Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| And the conclusion that we have come to is that the things that have always been behind our celebration of the extremely good credit performance and the strength and performance of this asset class for us over a long time period in terms of underwriting approach and risk appetite and business model are helping us in this situation as well |
| I think the second takeaway is that we have a very impressive, broad and deep bench of very talented people |
| And then the other thing is really just kind of the proof point of the marketing investment where it is driving really robust - acquisition as well as very good return performance |
| But what is true underneath that is that both divisions focus very strongly and very intensely on the other side of the equation |
| And so as we combine the two things together, yes, maybe at the margin, we kind of take what are really already two excellent franchises and bring it to the next level in terms of the quality of the service and the types of opportunities that we create |
| And part of the reason for that is that things are already quite well optimized, and the partnerships are very, very strong |
| At the same time, again, as we discussed earlier, we do expect robust card loan growth this year |
| But the one thing that we have consistently said is that we feel very confident that we are going to continue to deliver exceptional returns |
| And as long as rates sort of evolve more or less within the expected kind of uncertainty, we think there should be solid, solid activity there |
| So broadly, I think that goes a long way to explaining why the performance in the space for us continues to be quite good |
| Inside that, if we do a little bit of the dynamics product by product, M&A, we have seen some encouraging signs recently |
| Team did a nice job |
| And then more specifically, in terms of the revenue drivers, we have observed over a long period of time that branch share and deposit share are quite strongly correlated |
| So that is solid, I would say |
| We just heard from David Zalman at Goldman right before you, there is obviously this great hope of a big rebound in investment banking activity in 2024 |
| And I do think we see healthy block activity, and maybe we will see some more secondaries |
| And that in the normal course should be supportive of that business |
| So those are not the most conducive things for M&A in the C suites, but at the margin, some momentum there |
| We have a long track record of being pretty deep and pretty analytical and pretty precise as well as pretty strategic about our capital optimization |
| And I think at this point, there seems to be like a little bit of a consensus for really meaningful change and like very significant improvements |
| So that creates some pretty strong incentives to inject equity when that is needed |
| Now we happen to think that our office portfolio is quite high quality |
| And generally, they hold up quite well, which is in part because the other critical piece of the business model here is that it is a very investor client-centric model |
| And so there are in all of these expansion markets in the places where we have branch share let's say below 5%, as we grow that branch share, we expect to see the concomitant growth in deposit share |
| And so at the margin, to the extent that you have some cuts coming out of the curve, that should be a modest tailwind in terms of this year's revenue |
| So for the first quarter for Investment Banking fees, we expect them to be up sequentially and year-on-year in the low to mid-teens |
| And those people are getting moved around in various ways and given new opportunities to develop new skills to make them better prepared and more credible as successors |
| And so for us, we see that kind of as a tailwind |
| So last year, card outstanding were up 17% |
| Great |
| Statement |
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| But the IPO environment is a little bit weaker than you might have otherwise expected just because the performance in IPOs has been a little bit more mixed, I think a little bit disappointing to some people |
| But having said that and also, as you noted, there are some - the thing that we have talked about very consistently for several years now in terms of the failure to recalibrate the coefficients, unless that changes, remains a factor and a secular problem fundamentally |
| So the Fed models, in particular, are totally untransparent to us, and therefore, contrary to what gets argued sometimes, our ability to forecast the SCB even with all of the internal knowledge that we have is actually quite a bit less than you might expect, actually |
| But in the big picture, there is still some challenges there, remains a challenging regulatory environment |
| So there is just no way of escaping the fact that all else equal, that actually puts some pressure on the 17% |
| And I think we obviously disagree with that |
| So it is in large part because of these dynamics that we have been so clear and forceful about guiding to expected sequential declines in quarterly NII because of the whole sort of over-earning narrative |
| But one way or another, we know that there is still some modest headwinds to the overall level of system-wide deposits from QT |
| Whether you look at some of the public comments of prior influential regulators, it just seems like there is quite a lot of criticism coming |
| Obviously, we have been surprised before |
| Then per your prior question, the ongoing expectation of significant amounts of internal migration and therefore, ongoing increases in weighted average rate paid despite the cuts, so the expectation of significant deposit margin compression and hence, the sequential declines in NII that we have talked about a lot |
| So I wouldn't necessarily say wildcard in terms of deposit dynamics, but there is certainly a healthy cone of uncertainty around how all that plays out |
| But that is not to suggest that - I'm not saying have to say that like and New York is bad, but don't worry because it is only 20% of the total because the reality is that our New York like doesn't look particularly bad to us, actually |
| And so the slightly worse performance relative to the prior year is not particularly differentiated across asset classes |
| So as of the end of the year, just on the basis of the normal seasonal patterns, we did actually come down |
| So I think the safer assumption is that there continues to be some upward pressure on the SCB, but we will see |
| I think there is lots of process elements that would lead you to want to be cautious there |
| And of course, we are going to be watching it closely, and we worry about everything |
| And so fair point on the balance sheet, but I think we are over-earning in margin terms, and therefore, that is point one |
| There is obviously still quite a bit of political and geopolitical uncertainty out there |
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