipline. And then the last thing I'd say we have done is we've shifted towards the faster-growing revenue pools. Where are those? Some of those are in private markets. Some of those are in European cross-border funds. Some of them are in the front and middle office, and that's helped us. And so each one of those efforts, whether it's the product proposition, the execution discipline and how we've broken it down or the shift towards, I think, faster-growing markets has helped and puts us in a better position to now deliver on some of our medium-term targets.

Okay. Well, we expect you to continue to deliver. So let's turn to asset management. The business is still about 20% of revenue and earnings. It's compounded at a very healthy rate. So let's talk about how you're looking at the business today. The need for incremental scale or scope, can it continue to make its fair contribution to the 4% to 5% revenue growth? Or how do you look at the sustainability there?

I think we've been very pleased. And in some ways, I think we've hit our spot again in the asset management business. I think for a couple of years, we were -- it was doing all right, but it wasn't -- didn't have the revenue growth we'd expect in the margin expansion. This year, we had a strong mid- to upper mid-single-digit top line growth this year, last year. We expanded margin by 8 to 10 points so that we're solidly in the 31%, 32% margin range. And so I think a lot has come together. When you peel it back and think about it strategically, the ETF franchise, it's been systematically expanded, right, not only the classic SPY institutional franchise, but into retail. And at the same time, we've expanded the U.S. franchise into Europe and into Asia. In institution -- in institutional asset management, we have a franchise that was built over the years, but we found that we -- we're really excelling in index equities, index fixed income. There's a whole offering around target date funds and 401(k) that's particularly distinctive. And then that institutional framework, especially the index offerings with an ESG overlay, I think it's really created some momentum. And again, we brought some execution momentum and so forth, but that's been fruitful. And then finally, the cash business continues to do well. Part of that is some amount of quantitative easing. But part of that is just systematically making the connections with the rest of State Street and driving the offering on a third-party basis. So we're pleased with the performance. It's been constructive and accretive to our medium-term financial targets. And it's an important part of the diverse offerings that we bring.

So I know you know what my next question is, given that there have been discussions and rumors, et cetera. But when you think about the need for incremental scale or scope, buyer, seller, neither, no answer?

It's -- we never really comment to a market speculation. What I tell you is it's a core business that we've been able to operate. We've been able to operate it well and so we're pleased with its performance. We've always said that we're going to drive the breadth of the businesses that we have and from time to time, if there's an opportunity to bolt something on to add to what we've done. We added the GE Asset Management business a couple of years back, which was, roughly speaking, 10%, 15%, 20% of the size of what we had in asset management. And we've just done that again in -- with the Brown Brothers Investment Services announced acquisition, which is about 10%, 15% of what we have in services. And so we think about our businesses as can they perform? Can we drive the growth in earnings that we'd like? Are they robust? And then can we build around them? And I think we'd certainly say that of all of our businesses right now.

Okay. That's a fair enough answer. So let's switch gears and let's talk about net interest income as kind of the means to wrap up the revenue discussion, but also kind of touch on the current environment. And I realized that we're only about halfway through the quarter, but I do have to ask on NII, if there's any change in your thinking given the yield curve shift and expectations for a first-rate hike of at least 25 basis points in March?

I think the first time we met, Susan, we were looking at the start of the last rate cycle, and I was smiling then and I'm smiling even now. You know what, we've given guidance for the year. We gave our original guidance based on 3 rate hikes, NII up 10% to 12% for the year. There's certainly a set of appealing scenarios as we read all the probabilities on Fed funds and rises. What we've said is that every 25 basis point increase in Fed funds rate helps our NII by about $20 million to $25 million per quarter, right, as it flows into the P&L. And so I think what we've best try to do is give good guidance based on what we knew at the time. And there's a lot of basic information out there that folks can use to model different scenarios. To tell you the truth, I'd like to get to the first rate rise and then look forward from there. And then get to the second one and look forward from there, and I think we'll be able to update as we get further during the year.

That's all quite fair. So then let's think about it this way as well. In terms of where you're deploying liquidity today and whether or not there's been any change in terms of your appetite for securities and duration?

