Please standby. We're about to begin. Good morning and welcome to the 2021 Third Quarter Earnings Conference Call hosted by BNY Mellon. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Please note that this conference call and webcast will be recorded and will consist of copyrighted material. You may not record or rebroadcast these materials without BNY Mellon's consent. I will now turn the call over to Marius Merz, BNY Mellon Head of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone. And welcome to our First Quarter earnings conference call. Today, we will reference our financial highlights presentation, which can be found on the Investor Relations page of our website at bnymellon.com. Todd Gibbons, our Chief Executive Officer, will open with his remarks. Then, Emily Portney, our Chief Financial Officer, will take you through the presentation. Following their remarks, there will be a Q&A session. Before we begin, please note that our remarks include forward-looking statements and non-GAAP measures. Information about these statements and non-GAAP measures are available in the earnings press release, financial supplement, and financial highlights presentation, all available on the Investor Relations page of our website. Forward-looking statements made on this call speak only as of today, October 19, 2021 and will not be updated. With that. I will turn it over to Todd.

Thank you. Marius. And good morning, everyone. I will touch on a few. Highlights before I hand it over to Emily to review our third quarter financial results. And she will give you the outlook for the remainder of the year in more detail as well. Our financial performance this quarter reflects healthy and broad-based organic growth across our businesses, as well as supportive global markets backdrop. Now if you refer to slide 2 of our financial highlight’s presentation, we reported EPS of $1.04 and generated a return on tangible common equity of 17%. Revenue was $4 billion up 5% year-over-year and fee revenue was up 6% year-over-year. And that would have been 11% if you excluded the impact of money market fee waivers. This fee growth included almost 3% of organic growth across our franchise. During the quarter, we returned roughly $2.3 billion of capital to our shareholders, including almost 300 million of common dividends and 2 billion of buybacks. Our continued focus on innovation has led us to announce several groundbreaking new solutions this quarter that will meaningfully improve the client experience and represent exciting growth opportunities for us. Let me start with Asset Servicing. In the third quarter, we continue to see strong sales momentum. Year-to-date wins were up almost 40% versus a year ago and we are winning larger, more complex deals that expand our product offering. as clients increasingly see the value, we can provide across the value chain. We had a number of exciting business with this quarter. But one example I would like to highlight is the work we're doing for Oakhill Advisors, a leading alternatives investment firm. Oak Hill was receiving fund admin services from one of our competitors in performing middle office functions in-house. Due to our deep expertise and our…

Thank you, Todd, and good morning, everyone. As they walk you through the details of our results for the quarter, all comparisons will be on a year-over-year basis, unless I specify otherwise. , provide 5% reflecting higher fee revenue, partially offset by lower net interest revenue and higher money market fee waivers. Fee revenue grew by 6% or 11% excluding the impact of fee waivers. This affects the positive impact of higher market values, strong organic growth, and a favorable impact from ABC, U.S. dollar. Money market fee labors distribution, and servicing expenses for 233 million in the quarter, an improvement of 19 million compared to the prior quarter, driven by slightly higher average short-term in history. Other revenue was a 129 million and included roughly 55 million of valuation gains on strategic equity, investment. And interest revenue was down 9%. Expenses increased 9% or 6%, excluding the impact of higher litigation reserves. A notable item this quarter, the impact in which you can see at the bottom of the slide. Provision for credit losses for the benefit of 45 million primarily driven by an improved macroeconomic forecast, including an expectation for a continued recovery of commercial real estate prices. EPS was a $1.04, higher litigation reserves negatively impact EPS by $0.06 and provision benefit had a $0.04 heading impact this quarter. Pretax margin was 29%. On page four, we see the trend across a few key metrics over time. On the capital and liquidity on page five. Our capital and liquidity ratios remained strong and well above regulatory minimums and above our internal targets. Our chairman leverage ratio, which is our binding constraint, was 5.7% down approximately 30 basis points sequentially, primarily driven by the return of 2.3 billion in capital to our shareholders, partially offset by earnings and…

Yes. As a reminder, we ask that you please limit yourself to one question and one related follow-up question. Our first question comes from the line of Steven Chubak with Wolfe Research.

Hey, good morning, Todd. Good morning, Emily.

Good morning.

Wanted to start things off with just a question on the NIR guidance, Emily, that you just shared. I was hoping just to unpack the guide for 4Q, specifically, what you're assuming in terms of deposit, balance sheet growth, liquidity, redeployment, and I guess less and certainly not least, premium amortization.

