Strategies for Growth and Outperformance

Transcription

1 Strategies for Growth and Outperformance June 17, 2008 Asset & Wealth Management Ron O Hanley / Jon Little Dave Lamere

2 Today s Discussion Global leader in Asset & Wealth Management Performance Growth strategies Goals Non-U.S. AUM $1.1 trillion As of 3/31/08 Wealth Management 25% 8% 40% U.S. Institutional 27% Dreyfus 2008 Investor Conference BNY MELLON WEALTH MANAGEMENT

3 A Global Leader in Asset Management BNY Mellon manages more than $1.1 trillion assets under management 1 A global leader 4 th largest global institutional asset manager (P&I, May 2008) 3 9 th largest U.S. asset manager (Institutional Investor, July 2007) 2 4 th largest U.S. subadvisor (P&I, May 2007) 2 Top 10 in wealth management in the U.S. (Barron s/internal analysis, June 2007) 2 Largest manager of U.K. discretionary charity funds; 2 nd largest U.S. Endowment and Foundation asset manager (U.K source: Charity Times, June U.S. source: P&I, May ) with strong international presence an industry-leading product set $259 billion in assets from non-u.s. clients 1 7 th largest asset manager in Europe (Investments & Pensions Europe, June 2007) 2 More than 275 institutional asset management product offerings, covering virtually all investment styles $69 billion in absolute return and alternative assets 1 broad client reach 48% of 50 largest global retirement plans (P&I, December 2007) 3 66% of top 50 U.S. corporate plans (P&I, January 2008) 3 60% of top 50 U.S. public plans (P&I, January 2008) 3 and industry- leading growth 2008 Investor Conference Presence in 15 of the top 25 domestic wealth markets (Barron s/internal analysis, June 2007) $73 billion AUM net flows (2007) 1 As of 3/31/ Rankings based on 2006 year-end data. 3 Rankings based on 2007 year-end data. Please review the disclosures in the Appendix following this presentation. BNY MELLON WEALTH MANAGEMENT

4 Multi-Boutique Model Surrounded by World-Class Distribution and Support Client-driven Sales/Service Channels North U.S. Retail BNY Mellon American Intermediary International Wealth Institutional & Direct Management Multi-boutique Investment Management Platform BNY Mellon Asset Management Shared Support Please review the disclosures in the Appendix following this presentation. Mellon Global Alternative Investments (MGAI) and BNY Mellon ARX do not currently offer services in the U.S Investor Conference BNY MELLON WEALTH MANAGEMENT

5 Strong Net Asset Growth Assets Under Management ($ billions) $556 10% CAGR $1,105 Our model helps us achieve strong asset growth Focus on investment performance Broad range of investment strategies Subadvise for Wealth Management Cross selling from all of BK Strong growth in AUM Averaging > $40B p.a. of net asset flows ( ) /31/00 3/31/08 Consistent AUM growth (CAGR) 1-year 11% 3-year 15% 5-year 13% 7-year 11% 15% U.S. institutional AUM growth in 2007 relative to 12% growth for competitors (P&I May 2008) 2008 Investor Conference BNY MELLON WEALTH MANAGEMENT

6 A Broad Array of Clients and Products Client AUM $1.1 trillion As of 3/31/08 Product Endowments/ Foundations 4% Sub-Advised/ Wrap/SMA 7% HNW/Trusts 9% Insurance 3% Other 5% Mutual Funds/DC 38% Absolute Return Strategies / Alternatives 6% Cash 32% U.S. Fundamental / Quantitative Equity 8% Int l / Global Fundamental Equity 12% Index 14% Fixed Income 14% Defined Benefit/other Benefit Funds 34% Currency / Overlay 6% Asset Allocation 8% Please review the disclosures in the Appendix following this presentation Investor Conference BNY MELLON WEALTH MANAGEMENT

7 Financial Performance with Strong Growth in Margins 2007* 1-Year 3-Year Asset and Wealth Management Fees 2,714 27% 25% Performance fees 171 (56)% 5% Other fees % 7% Operating Revenue $3,296 14% 21% Operating Expense 2,118 13% 15% Pretax Operating Income*** 1,178 18% 35% AUM (in billions) $1,044 12% 16% Pretax Operating Margin CAGR* ($ in millions) year 3-year** 36% +100 bps bps 2007 Highlights Non-U.S. revenue 40% of total revenue in 4Q07. 36% growth in non-u.s. revenue: Europe +33% growth U.K. +44% Japan + 75% Brazil + 63% $76B net new cash / short duration business in 2007 Continued growth in alternative products Merger complete, exceeding synergy targets *2007 financials and 1-year CAGR reflect pro forma operating results for BNY Mellon Asset Management. **3-year CAGR represents legacy Mellon data. ***Pretax Income Excluding Intangible Amortization.

