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| And when I look at that TTS strength, about half of it was driven by rates, which means the other half was driven by good business activity and momentum, new client acquisitions both in our multinational client set, but also with our middle-market banking clients, doing more with existing clients, opening up in places where they have their subsidiaries and alike |
| And so that direct connectivity I think is very powerful in us being able to achieve the return targets that we have set |
| So, how those things evolve will certainly factor into when we peak out in terms of loss rates, but I feel very good about the reserve levels that we have and our preparedness for that |
| So, feel very good about how we're reserved |
| When I look at kind of the reserve levels, and I'm going to come back to unemployment in a second, both portfolios we feel very good about the reserve levels that we have |
| On the retail services side, it was probably flattish year-over-year, but a little bit better than, again, pre-Thanksgiving momentum or activity, and so good signs there |
| I would say that, the corporate and consumer base has been remarkably strong, remarkably resilient through all of this |
| If I think about the recent holiday activity, we saw in branded cards, I would say good momentum year-over-year through Cyber Monday, so Black Friday and then Cyber Monday, better than kind of pre-Thanksgiving levels, and so feel good about that |
| I think last quarter you actually saw very good momentum across a number of businesses |
| That is a business that has actually shown good momentum |
| We have got a very strong fixed-income business |
| We have seen good client acquisition growth there |
| So, you have a really strong services core business that as we go into '24 and beyond, we are likely to see very strong continued revenue growth momentum |
| Despite that, we have seen continued momentum, which is good, particularly in areas like debt capital markets and issuance activity there |
| We continue to expect to see good momentum with new client acquisitions there |
| We have seen that growth turn to average interest-earning balances growing, spend growing those types of things have contributed to that top-line momentum |
| And equities we've seen good continued momentum in prime, but a little less so in cash when we think about volumes kind of tapering off there |
| We ended last quarter with pretty strong CET1 ratio, 13.6% or so |
| And the third are the divestitures which we've made good headway on but ensuring we're driving and eliminating that stranded cost |
| So very good quality portfolio, that's important |
| And as I look at the fourth quarter and we round that out, I think we're likely to be towards the lower end of that range, so closer to $78 billion or so, which I still think is very good performance obviously inside of the range |
| Seeing normalization of credit, you'd expect that in the portfolio, and obviously there are a number of factors that will play into how that persists, but these are good portfolios with good returns that I expect to see continued momentum in |
| And so, the combination of the stronger parts of the franchise is continuing to perform, where we have had wallet pressure like Investment Banking, that wallet eventually having to turn |
| Similarly, in security services, the we have grown assets under custody to over $2 trillion third quarter year-to-date |
| And again, what we're trying to do is build credibility with our investors, which means proof points along the way that we can deliver and do what we we're going to do |
| The sectors I don't think will come as a surprise, but think about dining, entertainment, travel, those were the areas where we saw that good activity through that early part of the holiday season |
| I'd expect to come in probably a little bit better than that, just given the way things have played out |
| That's one of the factors driving me towards the lower end of that range, but feel good about that range |
| So, can you talk about some of the dynamics and the recent trends both in the branded card business and the retail services business, both in terms of what you see now, but also what you're expecting as we head into the business? Mark Mason Yes, so look, I feel very good about our number to position in cards |
| But at the same time the efficiency that allows us to run the business more effectively |
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| We have been disappointed in what we've seen in our Wealth Business |
| We worry about movement of activity to non-regulated spaces and outside of the banking institutions and we worry about the impact to consumers and corporates from a lending point of view |
| But if I think about the Argentina elections, for example, that's probably going to put pressure on the revenues for a couple of $100 million |
| With that said, our economists are calling for a slowdown in growth, as we go into 2024 |
| When I think about kind of global demand for manufacturing and how that's been slowing, that's going to put continued pressure on Germany in other parts of the euro area |
| And then there is wealth, right? And just candidly, I have been disappointed |
| And when we look at markets, I'd say that client activity across a broad set of asset classes has been somewhat muted through the quarter |
| So, as I think about 2024, 2024 is going to be lower than 2023, right? So, I have talked about in the past, Q3 to Q4 seeing a drop |
| One, it's very clear to me at least that this wasn't a holistic review that we had expected and hoped for, and that is I think of concern, but I think very obvious |
| The downside assumption is probably close to a 7% unemployment rate |
| And then obviously going into '26, we'd expect continued downward pressure on expenses |
| I think we are likely to see some things mild |
| So that will be part of what we see play out there as well as just mix and how mix has evolved will be another important factor, but those factors will kind of play through the NII and put a little bit pressure on the fourth quarter |
| So is that still your expectation? And I guess as a follow-up, obviously, you talked about this, there's a lot of uncertainty over the rate environment as we head into next year |
| I think for the most part we are surprised globally at how growth has held up, when you look around the world |
| When I look at, the euro area, they have seen some contraction already in the third quarter |
| Richard Ramsden And then just obviously, there is a lot of uncertainty around steady state capital requirements |
| But we feel as though it's going to be a soft landing, likely a mild recession when I think about that part of the world |
| Generally speaking, I think that slowdown will likely be certainly short of a significant recession globally |
| Growth for the year, our economists are expecting somewhere around 5.3% or so, likely to see growth a little bit lower than that, call it a four-handle in 2024 |
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