Sure. So just why don't we first just start with the third quarter. And the third quarter NIR was down very, very modestly. That was off the back of lower reinvestment yields, also lower interest earning assets as we worked with our clients to actually manage, managed especially excess deposits. We were able to offset that with some tweaks in the securities portfolio. And also, we did see a benefit from premium amortization coming down that was both a mixture of us reducing the size of our MVX portfolio as well as the fact that prepayment speeds did slow down quarter-to-quarter. Your (ph) full-year guidance, you just rightfully pointed out remains that down 14% for the full year in terms of kind of what's baked into the fourth-quarter , I think we have more or less hit the trough. What's baked in there. Certainly, we'll still have the impact of lower reinvestment yields as a headwind. We are expecting a further reduction in interest earning assets because we will continue to work with our clients in terms of managing excess deposits. So perhaps, we expect them to go down by about 5 to 10 billion. With respect to premium amortization, it's likely our expectation forecasts based on rates is that it will be pretty much flat fourth quarter to third quarter. And look, there's probably some upside. I mean, certainly based on what we're seeing in terms of volatility and rates, and EBITDA movements by, for example, the Bank of England, etc. So, there could be some upside.

That's great color, Emily. And just for a follow-up on expenses, I was hoping you could speak to the expense growth outlook. We've seen a number of upward revisions to the expense guidance over the course of the year. I just want to gauge whether the current level of expense it's about 2.85 billion litigation cost is the right jumping off point for 4Q and maybe just longer term, what level of expense inflation we should be underwriting on a more normal basis just given the continued investments you cited in the business.

Sure. So, within the quarter -- so yes, expenses overall up 6%, We're still guiding for the full-year expenses to be up 5% versus last year, obviously . When you the third quarter, about is attributable to what we call revenue related expenses, inclusive of an uptick in higher incentives. We obviously want to pay our people competitively and for the strong organic growth that we are seeing. About a third of that is split evenly between the impact of the weaker U.S. dollar as well as the incremental investment that we have pulled forward. So those are the investments in both -- in growth, in infrastructure as well as efficiency. Well, also, it's worth mentioning that in the third quarter, we are starting to see an impact of a tighter labor market, both in terms of competition and in terms of cost. And also in the third quarter, there was an impact of merit increase which took effect in June. As we kind of look out, it's certainly too early to really comment on 2022, where in the middle of the planning process, what I would say is that, yes, the uptick you're seeing in the Second Half of the year is really the jumping off point for next year. And ultimately, there are other headwinds as well, inflation as I just mentioned, look, we're seeing. It's a good thing, but return to more normalized travel rates. So CNI (ph) is likely to go up. We're when as we reopen and the offices and return to -- return to the office will be some additional expenses associated with that. Of course, we will continue to also achieve and identify efficiencies. We're working through the investment spend as we speak, going through the proverbial food fight. Because as always, there's lots that we want to do, but what I would say is we are intensely focused on expense management. We will continue to be focused on expense management, but we're also going to invest through the cycle. And if I were to just give some color, I would just say that expenses in 2022, if I'm standing here today, will be modestly up from 2021.

Very helpful , Emily. Thanks so much for taking my questions.

Our next question comes from the line of Mike Mayo with Wells Fargo Securities.

Hi, good timing. I wanted to follow up on the food fight, investment spend discussion. Software costs were up 8% year-over-year. And Todd, you started off talking about some FinTech like initiatives. And so, I'm just wondering if maybe next year you want to spend more money. There's it's tough trade-off that you have in delivering results and investing for what you think could be a good effort. I didn't fully understand when you're talking about purging and the transaction banking payments. So maybe if you could just describe the total addressable market for that, how much you have and where you think you're getting or some color around that. And then what type of spending that's going to involve. Thanks.

