The Bank of New York Mellon Corporation (BNY) Earnings Call Transcript & Summary

Good morning, and welcome to the 2026 Third Quarter Earnings Conference Call hosted by BNY. [Operator Instructions] Please note that this conference call and webcast will be recorded and will consist of copyrighted material. You may not record or rebroadcast these materials without BNY's consent. I will now turn the call over to Marius Merz, BNY Head of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone. Welcome to our third quarter earnings call. I'm 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. And I'll note that our remarks will contain forward-looking statements and non-GAAP measures. Actual results may differ materially from those projected in the forward-looking statements. Information about these statements and non-GAAP measures is available in the earnings press release financial supplement and quarterly update presentation, all of which can be found on the Investor Relations page of our website. Forward-looking statements made on this call speak only as of today, October 15, 2026, and will not be updated. With that, I will turn the call over to Robin.

Thank you, Marius, and good morning, everyone. I'll start with an overview of BNY's performance in the third quarter, and then Dermot will walk you through our financial results and outlook in greater detail. Referring to Page 2 of the quarterly update presentation, BNY delivered strong results in the third quarter. Earnings per share of $2.34 grew by 24% year-over-year at a very solid pretax margin of 39% and with a strong return on tangible common equity of 29%. Once again, our growth was broad-based across our business segments, resulting in firm-wide revenue of $5.7 billion, up 12% year-over-year. generating approximately 390 basis points of positive operating leverage in the quarter, demonstrating the scalability of our business as well as our continued work to enable greater productivity. As another signal to the diversification and resilience of our business model, we delivered these results against the backdrop of an overall constructive but uneven operating environment in the third quarter. Equity markets remain strong, supported by corporate earnings growth as well as continued investments in AI capabilities and related infrastructure. At the same time, persistent inflation, a sharp repricing in interest rates, geopolitical tensions and trade uncertainty contributed to volatility in fixed income markets and rotations across equity markets. Turning to our business performance. As many of you know, over the past few years, we have changed how BNY works. With 2 key building blocks for the re-imagination of our company in place, the platform operating model and our commercial model, we are able to operate with greater connectivity and deliver greater value to our clients. Our commercial results in the third quarter reinforce our progress. Client demand continued to grow with strong sales and pipelines across products, client segments and regions as well as larger, more comprehensive wins. As a result, the third quarter was our 15th consecutive quarter of year-over-year sales growth with new mandates, deepening existing relationships from digital native clients like Revolut, to established institutions such as ING, that are finding more ways to work with BNY in more places across more products. This continued momentum is driving higher organic growth and enabling an even more resilient and vibrant business built to support our clients with excellence through economic and market cycles. Changing how we worked was a prerequisite, but innovation is an increasingly important element of the BNY story. With everyone in the company now working in our new operating models, our focus has shifted to realizing the benefits with product, engineering, operations and commercial teams coming together to develop more integrated and innovative solutions and deliver them for clients at greater speed and scale. At its heart, BNY powers markets and advances the global financial system. We have done this over the entire history of the United States. BNY supports the entire capital markets life cycle from managing assets and collateral to servicing them and moving money. We view some of the current inflection points in market structure and technology as opportunities. As markets evolve, we have the vantage point and positioning to connect our capabilities in new ways, helping clients to adapt to changing market structures and pursue growth on infrastructure that they already trust. Several launches illustrate what that can look like. In July, we announced the launch of our global digital transfer agency capabilities, which extend our leading position in traditional fund servicing to the on chain world, enabling a unified client servicing experience and ultimately growth into new asset classes and technologies. In the spirit of build it once, use it many enabled by BNY Digital TA we, ourselves, now offer a new digitally native money market fund through BNY [indiscernible] with our new B-liquid tokens representing shares in the fund on chain. Bailey Gifford co-designed its recent on chain offering with us and has already launched a fully native U.K. regulated tokenized fund and BlackRock is using our capabilities for a recently launched tokenized share class of one of their existing money market funds. And just last month, our payments and trade business launched a new pay-to-wallet capability that allows banks to send cross-border payments directly from bank accounts to participating retail digital wallets using the payment messages and correspondent banking infrastructure from us that they already rely on. This gives banks another way to reach customers who use digital wallets and grow their cross-border payments businesses on BNY's Global Payments platform. Our thesis and digital assets remains simple: innovate the capabilities and act as a partner to our clients as we help them bridge to the digital world. On a related note, we couldn't have picked a better time to reimagine BNY than in this age of AI. We have said it consistently. At BNY, AI is for everyone, everywhere and everything. And so we are embedding AI in every aspect of our business. That's why we've built our enterprise AI platform, Eliza, and invested in our people so we can develop capabilities, govern them consistently and put them to work at scale. Over the past quarter, we've continued to move AI deeper into the processes that run our company. By deeply understanding our activity, including process steps, system interactions, workflow patterns and more, Eliza is helping our teams reimagine how work gets done. In fact, over time, we see an opportunity to extend these AI capabilities to our clients to help them solve similar challenges and optimize workflows end to end. This work ultimately creates more capacity for our teams to better serve our clients and earn BNY a greater role in client relationships through improved features and capabilities. We are also pairing our ambition with the governance and accountability needed to scale AI responsibly. Last month, we opened a BNY AI lab at [indiscernible] Mellon University, advancing research on topics like verifying AI-generated code and evaluating agents for use in critical systems. All of this reflects our broader approach to AI, moving with ambition intensity and discipline, all with the objective of running BNY better to drive enhanced commercial, operational and financial performance. I'll conclude by summarizing where I see our company at this point in time. Our performance in the third quarter demonstrates what this team and this BNY are all about deliberate, innovative and never satisfied. Our work to enable higher performance, greater connectivity between our platforms and more seamless delivery of holistic solutions from across BNY to our clients continues. And we can already see that these foundational investments have laid the groundwork for our further growth. With our resilient and trusted platforms, deeply embedded in workflows and the breadth of capital markets worldwide, BNY's diversified businesses enable our clients to adapt and thrive. All of this laid against the secular trend of financial markets growing, deepening and evolving. Collectively, this allows us to go after the white space across products, client segments and regions better than ever before, creating value for our clients and shareholders. Put simply, we remain excited and energized by our momentum and the opportunity ahead. With that, I'll turn it over to Dermot.

