OPTX

1. Market environment: Volatility with factors like AI, geopolitics, private credit. Capital markets resilient despite uncertainty, M&A announcements held up. 2. AI impact: Transformational productivity power of AI seen as valuable for client service, shareholder value, and various industries. Morgan Stanley hosted TMT conference with key figures discussing its impact. 3. Capital markets and pipelines: Resilient with examples like raising $6B for Galderma, multi-billion reinsurance offering, $75B raised in last six weeks with hyperscaler debt, and M&A deals. M&A volumes moving towards trend line, credit markets for M&A functioning well. 4. Private credit: Private credit may have overexposure issues in certain areas like software, but not systemic. Wealth management flow into private markets up over 35% in March. 5. Global opportunities: Equitization, institutionalization of credit, cross-asset innovation as opportunities. Global footprint allows serving clients globally, e.g., equitization in Japan, Latin America, greater china. 6. Bank strategy: Optimizing bank to be high functioning, high quality, high profitability with fixed income derivatives and ISG merged into bank balance sheet, reducing complexity and funding costs. 7. AI impact across firm: Benefits client service, productivity, and support functions. Wealth management example: AI helps match clients with advisors and retain clients. 8. Wealth management growth: Next leg of growth from workplace and E-Trade, access to clients through stock vests, strong net new asset trends, teams with technology specialists, high retention of advisory clients. 9. Integrated firm: Formalizing linkages between businesses, e.g., corporate clients delivering workplace opportunities to wealth management, using holistic relationships with asset management industry.

1. Confidence in pipelines: Capital markets and M&A pipelines robust with underlying fundamentals intact. 2. Private equity dry powder: Urgency building for private equity firms to deploy dry powder as LPs want capital back. 3. IPO market: Likely to see large deals in next 18-24 months, especially in US with sense of being public again. 4. Capital deployment: Can be front-footed in investing in client business, consider dividend growth, opportunistically buy back stock, and look at organic and inorganic opportunities.

1. Private credit risks: Private credit may have overexposure issues, especially in software, leading to potential return and flow issues. 2. Recession risks: Recession could impact credit, leading to defaults across private, public credit, and bank balance sheets. 3. Regulatory risks: Complex regulatory environment and previous uncertainties around regulatory schemes.

Q: On capital, the firm has 320 basis points of excess capital. There's now more certainty on the regulatory outlook. How is management thinking about deploying that excess capital? Is this about doing more business with existing clients, or what are the new opportunities to deploy capital that you see?

A: Yeah, again, I think on the capital side, we like to be in a position of capital strength because what it allows us to do is continue to invest the capital in supporting the businesses. With SLR reform and the capital buffers that we've built, we can be, you know, quite sort of front-footed in investing in the client business. We can be quite, you know, sort of positive as we look forward around dividend growth. We can opportunistically buy back stock, and we also have the ability – to sort of think about both organic and inorganic opportunities that a market environment that may present us to us without having to feel like we're against the wall. And so in that context, we feel like there's real continued growth in both business and dividend around the capital market. And, you know, I think that's important, you know, as you see sort of varying market environments. I mean, again, we are seeing, as I said, a really good pipeline over the next couple of years, but there is going to be dislocations that we can take advantage of in that context. And you'll see elements around that. To a degree, you know, we took advantage of when E-Trade, when Schwab took commissions to zero and Ameritrade left the table, we were able to say, this is an opportunity, a partner that we always wanted. Same is true with Eaton Vance. It was on the top of our list with parametric. And then COVID happens and the opportunity presents itself. You know, you're going to see, you know, even right now, you see situations where you know, the market has some challenges. You know, for example, you know, our transactional volumes in retail are off of a record fourth quarter, are a little lower this quarter, but then they're going to come back up. Can we take advantage of opportunities along the way that capital provides us that flexibility? I think that's perfectly timed.