Bank of New York Mellon Corp (NYSE: BK) Q1 2023 earnings call dated Apr. 18, 2023
Corporate Participants:
Marius Merz — Head of Investor Relations
Dermot McDonogh — Chief Financial Officer
Robin Vince — President and Chief Executive Officer
Analysts:
Kenneth Usdin — Jefferies — Analyst
Steven Chubak — Wolfe Research — Analyst
Alex Blostein — Goldman Sachs — Analyst
Brennan Hawken — UBS — Analyst
Mike Mayo — Wells Fargo Securities — Analyst
Gerard Cassidy — RBC Capital Markets — Analyst
Brian Bedell — Deutsche Bank — Analyst
Robert Wildhack — Autonomous Research — Analyst
Vivek Juneja — JPMorgan — Analyst
Rajiv Bhatia — Morningstar — Analyst
Betsy Graseck — Morgan Stanley — Analyst
Presentation:
Operator
Good morning, and welcome to the 2023 First Quarter Earnings Conference Call hosted by BNY Mellon. [Operator Instructions] I will now turn the call over to Marius Merz, BNY Mellon, Head of Investor Relations. Please go ahead.
Marius Merz — Head of Investor Relations
Thank you, operator, and good morning, everyone. Welcome to our first-quarter 2023 earnings call.
As always, we will reference our financial highlights presentation, which can be found on the Investor Relations page of our website at bnymellon.com.
I’m joined by Robin Vince, President and Chief Executive Officer; and Dermot McDonogh, our Chief Financial Officer. Robin will start with introductory remarks, and McDonogh will then take you through the earnings presentation. Following their remarks, there will be a Q&A session.
Before we begin, please note that our remarks include forward-looking statements and non-GAAP measures. Information about these statements and non-GAAP measures are available in the earnings press release, financial supplements, and financial highlights presentation, all available on the Investor Relations page of our website. Forward-looking statements made on this call speak only as of today, April 18, 2023, and will not be updated.
With that, I will turn it over to Robin. Thank you, Marius, and good morning, everyone. Before I turn the call over to Dermot to review our financial results, I wanted to provide some broader perspective, and an update on how we’re serving our clients stepping up as a firm in this complex environment. Following a relatively benign soft begin markets were quite unsettled in March when we saw two prominent bank failures in the United States and the government brokered [Phonetic] distressed bank to takeover in Europe. While things have calmed down somewhat over the past couple of weeks after over a decade of 0 interest-rate monetary policies, the risks and uncertainties associated with the fights against inflation, higher interest rates and quantitative tightening together with geopolitical tensions remain elevated. And domestically, we continue to march closer to another debt ceiling standoff. Against this backdrop, it’s a healthy reminder that the strength of BNY Mellon’s highly-liquid lower credit risk and well-capitalized balance sheet, in combination with the resilience of our platform is the bedrock that supports our client franchise. For nearly 240 years we’ve built-up a legacy of client and industry trust rooted in our resiliency through good times and bad. We’ve been poaching [Phonetic] a storm for our clients in periods of stress over that time and recent weeks have been no different. As we’ve helped our clients to navigate the volatility in-markets with our strong balance sheet and broader liquidity solutions. Off the same deposit balances increase following recent market events, we ended the quarter slightly higher than where we started it. And our broader liquidity platform, which manages over $1.3 trillion dollars worth of cash and other short-term investment options, on behalf of our clients has seen growth across most channels. But more broadly, the recent events have led to concerns around the health and stability if some banks as they’ve highlighted the critical importance of robust asset and liability management for all financial services participants. As one of the largest banks in the United States and as a G6, we are held and we hold ourselves to a high standard, including stringent capital liquidity and stress-testing requirements. On capital, unrealized losses related to our available-for-sale investment securities portfolio already reflected in our capital ratios. We have consistently maintained the majority of our investment securities portfolio as available-for-sale. And as you will recall, we had a view for a while now, the rates would be a little higher in that terminal rate than the market has been pricing it and so over the last year and a half we meaningfully reduced the duration and enhanced the risk and liquidity profile of the portfolio. Together, these actions provide us with ample flexibility to adjust to changing market conditions as we move through the year. And on liquidity, our robust liquidity management framework includes risk metrics such as concentration limits and daily liquidity stress-testing protocols that go beyond regulatory requirements. It is these periods of stress that also showcase our characteristic resilient and the power of our diversified and low-risk business model. We primarily serve large institutional clients who collectively maintain substantial deposit balances with us as part of the services we provide to support that business activity, whether that’s custody, cash management, clearing and Corporate Trust Services. As a result, roughly two-thirds of our deposit base is operational and sticky in nature and derived from a diverse set of business lines. And as I mentioned earlier, we manage over a trillion dollars of cash on behalf of our clients across deposits, money market funds, repos and securities lending which allows us to retain a connection to the money when it moves around various short-term investment alternatives. And we’re also the largest provider of collateral services globally. Our average tri-party balances increased to $5.6 trillion this quarter, which is another example of just how comprehensive, our role is in the broader liquidity ecosystem. Now turning to our financial performance in the quarter. As you can see on page two of our financial highlights presentation, we delivered solid