Thank you, Robin, and good morning, everyone. I'll start with our consolidated financial results for the third quarter on Page 3 of the presentation. Total revenue of $5.7 billion was up 12% year-over-year. Fee revenue was also up 12%. That included 15% growth in investment services fees, reflecting net new business, higher client activity and higher market values. Investment management and performance fees were up 3%, primarily driven by higher market values, partially offset by the mix of AUM flows. [indiscernible] AUC/A of $63.4 trillion were up 10% year-over-year. This increase was primarily driven by higher market values, net client inflows and net new business, partially offset by the unfavorable impact of a stronger U.S. dollar. Assets under management of $2.2 trillion were up 2% year-over-year, primarily driven by higher market values, partially offset by cumulative net outflows and the unfavorable impact of the stronger dollar. Foreign exchange revenue was up 19% year-over-year, reflecting higher client volumes supported by continuous product innovation. Investment and other revenue was $175 million in the quarter. Net interest income was up 15% year-over-year, primarily driven by reinvestment of investment securities at higher yields as well as balance sheet growth, partially offset by deposit margin compression. The provision for credit losses was negligible in the quarter. Expenses of $3.5 billion were up 8% year-over-year, both on a reported basis and excluding notable items. More than 3/4s of the increase represents revenue related expenses, the remainder reflect higher investments, partially offset by efficiency savings. Taken together, we reported earnings per share of $2.34, up 24% year-over-year. Excluding the impact of notable items, earnings per share were $2.37, also up 24%. On the back of approximately 390 basis points of positive operating leverage, pretax margin expanded to 39% and return on tangible common equity was 29%. Turning to capital and liquidity on Page 4. Our Tier 1 leverage ratio for the third quarter was 5.7%, down 24 basis points sequentially. Tier 1 capital decreased by $1.1 billion primarily driven by capital returns through common stock repurchases and dividends, a decline in accumulated other comprehensive income and a preferred stock redemption net of issuance, partially offset by capital generated through earnings. Average assets were approximately flat sequentially. Our CET1 ratio was 10.9%, down 6 basis points quarter-over-quarter. Over the course of the third quarter, we returned approximately $1.4 billion of capital to our common shareholders, resulting in an 85% total payout ratio in the quarter. Next, net interest income and balance sheet trends on Page 5. Net interest income of $1.4 billion was up 15% year-over-year and down 2% quarter-over-quarter. I talked about the drivers for the year-over-year increase earlier. Sequentially, the decrease was primarily driven by seasonally lower deposit balances in the third quarter partially offset by reinvestment of investment securities at higher yields. Average deposit balances decreased by 1% sequentially, including a 1% decrease in interest-bearing deposits and a 3% decrease in noninterest-bearing deposits. Average interest-earning assets were flat sequentially. Turning to our business segments, starting on Page 6. Securities Services reported total revenue of $2.8 billion, up 15% year-over-year. Total investment services fees were up 19%. In Asset Servicing, investment services fees increased by 12%, reflecting higher client activity, net new business and higher market values. ETF servicing AUC/A grew by 26% year-over-year. Alternatives AUC/A grew by 14%. And across both segments, we are well positioned to win new funds as they come to market. This past quarter, we were pleased to onboard Aviva Investors to our middle office solutions platform as we near the completion of implementing a fully integrated operating model for them. Meanwhile, sales momentum continued with a good mix of larger transformational mandates as well as numerous tactical wins supporting the durability of organic growth in this business. In Insurance Services, Investment Services fees were up 43% primarily driven by higher corporate trust fees, notably including fees accounting for pass-through expenses associated with our role as financial agent for Trump accounts, but also reflecting broad-based growth across the business. Total debt service grew by 6% year-over-year to $15.4 trillion at quarter end. And in depository receipts, we have won approximately 2/3s of capital raising year-to-date, and investment services fees in the quarter grew by double digits year-over-year. For the segment overall, foreign