8 Strong 3-year Growth Rates Pretax earnings growth BNY Mellon* BlackRock Franklin Resources T. Rowe Alliance Bernstein** Janus Legg Mason Federated 5% 3-year 35% 32% 26% 23% 21% 12% 60% 8% 1-year 18% 18% 29% 25% 26% 20% 60% Revenue growth BNY Mellon* BlackRock Franklin Resources T. Rowe Alliance Bernstein** Janus Legg Mason Federated 7% 11% 21% 24% 22% 27% 21% 62% 14% 25% 26% 22% 21% 21% 10% 14% Note: Revenue and pretax earnings growth adjusted for non-operating items as disclosed in the financial reports as well as the estimated impact of material acquisitions. * 2007 vs year CAGR represents legacy Mellon data ** Alliance Bernstein pretax income is calculated on a total corporation level

9 Investment Performance Percentage of IAM Investment Products Exceeding Benchmark (periods ending March 31, 2008) 45% 76% 59% 51% 48% 63% 79% 64% 58% 54% 71% 90% 83% 83% 78% 69% 65% 59% 56% 65% 95% 68% 89% 25% 1 year 3 year 5 year 10 year All Index/Enhanced Index Equity Active US Equity Active International Equity Fixed Incom e Other All BNYM AM institutional products are included, representing $538 billion of AUM. Calculations are equal weighted. Investment performance is gross of fees except for privately offered funds.

10 Select Strategy Performance Product AUM ($B) 1 - Year 3 - Year Gross Return (Net return) Universe Ranking (Percentile) Gross Return (Net return) Universe Ranking (Percentile) Walter Scott Global Equity $16.7 MSCI World Index (net) (N/A) (N/A) 30 Newton Global Equity 9.0 MSCI World Index (net) (8.8%) (14.0%) 14 Newton Global Bonds 4.0 JPM Global Gov t Bond Index 19.6 (19.1%) (8.1%) 11 TBCAM Midcap Opp. Value 2.6 Russell Midcap Index (-5.9%) (7.0%) 38 TBCAM Dynamic Value 2.5 Russell 1000 Value Index (-3.5%) (9.3%) 7 TBCAM U.S. Large Cap Core 1.5 S&P 500 Index (-2.7%) (7.1%) 27 West LB Global Emerging Market 1.4 MSCI Emerging Markets Index (net) (29.0%) (30.9%) 32 Standish Emerging Markets Debt 1.0 JPM GBI-EM Broad Diversified Index (16.8%) 0 N/A 0 N/A Please see investment performance disclosures in the Appendix. Percentile ranking based on gross returns from Evestment Alliance universes. Disclosures are in the Appendix. Past performance is not indicative of future returns. If calculated on net performance, rankings may be lower. N/A N/A

11 Driving Growth in Our Multi-Boutique Model Build on Strategic Imperatives Leverage Distinctive Capabilities Continue international expansion Expand and deepen presence in U.S. Retail / Intermediary market Extend multi-discipline products Exploit cross-sell opportunities across The Bank of New York Mellon Maintain industryleading U.S. institutional presence Attract, develop, motivate and retain the right people Pursue selective acquisitions

12 International Expansion Achievements and Actions AUM by Geography Revenue by Geography U.S. Non U.S. 84% 74% 27% CAGR 16% 26% U.S. Non U.S. 81% 19% 38% CAGR 64% 36% Achievements Brazil: Completed acquisition of ARX Capital China: 1 st QDII Mutual Fund Manager in China Signed JV agreement with Western Securities CSRC (Chinese Securities Regulator) approval for local Fund Management Company UK: 1 st full year of Walter Scott & Partners Ranked 5 th by net retail sales in Q Actions Deepen our footprint and enhance our client service capabilities Leverage legacy Bank of New York locations Expand product line selectively Grow BNY Mellon multi-manager solutions capability Europe: Ranked 5th for cross-border European fund sales in 2007 (Feri)

13 U.S. Retail / Intermediary Achievements and Actions Achievements Intermediary Distribution Upgraded U.S. wholesaling force Built new capability to focus on HNW RIAs/ Multi Family Offices Stabilized declining separately managed account business and positioned it for future growth 24% improvement in mutual fund gross sales vs while reducing redemption rates DCIO, Insurance and Rollover: Built one consolidated market facing Retirement & Insurance markets Retail Direct Reduced operating expenses while improving redemption rates to 9.7% vs. mutual fund industry average of 17.8% Product development Strategic venture with Wisdom Tree to launch a range of cash and fixed interest ETFs Merged/closed 41 funds Launched 9 new funds Actions Intermediary Distribution Increase focus on major markets and key firms for traditional wholesaling model Strengthen capabilities to more effectively serve intermediary home office gatekeepers Target unique customer segments via customized wholesaling models (e.g., E-Wholesaling) Increase outreach to HNW RIAs/Multi Family Offices Leverage intellectual capital and branding of The Bank of New York Mellon ( Who s Helping You? ) DCIO, Insurance and Rollover: Enhance presence within DCIO and VA markets through key mandates/wins Retail Direct Opportunistically improve long-term sales (e.g., Bank of New York Mellon employee offering) Maintain single digit redemption rates through continued high customer service/satisfaction levels Product development Continue rationalizing existing product set; including legacy BNY Hamilton Funds Focus development effort on multi-asset/customized and embedded solution products

