Financial Data and Key Metrics Changes - The company reported record net income of $5.3 billion and record revenue of $20.1 billion for 2025, with total revenue growing by 8% year over year [4][26] - Earnings per share increased by 28% year over year to $7.40, with a return on tangible common equity of 26% [5][26] - Pre-tax margin improved to 35% on a reported basis, with 507 basis points of positive operating leverage achieved [4][25] Business Line Data and Key Metrics Changes - Security Services reported total revenue of $2.5 billion, up 7% year over year, with investment services fees increasing by 11% [29][30] - Markets and Wealth Services generated total revenue of $1.8 billion, up 8% year over year, with net interest income for the segment increasing by 20% [32][35] - Investment and Wealth Management reported total revenue of $854 million, down 2% year over year, with assets under management increasing by 7% [36][37] Market Data and Key Metrics Changes - Firmwide assets under custody and administration (AUCA) reached $59.3 trillion, up 14% year over year, reflecting client inflows and higher market values [23] - Investment management and performance fees were flat, impacted by the mix of AUM flows and adjustments for certain rebates [23][26] - Net interest income increased by 13% year over year, primarily due to the reinvestment of maturing investment securities at higher yields [24][26] Company Strategy and Development Direction - The company is focused on unlocking growth potential through a new commercial model and the adoption of AI technologies [8][9] - Strategic priorities include enhancing client relationships, simplifying operations, and fostering a culture of accountability [15][16] - The company aims to innovate in digital assets and improve market infrastructure, including the launch of tokenized deposits and stablecoin reserves [10][11][74] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a revenue growth target of approximately 5% year over year for 2026, despite a dynamic operating environment [38] - The company is committed to maintaining positive operating leverage and has set new medium-term financial targets, including a pre-tax margin of 38% and a return on tangible common equity of 28% [39][40] - Management emphasized the importance of agility in expense management to adapt to potential market changes [49] Other Important Information - The company returned $5 billion of capital to shareholders through dividends and share repurchases in 2025 [5] - The Tier 1 capital ratio at the end of the quarter was 11.9%, reflecting a strong capital position [27] Q&A Session Summary Question: Guidance on revenue growth and assumptions - Management indicated that the guidance for 2026 is a top-line growth of approximately 5%, with net interest income expected to grow slightly ahead of 5% and fees potentially lower than 5% [45] Question: Medium-term earnings growth potential - Management highlighted the importance of positive operating leverage and the need for agility in expense management to defend margins and return on tangible common equity targets [46][49] Question: Impact of AI on hiring and efficiency - Management discussed the role of AI as a catalyst for transformational change, emphasizing that AI is expected to unlock capacity and increase revenues rather than just drive efficiency [52][56] Question: Pre-tax margin improvement across business lines - Management provided insights into pre-tax margin improvements, noting that security services and investment and wealth management segments have significant upside potential [63][65]

Financial Data and Key Metrics Changes - The company reported record net income of $5.3 billion and record revenue of $20.1 billion for 2025, with total revenue growing by 8% year over year [3][23] - Earnings per share increased by 28% year over year to $7.40, with a return on tangible common equity of 26% [4][23] - For Q4 2025, total revenue was $5.2 billion, up 7% year over year, with net interest income increasing by 13% [19][20] Business Line Data and Key Metrics Changes - Security services reported total revenue of $2.5 billion, up 7% year over year, with investment services fees increasing by 11% [25][29] - Markets and Wealth Services reported total revenue of $1.8 billion, up 8% year over year, with net interest income for the segment increasing by 20% [30][32] - Investment and Wealth Management reported total revenue of $854 million, down 2% year over year, with assets under management increasing by 7% [33][34] Market Data and Key Metrics Changes - Firmwide assets under custody and administration (AUCA) increased by 14% year over year to $59.3 trillion, reflecting client inflows and higher market values [20] - The ETF AUCA ended the year at $3.8 trillion, up 34% year over year, indicating strong growth in the ETF segment [26] - Average collateral balances in the clearance and collateral management business increased by 15% year over year to $7.5 trillion [31] Company Strategy and Development Direction - The company is focused on unlocking growth potential through a new commercial model and the adoption of AI technologies [6][18] - Strategic priorities include enhancing client relationships, simplifying operations, and fostering a culture of accountability [12][18] - The company aims to innovate in the digital asset space, including launching tokenized deposits and stablecoin solutions [9][57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a revenue growth target of approximately 5% year over year for 2026, despite a dynamic operating environment [35][39] - The company is focused on maintaining positive operating leverage and improving pre-tax margins to 38% and return on tangible common equity to 28% in the medium term [37][38] - Management acknowledged the need for agility in expense management to adapt to potential market changes [44] Other Important Information - The company returned $5 billion of capital to shareholders through dividends and share repurchases in 2025 [4] - The Tier 1 capital ratio at the end of the quarter was 11.9%, reflecting a strong capital position [24] Q&A Session Summary Question: Guidance on revenue growth for 2026 - Management indicated a revenue growth expectation of approximately 5% year over year, with net interest income expected to grow slightly ahead of 5% and fees potentially lower than 5% [39][40] Question: Medium-term earnings growth potential - Management emphasized the importance of positive operating leverage and the need for agility in expense management to defend margins and return on tangible common equity targets [41][44] Question: Impact of AI on hiring and efficiency - Management highlighted the transformative potential of AI and its role in unlocking capacity, with a focus on integrating AI into operations rather than solely on efficiency [45][46] Question: Pre-tax margin improvement across business lines - Management discussed the progression of pre-tax margins, noting opportunities for improvement in investment and wealth management, while security services and markets and wealth services are expected to maintain strong margins [50][52]