We've been careful. I think the natural position for a bank treasury is to run with some amount of modest duration, right? It's a natural long position and it's been accretive to do that for many years, for many decades, to be honest. What we did do on the margin is we adjust the position when bonds mature. Do we go and maintain duration? Or do we tighten it? And we've tightened a little bit on new purchases. We've also been more careful in the MBS space. We earn differential spreads there. But you don't want to be in a high premium or a high prepayment risk or extension risk bonds right now and so that's been an area that we've shaved down. So I think we've made some tactical adjustments and are certainly prepared to deploy more liquidity as rates rise and add more duration.

Okay. And then if we think about the what-ifs of a tight new cycle that begin sooner or QT that begins sooner and is more robust, how do you see it playing out vis-a-vis deposit flows? And how are you thinking and planning for an earlier start?

So I think the core question on quantitative tightening is what amount of deposits on a bank's balance sheet will be affected, right? Because then you can go back and triangulate to what does that mean for NII? Which kind of deposits will move off the sheet? And how that will affect NII? So the first thing we've done is we started to think through what's the effect? And the first way to think about is, let's just assume that the Fed reverses the $9 trillion balance sheet it has today back to $8 trillion, right? That could come if they do $100 billion runoff per month towards the end of the year. And that would basically get their balance sheet to be equivalent to where it was in the second quarter of 2021. What's ironic is we're at about the same deposits we had in the second quarter of 2021. And why? Because we've been kind of holding back the wave of deposits. And so our view is that we're going to have a relatively modest impact this year, even if they do begin quantitative tightening because we've been holding back that wave of deposits. And now what we're going to do is just let it, let it stabilize, to be honest. I think then the question is what happens to bank deposits if they go from $8 trillion to $7 trillion or $7 trillion back to $6 trillion? We've done a fair amount of introspection analysis on our balance sheet. If you think about it, our deposit base used to be $160 billion. It grew to about $230 billion, $235 billion, so up $65 billion, $70 billion of deposits. USD in core client deposits are up $45 billion during that time period. And during that time period though, AUC/A, right, the underlying core of what we do, is up 27%, right? So half of the $45 billion increase in deposits since the Fed balance sheet was at $5 trillion and now is at $9 trillion, it's largely driven by the underlying business activity that we have. So that leaves maybe -- maybe $20 billion, $25 billion that is really, in our minds, at risk in U.S. dollars, right, relative to the Fed balance sheet. But to work through that $20 billion or $25 billion, you'd have to get the Fed balance sheet to go from $9 trillion to $8 trillion to $7 trillion to $6 trillion to $5 trillion. And we see that as a multiyear process. And so it's hard to say, but maybe there's $5 billion, $6 billion, $7 billion, $8 billion of bank deposits on the base of [ 2 35 ] per trillion dollars of Fed balance sheet, which to me is relatively modest, relative to the large expansion we're going to get in NII from rising interest rates. And then obviously, what will tend to leave the balance sheet will be the more heavily priced deposits. And so there'll be some effect, but it will be -- we expect it to be relatively neutral for 2022 for this year and then to have some slight effects in the coming years forward.

Okay. So net-net, if we think about the benefits of higher interest rates and higher than forecast interest rates when we were back in January, this ought to be a net positive? And then kind of transitioning into the -- thinking about expenses and investment spending and the adequacy of your investment spending for 2022 and 2023, to the degree that there is incremental NII upside, does that drop to the bottom line?

By and large, yes.

Okay.

Yes.

Okay.

I mean we -- I think what we've learned over time is we need to have both fee operating leverage and total operating leverage as much as possible. And this past year, we had real headwinds between 2020 and 2021 on NII. NII was down 13%, and we still squeak by with some positive total operating leverage. And part of that is we had 3-plus points of fee operating leverage. This year, if you think about our guidance, we've guided to about 2 points of fee operating leverage. We're hoping to have more points of total operating leverage. And we're -- I think that's been how Ron and I and the management team have been thinking about the business is we need to have fee operating leverage because it's what we can control. And the NII, especially when there is more of a tailwind, is something that we should flow through to shareholders and use to generate earnings, buybacks and be accretive directly to EPS.