Okay. So, Pershing X is, I think an exciting opportunity for us. And so, if you think about the registered investment advisor business, so if you think about Pershing, we're really the largest correspondent clearer. So, we're a third-party clearer for broker-dealers in the retail space. And now registered investment advisor. And that business is actually growing, but it's not growing nearly as fast as the advisory space is growing. And so, we are the custodian, we , we are providing a lot of the backend services for that business. But we think there is the opportunity for us to be an integrator in that business. So, and it's -- it's been gradually at the numbers recently, but it's been growing in the ballpark of 15%. So, we think that, we've got a relatively small market share, part of it, Mike, so we think there's an opportunity for us to pick up market share in a fast-growing segment. So that's why it's so exciting for us. In terms of the challenge that Pershing X will solve, if you think about it, Pershing have these multiple technology tools, a bunch of different data sets that they're trying to, trying to integrate or trying to look at oftentimes are logging into multiple systems and they are really reducing the advisory productivity. And that would be across things like financial planning, investment modeling, even some banking activities. And we have the ability to integrate our own private bank. So, there's really no solution out there today that can tie that all together. And so that's what we mean, it'll be an open architected, but an end-to-end solution. And so, we'll be integrating best in class services in amongst some of our own. And it'll -- it will provide a digital capability and real good retail experience both to the advisor, as well as to the Investor itself. So that's our target for Pershing. I think your other question was around the e-payments. So, in e-payments, this is -- we -- this is using the clearing houses real-time payment system. And we were the first to actually connect. And now this is a request for payment from a client. Exhibiting (ph) our clients so a Verizon to their customer, and they send to come across your -- they'll come across your phone that your bill is ready. Here is your bill, press this and make the payment in real time. Or you can even set a time when you want to make that payment to make sure that you've got funds in your account. That will connect as more and more banks connect to the real-time payment system, that broadens the capability of covering a very large percentage of the market. Currently, there are about 15 billion payments made in the U.S. So, it's an enormous market and we've got some, we've got about 100 prospects showing significant interest in the capability we designed.

Okay. So, e-payments, big initiative, big opportunity, Pershing X, if I heard you correctly, big market, big opportunity. So, in terms of funding these initiatives, as far as investing in these areas specifically are more generally, I know you've done a lot of overhauls in the back-office, lot of overhauls with your tech talent. What sort of spending will this take and should you be going faster or slower or how do you decide that?

Yeah. We -- certainly as you (ph), no, we've been increasing our tech spend over the past few years. A lot of that, as you pointed out, was in infrastructure and resiliency and dawdling of sounder infrastructure to support the growth that we're looking to drive today. And so , the kind of the piece dividend from that, we are reinvesting in a number of the software and the AppDev that we've -- that we've talked about it. So, I kind of categorize it into three areas. One, is we've talked about our initiatives? We just talked on two, Pershing and Treasury, but we've got some very deep things going on in our Data and Analytics capability. We're digitizing things across the bank. The Wealth Platform we continue to invest in for our own wealth management activity, Corporate Trust we're using smart contracts in developing a digital network for our clients to operate on in Investment Management. So just about to cross our businesses, we continue to invest in technology. There is also ongoing infrastructure and risk management. I mean, our cyber defenses are not cheap and we need to continue to invest in them. We're doing a significant number of Cloud conversions as I think through out across the Company. Regulatory reporting requirements continue to go up. There a lot of liquidity requirements as well as complying with the requirements. And we will always be focused on data and resiliency. And then on the efficiency side, there's -- we -- we've actually inventory the number of things that we do manually, and we're looking to knock them out for automating when it's when it's -- what it can increase some significant efficiencies and risk reduction. And we're also looking to modernize some of our core app. So even our Treasury Services, we're putting -- we're putting a very modern payments app or engine underneath all of this. So, there are a lot of the --- the good news is there are a lot of opportunities, but it will come with some costs. And our intent is to increase our technology spend next year.

Alright, thank you.

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

Good morning, John. Good morning, Emily.

Morning, Gerard.

Hi.

Todd, can you -- or Emily? When I go back to the year-end, 2019 pre -pandemic size of your balance sheet, you guys had assets about 382 billion and deposits of 259, let's call it, and then you had deposits of definitive 95 billion. Obviously today, it's considerably higher when the finishes quantitative easing, assuming it's finished by next summer, can you kind of frame out for us what you think your balance sheet might look like as we go forward. Our customers going to be pulling deposits out, do you think you'll shrink down? Not that you'll ever get to that year-end 19 level. But should we start to think about continued falling of the size of the balance sheet?