results. We reported earnings per share of a $1.12, up 30% Year-over-Year, or up 20%, excluding notable items, primarily in the first quarter of last year. Revenue was up 11% Year-over-Year. We closely managed expenses up 3% Year-over-Year and we generated a healthy return on tangible common equity of 20%. And given how in focus, capital and liquidity are at the moment, I’ll note that our Tier-one leverage ratio as well as our liquidity coverage ratio remains strong and unchanged compared to the prior quarter, well-above regulatory requirements and our own management buffers. Stepping back for a moment. I’m encouraged by the early progress that we are seeing around the Company to deliver on the commitments that we made to you back-in January. First, we are bending the cost curve. Our first-quarter expense growth came in marginally better than our initial internal plan and we remain firmly committed to cutting our core expense growth by roughly half this year compared to 2022 on a constant-currency basis. Second, in-line with our outlook for the year, we continued to derive healthy growth in net interest revenue. Third, we delivered positive operating leverage on a Year-over-Year basis. And fourth, we returned a meaningful amount of capital to our shareholders, including $1.3 billion of common share repurchases. We’ve made good initial progress on our plan to return more than 100% of earnings to shareholders in 2023 and we currently expect to continue buying back stock, albeit at a slower pace given the uncertain environment. At the same time, I’ve made a promise to you to call it as it is, when we fall short of our expectations. And so, to be candid of fees being flat Year-over-Year was somewhat lackluster. Having said that, there were a number of business highlights this quarter that is designed to help us change this trajectory and drive underlying fee growth over-time. And so, I’ll call-out a few. In Asset Servicing, the pipeline remains strong and the margin on new deals is improving as we are increasingly holding the line on price to drive more profitable growth in the business. ETF activity is up across all measures, with healthy increases in AUCA, orders and flows [Phonetic]. And wins with all and in our data platform service business we’re pleasing to see this quarter. In January, we announced the launch of our outsourced trading business powered by a platform that already executed more than $1 trillion dollars in volumes annually for our Investment Management business. This global multi-asset trading service can help clients to reduce their costs and focus on alpha generation. While still early days, we think there is a significant opportunity here to offer front-office trading capabilities and a trusted unconflicted way to the market. Pershing brought in a healthy $37 billion of net-new assets during the quarter, representing mid-single-digit organic growth on an annualized basis and total revenue was a quarterly record. As part of BNY Mellon clients recognize Pershing as a source of strength and stability in the marketplace. In the current environment clients also appreciate the flexibility and choice of our product offering. Meanwhile, our Pershing X team continues to make great progress as we aim for a broader rollout this summer. Just last week, we announced a collaboration with Snowflake to provide our perspective Pershing X clients with more powerful analytics and faster data management improving their digital experience, so they can operate more efficiently. Clearance and Collateral Management activity remained elevated, given the volatility in the market that dealers increasingly finance larger inventories via tri-party. We continue to see growth from the investments that we’ve made to increase market connectivity by expanding our tri-party platform into new markets across Asia and EMEA and into new trade types and collateral pools, reinforcing our role as the only truly global provider of collateral management. Treasury Services delivered broad-based client wins across U.S. dollar digital and FX payments, liquidity and trade finance products and also saw a nice pickup in account and operational deposit growth towards the end-of-the quarter. In Investment and Wealth Management although our investment performance remained solid, AUM flows were mixed with strength in fixed-income and LDI strategies, partly offset by outflows in other long-term strategies. During the quarter, our U.K. investment management mutant [Phonetic] launched five future legacy funds. It’s first range of risk-rated sustainable multi-asset funds to support growth in the U.K. retirement market. And back-in the U.S. the Dreyfus bold share class, which we introduced last year has now raised over $4 billion in AUM. In summary, over the past few months, I’ve spoken about our combination of client trust at-scale platforms, client-focused culture and resilience, as a powerful foundation on which we can build. I’m also proud that our culture has been front and center in recent weeks as our people have risen to the occasion responding commercially and working tirelessly to enable the successful outcomes for our clients in these uncertain times. I view this client first culture as the key to make more out of our diversified portfolio of adjacent businesses. While we are the world’s largest custodian and trust bank, the contributions from clearance and collateral management, Pershing, treasury services and issuer services are differentiating and our client value proposition. With that, let me officially welcome Dermot to his first earnings call. Dermot, over to you.
Dermot McDonogh — Chief Financial Officer
Thank you, Robin, for the introduction and good morning, everyone. It’s a privilege to be here and I look-forward to working with you all. I’ll start on page three of the presentation with some additional details on our consolidated financial results in the first quarter. Total revenue was $4.4 billion, up 11% Year-over-Year. This reflects fee revenue being flat as headwinds from lower market values, a stronger dollar and the sale of Alcentra which closed in November last year were offset by a significant improvement in fee waivers and the absence of a notable item last year related to Russia.