exchange revenue was up 20% year-over-year on the back of higher client volumes and net interest income was up 14% year-over-year. Segment expenses of $1.8 billion were up 10% year-over-year, primarily driven by higher revenue-related expenses and investments partially offset by efficiency savings and lower severance expenses. Securities Services reported pretax income of $1 billion, up 24% year-over-year to pretax margin of 36%. On to Market and Wealth Services on Page 7. In our Market and Wealth Services segment, we reported total revenue of $2 billion, up 12% year-over-year. Total Investment Services fees were up 10%. In Wealth Solutions, Investment Services fees were up 7%, reflecting higher market values and client activity as well as net new business. Net new assets were $48 billion in the quarter, representing an annualized growth rate of 7%, reflecting inflows from existing and new clients. Wealth Solutions continued to win new logos and signed multiyear contract renewals with a number of significant clients in the quarter. In Clearance and Collateral Management, Investment Services fees were up 17%, reflecting broad-based growth in collateral management balances and clearance volumes. Average collateral balances grew by 14% year-over-year to $8.3 trillion, reflecting growth from both existing and new clients. And average daily transaction volumes grew by 10% year-over-year, reflecting higher client activity across both international and U.S. platforms. In Payments & Trade, Investment Services fees were up 8%, reflecting net new business. This solid performance is supported by new client wins, higher payment volumes and growth in our cash management and liquidity solutions. Net interest income for the segment was up 16% year-over-year. Segment expenses of $963 million were up 6% year-over-year, primarily driven by higher revenue-related expenses and investments, partially offset by efficiency savings. Taken together, our Market and Wealth Services segment reported pretax income of $1 billion, up 17% year-over-year and a pretax margin of 51%. Turning to Investment and Wealth Management on Page 8. Investment and Wealth Management reported total revenue of $857 million, up 4% year-over-year. Investment management fees were up 3%, primarily driven by higher market values, partially offset by the mix of AUM flows. Segment expenses of $655 million were up 2% year-over-year, primarily driven by higher revenue-related expenses and investments, partially offset by efficiency savings. Investment and Wealth Management reported pretax income of $205 million, up 11% year-over-year, and the pretax margin improved to 24%. As I mentioned earlier, assets under management of $2.2 trillion were up 2% year-over-year. In the third quarter, we saw $6 billion of net inflows in long-term active strategies, $4 billion of net inflows in index and $22 billion of net outflows in cash. Wealth Management client assets of $354 billion increased by 2% year-over-year, primarily driven by higher market values, partially offset by cumulative net outflows. Page 9 shows the results of the Other segment. I'll close with an update on our financial outlook for the year. On the back of another strong performance in the third quarter and with only 2.5 months left in the year, we are once again raising our outlook for growth and operating leverage in 2026. We now expect to generate nearly 500 basis points of positive operating leverage in 2026, up from 400 basis points just 3 months ago and clearly up from the slightly over 100 basis points we guided to at the beginning of the year. This reflects our current expectation for full year 2026 total revenue growth, excluding notable items, to land somewhere around the middle of a 12% to 13% range market dependent. And that includes our current expectation for full year 2026 net interest income to be up 15% year-over-year. Accordingly, we expect higher revenue-related expenses associated with this approximately 200 basis point improvement in revenue growth. Therefore, we are increasing our expectation for full year 2026 expense growth excluding notable items by 100 basis points to somewhere around the middle of a 7% to 8% range. As usual, our central case assumes current market implied forward interest rates, and that the operating environment remains broadly constructive. To wrap up, we are encouraged by our performance in the third quarter and the underlying momentum across our businesses. While we remain mindful of the dynamic operating environment, we continue to see our investments and execution translate into stronger client engagement, growth across our platforms and greater scalability. With that, operator, can you please open the line for questions?