I'm happy to take that and Todd certainly, can chime in. So, the way we think about other levels now, we probably still have around 10% to 15% of our deposits are excess and they will eventually receive in a more normalized rate environment. But actually, core deposits overall are also up just given the growth in etc. I think the core deposits are also up. But the excess is about 10% to 15%. And the way we've been looking at it is certainly we've been managing the growth in those deposits and very successfully. So, a very targeted way, looking at what we deem to be excess and working with our clients to pursue off balance sheet alternatives for those particular balances. And if the Fed begins to taper when we all think they will or speaking to taper soon, I think that does help in terms of putting all led to a degree on the growth of deposits from here in terms of what we expect of 2023 and beyond Yes, I think you're at the stage where the Fed actually hikes on multiple occasions, it's only at that point that we would probably see a decline in deposits. But the core itself is higher than it was in the fourth quarter of 2019.

And , I think if my memory serves me right that date was you're picking an end date. It was actually the averages were a little bit lower than that. So, there is a significant amount of excess. It will start to -- and that's why we're sitting on so much cash at Central Banks. And we will probably see a little less pressure, certainly for deposit growth when the Fed starts to, starts to taper. But to Emily 's point, the excess coming off as probably sometime thereafter?

Correct, Todd. They were a period than numbers. Good memory. The follow-up question, you guys had a very robust share repurchase amount this quarter, as Emily pointed out, of $2 billion and just guidance for the fourth quarter, the question is, if I recall correctly, you have $6 billion program that I think expires at the end of next year. If you reach the $6 billion prior to the termination, would you consider re-upping -- assuming, of course, your capital ratio is permitted, would you consider re-upping the buyback if you use it all up before that termination date.

The answer, Gerard, if you think about the stress capital buffer regime has actually made things a little more flexible for us. And so certainly the board recognizes that if we continue to produce the capital that we're likely to, and we buy back the excess capital that we've accumulated will be in a position to come back to them and ask for more. So, the answer is yes.

Great. Thank you.

Our next question comes from the line of Jim Mitchell with Seaport Research.

Hey, good morning. Maybe just one on issuer service fees. They were flat sequentially and typically you'd have some seasonality. I think you mentioned some weakness on the corporate side, Corporate Trust side. Is that just pushed out? Should we expect some rebound in 4Q? Just how do we think about the trajectory in that business and any more detail on the quarter would be great.

Sure. issuer services, you really do have two businesses, Depository Receipt and Corporate Trust as you point out. Within the , we definitely saw a resumption in both issuance and dividend activity, and that was really even on top of the normal uptick that we see in the third quarter. In Corporate Trust, the underlying business actually is performing really well. Volumes in structured products are up actually meaningfully, slightly offsetting a small decline in activity in units. But the third quarter for Corporate Trust, there were really two things that also impacted revenues. One was a decline in reimbursable expenses. We've got reimbursable expenses, our adjusted pass-through. And ultimately so that impacts revenue does not have any impact whatsoever on PTI. And also, there was a discontinuation of a public sector mandate that started in this quarter. And we'll see the full effect of that in the next -- in the Fourth Quarter, probably be another 10 million or so decline.

Okay. But no, nothing got pushed into 4Q? It's just those issues.

Yeah.

Okay. Just maybe on the payments business. I think it's an interesting push. You've already had some growth in Treasury Services. So maybe you could just talk a little bit of what's been driving the accelerating growth of late. I think it's a little too early to be expecting anything from these new initiatives. And then I guess as we think about the newish initiatives, like this Verizon deal and others potentially is that a first mover advantage type thing? I guess, how do you defend being the intermediary between the merchants and the banks? Is it just simply being the first mover advantage? And what you think the possibility from a revenue standpoint could be from that business? Thanks.

Yeah. This is -- so it's a couple of things there. Effectively what we're doing is we're digitizing their collection experience. We've been in the lockbox business and now we're converting that to electronic through these requests for payments. And it is faster and cheaper for the provider. So, the cost actually for the utility in this case, so the cost to them on a per unit basis is down dramatically. And you also reduce your float and other items. So, we think it's usually to their advantage. So, we happen to have the collection relationship and we can continue . Paper's not going away. That's going to be a component of it, so we can provide the complete solution. So, we just thought we happened to be in a very nice position to do this, and we're not -- we're not in the card or retail payments business to speak of. In between it so, we happen to be very well-positioned and we got a little bit of a first-mover advantage by being into declaring houses real-time payments system, right way. In terms of how big can this grow? It could possibly move the deal a little bit, add a little something to our organic growth. I think it's a little too early to tell. We are excited about the relationship that we've got with Verizon. We're excited that they certainly stirred up a lot of interest. And we've got a pretty reasonable pipeline, but I just prefer at this point not to speculate on what that could be

Okay. Thanks.