14 Acquisitions: A Pattern of Successful Integration BNY Mellon Western Fund Management 1 M&A Success Ongoing M&A Focus Distinctive institutional skill Distribution extension Strong acquisition track record Model makes us attractive to targets and facilitates integration Add / enhance specialty investment capabilities / alternatives Exploit separation of manufacturing and distribution Developing / Emerging markets 1 Joint venture agreement signed November 2007

15 Exploit Cross Sell Opportunities Cross Sell Overall Distinctive skill and successful track record in cross-selling Merger creates new cross-selling opportunities Next steps Exploit new opportunities for cross sell - All AM products and services to legacy Bank of New York clients - Legacy BNY AM boutiques products (Ivy, Urdang, Alcentra) to legacy Mellon clients globally Develop additional global products (e.g., Japanese Yen MMF) Cash Management Example Broad and deep investment and credit skills Market flight to quality that rewards our conservative investment approach Cash product sales throughout The Bank of New York Mellon (proprietary share of BNY Mellon client cash in MMFs improved from 24% premerger to 33% March, 2008 ) Significant cash business beyond MMFs (STIF, Separate Accounts) Institutional Money Market Funds Domestic 40 Act Institutional Money Market Fund Market Share Data as of 3/31/08* Rank Manager J.P. Morgan BlackRock BNY Mellon/Dreyfus Fidelity Goldman Federated All Others Total Total Assets ($B) 225, , , , , , ,844 2,093,857 *Source - imoneynet month-end data for 3/08

16 BNY Mellon Asset Management Summary Deliver strong investment performance Institutional goal: 70% exceeding 3-year benchmark (currently 63%), 60% exceeding 3-year peer median (currently 46%) Mutual fund goal*: 35% of funds rated either 4 or 5 star, Morningstar (currently 23%); 3-year Lipper at or above 35th percentile (currently 43rd percentile) Deliver superior client service Institutional: Consistently rank in top quartile of client satisfaction as measured by Greenwich Quality Index (GQI) Retail: Consistently rank top ten in client satisfaction as measured by Market Metrics Continue to exploit global growth opportunities Medium-term financial goals Revenue growth of 12-14% Pretax profit margin of 36-38% ** * Excludes short-term funds. Rankings are asset weighted ** Excluding intangible amortization

17 Dave Lamere

18 Leading Wealth Management Franchise Yr. Growth Fee Revenue: Net Int. Revenue Margin : Clients Assets: Loans : Deposits: Employees: $632 million $169 million 30% $170 billion $4 billion $7 billion 2,240 8% 3% - 10% 5% 15% Excl. Florida & California commercial banks Strategic Markets Locations in 16 states + London Unique Characteristics Client Profile < $10 M $10 M - $100 M $100 M + $46 BILLION $56 BILLION $68 BILLION Industry leading client satisfaction 93% of clients are highly satisfied + 96 % retention rate Scalable Business Model Distributed sales and team-based service delivery Centralized core capabilities Unified operations and technology $170 BILLION Client assets Corporate Synergies Create Unique Platform WEALTH MANAGEMENT

19 Exclusive Client Expertise Leveraging the best of BK Investment Management 1 Discovery and Insights Wealth and Estate Planning Broad asset class expertise of $1.1T AUM 6 Active Management 2 Asset Allocation 224 years of experience in fiduciary, estate and family issues Client CLIENT NAME Customized lending and deposits capabilities 5 Implementation 3 Structural Analysis World s largest custodian with highest quality ranking Private Banking 4 Asset Location Global Custody & Information Management WEALTH MANAGEMENT

20 Investing in Distribution Greater Growth And Productivity Q08 Growth Sales Officers % Sales * $36MM $55MM 53% Productivity / Sales Officers $467MM $572MM 22% Client Assets $155B $164B 6% Client Deposits $6.0B $8.0B 33% Client Loans $3.9B $4.3B 10% * Represents annualized new business revenue. Note: All statistics exclude the Florida and California commercial banks WEALTH MANAGEMENT

21 Performance Versus Peers Revenue Momentum (CAGRs) 14% 12% 10% 8% 6% 9% 6% 5% 7% 6% 12% 4% 2% 0% 2008 Q1 1yr 3yr BNY Mellon Peer Group (average) Fee Revenue Total Revenue Pretax Inc. CAGRs Q year 3 year Q year 3 year Q year BNY Mellon PWM 9% 8% 8% 9% 5% 6% 20% 6% Northern Trust PFS 7% 14% 10% 4% 10% 8% 0% 8% Wachovia PB 9% 2% 13% 4% 3% 13% 11% 6% Alliance Bernstein PC 10% 9% 15% 10% 9% 15% n/a n/a WEALTH MANAGEMENT

22 BNY Mellon Wealth Management Summary Leading Wealth Management franchise with excellent domestic footprint BNY Mellon created unique client offering and profile Merger producing revenue and expense synergies Distribution investments driving growth momentum Enhancing tri-state opportunities Maintain excellent client service and retention ratings Medium-term financial goals - Total revenue growth of 9-11% - Pretax margin of 33-35% * * Excluding intangible amortization WEALTH MANAGEMENT