[Operator Instructions] We'll take our first question from Mike Mayo with Wells Fargo Securities.

I guess this follows on that last comment about the expense guide being a little bit higher. How much are you spending on AI? What sort of benefits are you getting from that what you see as the potential? And Robin, I know you say, AI for everyone every AI for everyone, everywhere and in everything, that's a nice kind of high-level statement, but how does that actually impact the financials? Or if and when will you actually see it back the financials?

Sure, Mike. Happy to talk through all of that for a second. So let me just like zoom out for a moment. So we spend $4 billion a year on technology. We have a $13 billion expense base. And so if you just put AI into that context, sort of a few different things. So number one, it's a catalyst for transformational change, frankly, for the world, for all companies and for people. And so we think we're going to be a significant beneficiary of this technology given the fact that we think is going to sort of sweep over our business in a positive way, give us the opportunity to reduce friction, improve outcomes, create capacity internally and frankly, deliver for clients. We're excited about it for obvious reasons. Now it's moving very rapidly. We think adoption and integration ultimately can become limiting factors, which is why we have focused so much on our platform and this cultural philosophy, which you just quoted to really make sure that we are a fertile ground for adoption because if people have shields up walls up, that's not going to help the process. And we've been investing in this for -- as you know, we've been talking about it for 3 years, but we've been investing in over that. Now when we actually think about the inputs and measuring them and the output, so I sort of break it into 2 categories. So now we're really going to get to the heart of the answer to your question. The first thing that matters when we measure how much we spend and we think about how much we spend is are we spending too much or too little? We don't need false precision around exact perfection. What we really need to understand is are we investing appropriate and are we generating return from that? And if the answer is yes, then we need to understand, should we carry on and lean in more. The answer to the question is, yes, we're generating return and yes, we want to lean in more. And at the end of the day, the precise measurement, internal transfer pricing, et cetera, isn't super important. So frankly, we don't spend calories worrying about that as an input. The second thing that matters a lot is good FinOps, financial operations, managing the token cost, et cetera, and for that, we've put a lot of precision in because we want to be very, very careful to make sure we're using the right models for the right tasks, the routing engines, et cetera. And that's all built into Eliza. So there were very precise and we measure very carefully so that we're making the optimal decision at every moment of consumption of AI intelligence. So that's how I'm thinking about it, and we're thinking about it. And as a result, we're not breaking it out, but it sort of folds into the inputs across our expense base. And frankly, we think it could be counterproductive to break it out and to start obsessing about it publicly and even within the company as an input.

So one follow-up as it relates to token costs, and this gets to the benefits of scale. Are there benefits to scale when you're purchasing tokens at the enterprise level, do you get kind of discounts or something versus a smaller player that's trying to use AI tokens? And how are you managing that to become more price effective.