Our next question comes from the line of Brennan Hawken with UBS.

Good morning. Thanks for taking my questions. Would like to explore that really robust core fee revenue growth that you guys have seen here. Todd, you made reference to nearly 3% organic growth rate in the quarter, which is really quite good. So is it possible to break down the year-to-date or your expectations for 2021 in the different components, how much of it came. Do you think from organic? How much activity and volume-related? I seem to recall that in the past you've said that half of your Servicing business is market-sensitive. So, is that still the right way to calibrate when we think about the market impact or pricing dynamics? Is it possible to give some color on the composition?

Sure, Brian. So, I think first of all, we should probably help you understand what we're describing as organic. So, we do try to take the market impact out for interest rates and the equity markets. We also try to adjust, for example, for some of the unusual activity that came of it, for example, right now money market funds are very large because of all this excess cash. Deposits are very large because of this excess cash. So, we tried to knock that growth out of the calculation. And when we get -- when we knock all of that out -- because if you look at us growing, our revenue growth minus fee waivers is significantly higher than what we're talking about in terms of our organic growth because that's getting the benefit of some of the market consideration. So, our -- once you knock all of that out the numbers get to something like 2.5% or so for this for this year, which is much stronger than what we've seen in years past. And frankly, 3-years ago was probably 0, maybe even slightly negative. And but you want to march through some of the areas where we're actually we're actually seeing it.

And just to really break it down very clearly. So, the 11% in growth ex waivers, we saw this quarter year-on-year, 3% was organic growth is as , about 6% of that was just market, was market impact and the remainder was just impact of a weaker U.S. dollar. In terms of the organic growth in that 3%, it was really broad based. So, when you look at purging, I think we talked a bit about continued growth in clearing accounts, mutual fund balances, and net new assets. In terms of Treasury Services, and we saw good growth in terms of payment activity. And on the back of both stronger economic, a stronger macroeconomic backdrop, but also net new business, and also within Treasury Services, we've really shifted the product mix to be higher margin in that business. In Asset Servicing, wins are up 40% year-to-date versus what they were last year. So that too is just speaking to the organic growth in that business. In FX, volumes were up significantly in some of that market, but a lot of that too is just based on investments in the FX platform that we've made. So, it's really broad-based and strong.

Excellent. Thank you for all that color. And Emily, I'd like to explore some of your -- I know it's very early to talk about 2022, but the expectation around expenses next year, a few questions on that. Would that modest growth be on a constant currency basis? And when we calibrate, I think you also had said that the back half of '21 is a decent base in which to build off of. Is that excluding the litigation that you guys had? And if so, could you size that for us? And when we think about modest, is there any way to calibrate that? Like, would you consider the 2021 expense growth to be modest or is it a bit more significant than that? Thanks.

So, in terms of -- its a bit early to really comment on 2022. We're obviously going through the entire planning process as we speak. As I did mention earlier, the uplift and expenses that you're seeing in the second half of this year on the back of the investments that we are making is structural. So that those -- those are permanent and that really will be baked into next year. As I also mentioned, there are some headwinds. We're starting to see a bit of inflationary pressure. Like I said, we're going to return to more normalized, we think travel and so will likely go up. A bit of extra expense associated with return to the office. So, there are headwinds that of course we're going to be looking to off-sale in offset with efficiencies. So, I wouldn't want to put an actual number on it. But at this moment, I would say expenses for the full year next year will be modestly up. And that's just on top line basis. They will be modestly up versus this year.

And Brennan, we would adjust for the litigation reserves.

Yeah.

So, we wouldn't consider that part of the base.

Yeah, on a non-operating basis. I should've said that, sorry.

Got it. And I know FX -- should FX be a tailwind for you guys next year, just to follow up on that. Because I know it was a headwind this year.

It depends on where we're --

It depends.

Right now, the dollar is showing a little bit of strength, which would create an expense tailwind but it would be neutral to our pretax.

Right. Fair enough. Thank you.

Our next question comes from the line of Ken Usdin with Jefferies.

Hi, good morning. Wanted to start by just asking you to talk a little bit more about Asset Servicing. It really good underlying growth if we just keep sec lending aside and fee waivers aside and the deck mentions transaction activity and higher market levels. I'm just wondering if you can help us understand like, how did the collateral business act versus how did the core Asset Servicing act and what type of net new wins quarter did you see on both sides? Thanks.