So then I hear you on the prioritization of the operating leverage. And honestly, we see the new business growth, and that's a net positive. But what's your level of confidence in the adequacy of the investment spending when you are putting more priority on the operating leverage?

Sure. the way we've, I think, designed or redesigned the business over the last few years is that we've systematically been trying to either maintain cost down or cost flat or up slightly. So within the balance of the fee growth. If you think about this year, in particular, in terms of the guidance we gave, we guided to a couple of points of higher expenses for the year. That was really about 5 to 6 points of higher spend due to variable costs, due to merit and compensation costs and investments, offset by several points of continued reengineering and productivity, right? So you've got to think about it on a gross basis. On a gross basis, I think we've been systematically reinvesting in the business to the -- by about 3 points, sometimes 4 points of expenses. So on our expense base, $8 billion expense base, we're talking about $250 million, $300 million of reinvestment in the business. And our view is that, that is both important for our clients and for our franchise, right? Because whereas it's in the Alpha offering and the products and services around that in private markets where there's real differential opportunity. It's in some select segments that we've been building out. It's in technology and resiliency and some of the infrastructure and that all matters. Is it enough? I think we have the scale. Susan, the -- we've got a -- we've got $43 trillion of assets under custody. We'll be the -- we're the #2 custodian out there. We'll be #1 once we close the Brown Brothers deal. We've got an $8 billion expense base. We've got $2 billion of spend a year on technology. And to be honest, one of the reasons why folks like Brown Brothers and others have said, "Look, do I want to keep going in this business? Because they don't have the scale we do." And I'd say we do have the scale to reinvest, and we're going to continue to do that so that we can generate those growth opportunities that you've seen.

Okay. So let's then transition into capital management for a minute and talk about the priorities, and I understand pausing share repurchasing implications of BBH. But let's talk about how you're now thinking about share repurchase, considering the timing of closing on Brown Brothers as well as the impact. Look, the one negative of rising interest rates is it does hit you on OCI. So how does that factor in to your thinking around the pace of capital returns this year?

Yes. It's all been factoring in and I think continues to factor into our -- the guidance we gave. The guidance we gave is that we felt that with the close of Brown Brothers, with the advent of SA-CCR rolling into RWA construct, and with some level of movement in interest rates, we'd be able to restart the buyback in the second quarter and then continue in third and fourth quarter. And we're on pace to do that. We had assumed a 10-year at -- just at around the 2% level that it's sitting at today. Obviously, if we get another spike, we have to -- we may have to adjust a little bit. But at that level, we feel comfortable with the ability to restart our buyback in the second quarter, and then get to the more regular levels that we have historically for third and fourth quarter. And that's part of what we feel committed to, right? Because it's, in our minds, capital is better kept with our shareholders than on the balance sheet. And we've got the earnings generation to be able to deliver that.

I'm tempted to let you just finish on that note with the earnings generation that does support that. And -- but I do want to touch, while we have 1 minute and 30 seconds on the clock here. When I think about and take a step back and we've sat down every year for the last several years and talked about the growth prospects. And it would seem to me the confidence boost that came from the new business generation last year from the realization of the operating leverage that you targeted that you enter '22 even more confident in the achievability and the sustainability of the targets that you've set out?

I think that's right. I think we've built sustained momentum in the business. We've been effective with new clients for the existing clients, the Alpha offering, the traditional offering. I think has been -- I think we've reached that level of confidence, and I think sustainability that we can keep delivering that. I think, Susan, we've also, over the years, shifted the center of gravity of the revenue pools that we operate in the front office, which is growing double digits. The middle office, mid-single digits, sometimes high single digits and that's actually helped give us some lift. And then finally, I think we've instilled in our culture and engineering mindset that we're going to keep driving productivity. And now folks are realizing the more productivity we can drive, the more we can reinvest in the business. And that's a very positive, I think, part of the culture and something we'll continue. You put those together and add some additional tailwind from interest rates, knock on wood, we'll watch the first and then smile further. I think there's a lot of positives here.

Okay. Thank you for coming back and joining us in person. It's good to be back in person. It's good to see you. Thank you all for joining us and that's it for this session.

Thanks very much.