Yes. The short answer is yes, but the benefits of scale accrue in a few different ways. So first of all, yes, if you've got a good relationship with the providers of this intelligence and in fact, frankly, more of a partnership mentality, which we have with several of the labs where we're actually giving them ideas, collaborating with them, helping them with product development in some cases, that sets the scene for better commercial arrangements, and for sure. And you can only really do those things if you have the scale and frankly, the R&D capability to be able to be effective in that regard. The second thing that matters for price a lot is to be able to put models against each other and to be able to really use the right model for the job. And that isn't just in terms of one lab versus another, it's labs versus the appropriate open source potentially. It might be using a 6-month old model or a 12-month old model, you don't need a sledgehammer to crack a nut. And the routing logic built into that is very important. Now you can't do that unless you actually have a chassis, a harness to be able to manage that and that's where the investment in Elisa, we think, is very important because if you're just natively operating through the front door of 1 of the labs ecosystems, you can't do that type of routing. You actually need to have a layer that all of your agents operate in, all of your people operate through in order to manage that. And so that's a very important part of essentially managing economics, and you've got to have scale to be able to make that type of investment.

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

Maybe just sticking with AI and the broader sort of all the employees are on the platform now, as we look forward over the next year or two, how should we think about the benefit of the platform and add to that, any AI-related productivity gains? Is it a client wallet share opportunity? Does it open up new revenue pools or is it mostly about more capacity, more efficient employee base?

It's about all 3 of those. And you happen to have hit on 3 AI strategic vectors. And so I'll reframe them for you. The first one is generating internal capacity. And this is a very important word capacity because in some companies, they frame AI for themselves, I defer to their expertise for their own environment as being an efficiency gain. We don't think about it that way. We think about it as a capacity generator. If we can free up our people to be able to do more things, we're a growth company these days. We've got plenty of things to do. And so whenever we can generate capacity to provide for that growth without having to grow the expense base, that's phenomenal. We're so lucky to be reinventing AI, reinventing this company and reimagining BNY in this age of AI. So that's capacity, and we're very excited about that. What happened more recently, and as I mentioned, we've got 400-plus AI solutions in production. More recently, there's been become a tilt of some of those towards the second category, which is creating improvements in products, features and actually doing things that are helping our products deliver better for customers. And that, we think, is going to be one that's going to accelerate more from here. And then the third one, which we also have some examples of, although it's very early is doing new things for clients that we wouldn't previously have done without AI. So actually applying AI across ourselves and our clients on an end-to-end basis or delivering certain solutions that just didn't make full economic sense in a non-AI world that now might make more economic sense. So that's the third vector. And we actually view the opportunity across all three. It started more in the first. It's evolving more into the second. And ultimately, we think it will cross all 3.

And maybe just sticking with that, I mean you obviously have a unique lens both in terms of how front-footed you've been on AI deployment you see as part of the OpenAI board, Robin. Just talk to us, one, how do you protect against like the headlines we read about rogue agents when you're sort of all signs go in terms of deploying AI internally. So one, how do you protect against rogue agents? And as we think about the debate around open weight models versus the closed ones, like is there one way to think about it, given you said that you don't need the, I guess, the frontier models to solve the issues that the -- I guess, the industry is dealing with.

Sure. I'll give you sort of 3 parts to that. So number one, if you just step back from the current debate about speeding up, slowing down, pacing the frontier and all of that, there are 3 sciences in AI these days. One is the frontier model science itself, new models, more capabilities, more better intelligence, et cetera. That one's obviously talked about a lot. But the second and the third are very important, and they haven't really been as much as part of the mainstream conversation, although of course, you hear about them. The second science is the science of alignment and making sure basically that the models do what we would want them to do, behave as humans would like them to. And this is a science that needs more investment and frankly needs to catch up with the science of the model frontier. And you're seeing the lab starting to really invest in that. You're seeing some of the hardware companies talk about it more as well. Jensen has talked about it in the context of NVIDIA. Some of that alignment might need to be built into the hardware chipset in order to make it fully enduring. And then the third science is the science of observability. You want to know what the models are actually thinking and doing. And that science has also lagged and also needs to catch up with the frontier. So I view the safety package of alignment and observability needing to catch up with the frontier, that's important investment and it has to happen. The second frame that you mentioned is open source open source essentially means open weight, which means user customization, which is terrific and powerful. We do it. We use open source models as part of our ecosystem. So we're using the right tool for the job. But open weight means that the users can essentially certainly a sophisticated user can take off some of that safety package that we were just -- that I was just talking about. And so we need to be very thoughtful about that in the future because if you have very powerful frontier capable models that have open weights, it doesn't mean that bad actors can essentially adjust them so that they would behave maybe in a manner differently to the way that we would like them to behave. And then the third question, which is how all of that applies to our environment, which is essentially what you asked, that's where the power of Eliza comes in because we've got the chassis, the harnesses, the safety protocols, where we essentially can build and wrap safety around that frontier capability because we've got this extra layer. We also have the benefit of all of our existing controls. We don't make payments to BNY without a lot of validation. The fact that an AI model wants to make a payment, that's nice. We aren't fully trust even people to do things solely by themselves. We have maker checker processes, we have challenger processes, AI can operate the same way. So having the chassis, the safety harnesses wrapped around AI at the platform level. Again, back to Mike's question, some of that investment is about scale. That's how we do it well, deliberately and intensely over time.