What -- Emily, why don't I take the clearing and the collateral management business and you can take the rest of the Asset Servicing space. So, we saw good growth in the clarity and collateral management business as we have for a while now. In fact, one of the points I made in my remarks. For the first time we saw the collateral management numbers, our tri -party numbers exceed $5 trillion in the quarter. So, we continue to see good growth there. And the profitability on the global collateral management continues to be strong. we've got innovation that is paying -- paying off there. That attributed a bit to the growth. The other thing that we're doing and we do this out of our Markets business, but it's really a collateral management business. Is the requirement to be margining and over-the-counter for over-the-counter derivatives transactions to meet margin requirements and we're in phase five of six of that. And our teams did an excellent job of seamlessly onboarding a significant number of players. And that's starting to add a little bit of revenue to the line there. So overall, that business continues to look pretty healthy and continues to show underlying organic growth. You want to comment on the rest of Asset Servicing?

Sure. As you think about Asset Servicing and just thinking about just the growth in our in our fees or at, or sorry. Our AUC Assets Under Custody they're up about 17% year-on-year on a spot basis. About half of that was driven by market and the other half truly driven by growth both from growth from existing clients, as well as new clients probably split about 50-50. And when just thinking through where we're seeing a lot of that growth. About 30% of it is from investment managers. Another 30% or so it's from broker-dealers and banks. And then the remainder is really split between both the alternative space and the asset owner’s space. So that's where we're seeing a nice uptake and the pipeline is stronger than it was at this period last year.

Great. Thank you. And my follow-up is just coming back on the Clearing Business last quarter. you had said that you were to expected about a $20 million impact from the deconsolidation that you discussed. Can you just help us understand how much of that was already out in the third quarter and how much more you still expect, if any?

Sure. Encouraging the -- we had originally expected about a 20 million impact of the lost business due to just being on the wrong side of M&A that is due to timing that was a lot less. So, I would think about it as the uptick will be about 15 million between the third quarter and the fourth quarter. We'll see the full impact.

Okay. Got it. Understood. All right. Thank you.

Our next question comes from the line of Brian Bedell with Deutsche Bank.

Great. Thanks very much. Good morning, folks. Most of my questions have been asked, but maybe just to follow on a couple. Just going back onto the organic growth, obviously this is really, really tracking well, going from zero - ish to now, close to 3%. So maybe just the thought, 2022 too early. But given these initiatives that you have and how you think about the revenue following through, do you -- do -- are you optimistic that you can continue to improve upon that -- that 3% number? And then just one on Pershing X. Technically, just into the -- into -- in that aggregator system. Does that require you to disintermediate that current custodian? So are you becoming the custodian in that process or rather would you sit on top of the current custodian and make it -- have a seamless aggregation of their technology services.

Okay. So why don't I take the Pershing question and then, Emily, I think you can probably handle the other. But the Pershing project X will be multi-custodial. So will be actually be of course, we'd love to have a custodial business, but we'll be able to provide these capabilities regardless of who the custodian is. And we were working on that capability right now. And I must -- I have to say, this is going to -- the Pershing particular -- in particular is probably the longest term of our investment. So, this, we're really investing for the future and I think before we really start to see the revenues that we expect in that business, that's probably two or three years out. Most of the other ones that we've been talking about are a little more near-term. Do you want to --?

Sure. Again, we're in the middle of planning process so it's probably too soon to really comment on the expectations specifically for organic growth next year. But certainly, we're really pleased with the momentum that we've seen this year and we would hope to certainly achieve roughly the same amount of organic growth next year.

Okay. Great. And then just quickly on net interest revenue on that 14% down guide, not sure if I had the right base here, but it does that imply a slight downtick in NIR in 4Q versus 3Q. I knew and Emily, you said you talked about the trough and I wasn't sure if you're referring to 3Q or 4Q as they're likely NIR

Yeah. If you do the math, it would imply a very -- a slight down tick about 1% to 2% in the fourth quarter. But of course, rates are moving all the time. Like I said, we're seeing potential upside from some Central Banks even moving earlier than originally thought. So that's based on the last forecast, it's slightly down, but we think there is potentially some upside and hopefully, it will be flat.

Okay. Great. Thank you.

Our next question comes from Rob Wildhack with Autonomous Research.