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

I would love to hear your updated perspective on the platform operating model. So you guys had a phase rollout and you've spoken in the past about 12 to 18 months of seasoning that users need to maximize the model. How tangible should we expect the benefits to unit cost reduction or cross-selling or other metrics to impact ultimately BNY's results as we enter into '27 and through '28?

Thanks for the question, Brendan. So as we've said, we're fully live in the model now, 100% of the firm is active a platform operating model it's been a long journey, and I will congratulate everybody at BNY to kind of make us a reality. It was a very big undertaking, a very important strategic initiative for the last 4 years. But now we're actually in the model and we talked over the last several quarters about de-siloing the firm, putting like capabilities into similar platforms. So now we can really feel like going forward, the platform operating model is set up to deliver more value to clients, and you're beginning to see that the commercial model alongside the platform operating model is delivering the growth that's resulting in that 15 consecutive quarters of year-over-year sales growth that Robin alluded to in his prepared remarks. Also, I would draw attention to the fact that over the last few years, and I say it every quarter in my prepared remarks, we've harvested efficiency gains that we've reinvested in the business. And this year, particularly, you're beginning to see the payback and the benefit of those investments. If you take Securities Services, [indiscernible] segment that has a margin of 36% this quarter. That's as a result of moving into model, investment in strategic technology delivering more for clients, delivering more mandates that Securities Services are then bringing in other platforms to deliver more line of -- more products from other platforms to the clients. So we kind of think of platform operating model beside the commercial model alongside AI is a very, very compelling strategic opportunity for us in the forward. So we're very excited about the platform and where it is now and how we can grow the firm from here with that in place.

Thanks for all that color, Dermot. And a bit more mundane question for my follow-up. So deposit trends were a bit stronger than we had expected. Can you speak to quarter-to-date trends and what you're thinking for the fourth quarter? And also, you took up the NII guide. We've certainly seen rates back up. But in the past, you've spoken to less rate sensibility. -- could you maybe speak about what drove the upside to the prior guide on NII?

So yes, sure. So we talk a lot about narrowing the Kona outcomes and interest rate volatility, plus or minus 50, 100 basis points, we're kind of -- we always like to stay close to home as it were and that's been a strategic philosophy of ours over the last few years, and we feel very comfortable with where we're at in that. And really, our NII is really -- we don't lead with deposits. We don't lead with pricing, it's as a result of client activity coming to our platforms for other products that leave cash with us to service those activities. In Q3, you kind of saw a seasonal dip as expected. And then on the other side of it, you see with the rates backing up, you see a pickup in yield from about 150 to 200 basis points with securities rolling off into higher yields. So that mix -- we expect to continue into the fourth quarter. We have roughly about $5 billion of securities rolling off per quarter, and we do expect the seasonal pick up -- deposits to pick up into Q4 a little bit relative to Q3 as Q4 is quite an active quarter. So we've seen that in early doors in terms of deposits picking up so far this quarter.

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

I was hoping to dig into a couple of businesses with you guys. So first, I guess, [ kudos ] to our management continues to up really nice growth. It's been a super volatile year, obviously, in rates markets as well. So curious how you think about the durability of this kind of growth we've seen. And then more near term, as we move closer to mandatory treasury clearing what are the puts and takes, both kind of near-term impact on that business in a bit longer term?