Good morning, guys. One more on organic growth if I can. How much of that is coming from competitive wins versus say, more greenfield type opportunities?

You want to take that?

That makes sense.

Competitive wins versus Greenfield.

So when -- certainly, when we look at the entirety of our wins were both new wind of what we call new business. It can be new business from completely new clients, as well as new business from existing clients. So as clients obviously launch new funds, et cetera, that's still new business, but it's new business with existing clients. And of course, we're always very, very focused on retention. So, we're being, having the business already and still it's competitive, it's competitive out there. So, making sure that we're retaining as we're retaining those deals that we already -- that we're already incumbent. When you look at it about, it's about 50-50 in terms of the breakdown from like new versus just retention of existing business.

As we're -- and I think to your point, we're definitely winning against the competition and a couple of the ones that you've been called out today. One of the alternatives spaces that was a different service provider, we had a broader set of capabilities in addition to the ability to do the administration. So, we won that business. We want a couple of large businesses over the last takeaways, over the last couple of quarters. So occasionally we lose them, but right now our win-loss ratio versus the competition is leaning toward our side and we think that's because of the capabilities that we've got as well as the quality of the service that we've been delivering.

Okay, thanks. And just to stay on retention, how -- how's the retention rates in trending? and then what kind of opportunities or things can you do to continue to improve the retention rate?

Our retention rates have been trending upwards and we don't really disclose, but certainly there are trending upward and they're very high so well in excess of 70-75%. So, in terms of how the first thing I would say is, this -- the first and foremost is just client service and basically performing -- performing well day in and day out. And that's what kind of gives you the even, the right to actually -- to bid until ultimately retains. So, we're intensely focused on that. And then, of course, it's about talking to our clients, understanding their strategy. More and more, we're really working in a consultative manner with our clients, looking at their issues, their challenges, and how we can bring the solutions of our -- the entirety of the firm to bear, to help them with their operating model and to get more efficient and to create . So, it's both just being good at the day-to-day and also ensuring that our capabilities and our -- both our capabilities and our products are not only competitive, but leading edge and then working with the client -- working with our clients and on a very, in the consultative and in a strategic manner.

Okay. Thank you.

Thanks Robert.

keypad. Our next question comes from Michael Brown with KBW.

All right. Thank you, operator. Not sure if you guys gave this, but Emily, I was just -- given most of your comments were on a year-over-year basis, I was just curious given that the move in the dollar and the strengthening that we recently saw, what was the sequential impact to revenues and expenses in the third quarter versus the second quarter from the move in the dollar.

Oh, gosh. Off the top of my head, I can't really -- I don't have it off the top of my head, but, I mean, the good news is that actually we're pretty equally match. So, any -- any benefit you have in revenues or any headwinds you have in expenses is pretty much equally offset in revenues from -- so from a PPI perspective, are incredibly well hedged.

Right. Okay.

But it's going to be in the ballpark of 1% to 2% of the expense base.

Yeah. Of the expense base, yeah.

Okay. And then just on the loan book, It's up 14% year-over-year. The average (ph) loans, but just 1% sequentially, and that's the lowest growth rate we've seen in the last three quarters. Any particular reason there was a bit of a slowdown this quarter. And what's the expectation there going forward?

So, I mean, just point out. Our loan book has grown by 14% year-on-year. So there has been very healthy growth in the loan portfolio over time. Of course, growth in any one quarter can be lumpy. We did see some healthy growth loans on a spot basis are actually up, more than -- they're up to 64 billion. Some of the growth we're seeing is a growth in margin loans, growth in cloud collateralized lending in wealth. We're seeing growth in our term loans in terms of securities financing and also more demand in terms of capital cost facility. And what we do think we have, certainly, we're proactively looking to grow the loan portfolio and we're very -- we feel that it's certainly an area that's in focus and we've got capacity certainly to do so.

Great. Thanks for that clarification. Thanks for taking my questions.

Thanks, Michael.

And with that, that does conclude our question-and-answer session for today. I would now like to hand the call back over to Todd with any additional or closing remarks.

No. Thank you, everyone for your interest and obviously, you can reach out to Marius in the IR team for any follow-ups. Thank you.

Thank you. This does conclude today's conference and webcast. A replay of this conference call and webcast will be available on the BNY Mellon Investor Relations website at 2:00 PM Eastern Standard Time today. Have a great day.