So the last question first, central clearing. We believe we're going to earn our way through that. And so far, we've seen that because you see more volume on the platform as a result of the initiative. And so actually, we don't see that in the near term, medium term, long term as a particular headwind. Also, a lot of rate volatility this year, but that has encouraged a lot of volume. And so the more volume and people trading treasuries and debt issuance, you kind of see that coming on to our platform. So we're very pleased with the volume that has supported the platform this year. Then you have the mix of international and domestic. International is something that we've talked about for several quarters, and we made some strategic investments into platform internationally, and we're beginning to see clients come to us and do more activity with us. So it's been nice growth internationally, and we expect that to continue. Also just -- we've talked about this on prior calls. Debt issuance globally, more debt issuance equals more activity, more volume. And so that's -- we feel good for that platform. And the last thing I would say on the collateral side, people are always looking for funding, $8.3 trillion of balances on the collateral platform. It's our -- it's a record for us. So clients are coming to us for funding needs. We're developing new solutions, different ways of doing things, using new technologies, new products. And so there's a certain element of a halo effect of clients wanting to do more with BNY in this space. So we're very pleased where it's at, and it may moderate from time to time from here, but the long-term outlook for that platform is particularly good.

All right. Loud and clear. Second question is around Wealth Solutions, the old Pershing business. Growth has obviously been pretty good, but partially held by both markets and just the level of client activity. Curious if you can zone in on how you think about improving kind of NNA growth in this business? And to what extent do you think some of the capacity constraints at other large RA custodians on the long short type of tax aware strategies could help you bring in incremental business as you help potentially fill that void?

Okay. So I don't -- know the old Pershing business is -- it is the new Wealth Solutions business. So we're very proud of that business, nearly $4 trillion of assets under custody. We have a right to play. We have a right to win. We have strategic ambition. First of all, I would like to kudos to the team for a really strong quarter in this space. $48 billion of net new assets. That's kind of a 7% annualized growth rate. We've been asked before on calls, what do we see the medium-term outlook for this business. We kind of said mid-single digits of net new assets. So kind of feel good about that new clients. I think if I remember correctly, we signed roughly 7 new logos onto the platform this quarter. So clients are coming to us. They like what we have to offer. And so we're partnering a lot with big RIAs. And as I said in my prepared remarks, we signed several clients to long-term contracts. So like the business, we kind of feel we're a big player in the business. We have fresh leadership in there, taking a fresh look at things and kind of coming up with different strategies. Also, you may recall from our call in January, we've pushed the acquisition we made a couple of years ago, [indiscernible] separately management accounts, we've moved that over into Wealth Solutions so we can give a more unified product delivery and separately managed accounts. To your point, we're very active in the long shore tax strategy as well, which is a good product for us, for our clients.

Our next question comes from Ken Usdin with Autonomous Research.

Dermot, just wondering 2 things on the guide and the outlook if I just do the implied math for the fourth quarter. If I'm doing it right, it implies that fourth quarter fees would be down sequentially from the third. And I'm just wondering, is there any seasonality there? Or are there any items in the third quarter that might have just been like strong because of the environment? Or or not, I guess, just in terms of how you're seeing the environment play out.

So I guess we -- I guess, Robin said in his prepared remarks, we have a healthy pipeline. We come into Q4 on the back of a strong Q3. Clearly, there is a lot of volatility in the markets, but as Robin has said, we're set up for these kind of things and the durability of the revenue stream. So we're kind of just trucking along executing our strategy. And there's nothing really that I see in Q4 that outlier relative to Q3. The pipeline is there. The healthy dialogue is there. Actually, I think we're kind of flattish, not down. But I would say, overall, we go into the last 2.5 months of the year, feeling very good about where the overall firm is and where our businesses are operating, and that gave us the confidence to update our guide as I gave in my prepared remarks.

Yes. I appreciate that. And then same point on the expenses, it kind of implies a a typical year-end step-up in the fourth quarter, and you have so much room in the operating leverage. It would make all the sense in the world if you are, in fact, pulling forward some investments. But can you just kind of talk us through fourth quarter seasonality on cost and if you're, in fact, kind of moving some of the investments forward just because you have such a strong revenue base.

So like I don't believe we're pulling forward. It's typically seasonal. There are a few idiosyncratic items that happen in the fourth quarter. And then there are some things around compensation matters so one-off stuff, some vendor-related stuff. There are 3 or 4 things that are in there. none of them meaningful in itself, but when you add it up, it kind of gives that uptick, but it wouldn't be a place where you would start your jumping off point for next year.

Our next question comes from Scott Siefers with TD Cowen Securities.