Firmwide assets under custody and-or administration of $46.6 trillion increased by 2% Year-over-Year. Growth from new and existing clients, more than offset the stiff headwinds from lower market values and currency translation a real testament to the strength and diversification of our franchise. Quarter-over quarter assets under custody and-or administration increased by 5%. Assets under management of $1.9 trillion, decreased by 16% Year-over-Year. Here the impact of lower market values and the stronger dollar was tempered by cumulative net inflows over the 12 months.
Quarter-over quarter assets under management increased by 4%. Investment and other revenue was $79 million and included another strong quarter of fixed-income trading on the back of elevated volatility and greater demand for U.S. treasury. And net interest revenue increased by 62% Year-over-Year, primarily reflecting higher interest rates. Expenses were up 3%, driven by higher investments and revenue-related expenses partially offset by efficiency savings and the impact of the sale of Alcentra. The impact of inflation and merit [Phonetic] increases were largely offset by the favorable impact of the stronger dollar. And provision for credit losses $27 million in the quarter reflecting changes in the macroeconomic forecast. As Robin mentioned earlier, earnings per share were $1.12 of 30% Year-over-Year, are up 20%, excluding notable items, largely in the first quarter of last year. Our unfortunate pre-tax margin was 28% and our return on tangible common equity was 20%, the highest in three years.
Turning to capital and liquidity on Page 4. Our Tier-one leverage ratio, which continues to be our binding capital constraints with 5.8%, essentially flat quarter-over quarter. And our CET1 ratio was 11%. The strength of our balance sheet and our healthy earnings generation in the quarter allowed us to return 1.6 billion of capital to our common shareholders, including $1.3 billion of common share repurchases while maintaining our capital ratios well-above regulatory minimums and above our more stringent management target.
Similarly on liquidity, our liquidity coverage ratio was 118%, also unchanged compared with the prior quarter. The strength of our highly liquid lower credit risk and well-capitalized balance sheet is one of the cornerstones of our franchise. Starting in late ’21 and throughout ’22, we proactively reduced the duration and enhance the risk and liquidity profile of our investment securities portfolio, while consistently keeping over 60% of the book available-for-sale to position ourselves with ample flexibility for changing market and interest-rate condition.
Between the beginning of this year and early March, we saw deposit balances declined in-line with typical seasonal patterns and in-line with our expectations, considering continued central bank tightening by both rate hikes and quantitative tightening. This was followed by a swift increase in deposit balances as [Indecipherable] strength of our balance sheet during the recent turmoil in the banking sector. We ended the quarter with deposit balances up 1% sequentially, on a period-end basis, but we expect continued moderation of deposit levels in the months ahead.
Now moving on to net interest revenue and further details on the underlying balance sheet trends on Page five, which I will describe in sequential terms. Net interest revenue of $1.1 billion was up 7% quarter-over quarter. This sequential increase reflects higher yields on interest-earning assets, partially offset by higher funding costs and the impact of balance sheet size and mix. While [Phonetic] it’s clearly a very volatile quarter related to [Phonetic]markets, it is worth noting that on average realized rates were in-line with our projections for the quarter. Our outperformance compared to our prior expectations was primarily driven by slightly lower-than-expected deposit basis [Phonetic].
On a quarterly average basis, deposit balances decreased by 3% sequentially. Noninterest-bearing deposits represented 26% of total deposit balances which continues to be above our long-term range of 20% to 25% based on historical averages in normal interest-rate environment. Average extracting assets decreased by 1% quarter-over quarter. Underneath that cash and reverse repo class [Phonetic] loan balances were down 6% and our investment securities portfolio was flat.
Moving on to expenses on Page 6. Expenses for the quarter were $3.1 billion up 3% Year-over-Year. As mentioned earlier, this reflects investments in higher revenue-related expenses. Partially offset by efficiency savings and the impact of the sale of Alcentra. The impact of inflation and merit increases was largely offset by the favorable impact of the stronger dollar. Robin has been clear about our determination to bend the cost curve. We’re executing with discipline and urgency as you can see signs of our delivery and our professional, legal and other purchase services, net occupancy and business development [Indecipherable]. We feel good about our progress in the first quarter and how it positions us for efficiency savings in the coming quarters to help us meet our goals for the year.
Turning to our business segments, let’s start with Securities Services on Page 7. As I discuss the performance of our Securities Services and Market and Wealth Services segments, I will comment on the investment services fees for each line-of-business described in our earnings press release and with [Phonetic] the financial supplement. Security Services reported total revenue of $2.1 billion, up 19% Year-over-Year. Fee revenue was up 4%. Within this FX revenue was down 6% as the benefit of higher volatility was more than offset by a decline in emerging market volume. And net interest revenue was up 77%.
In Asset Servicing investment services fees decreased by 5%. The benefit of lower money market fee waivers and net-new business was more than offset by the impact of lower market values, lower client activity and the stronger dollar. In Issuer Services, investment services fees increased by 67%, this increase largely reflects the absence of the notable item last year related to Russia, as well as lower money market fee waivers in Corporate Trust.
Next, Market and Wealth Services on Page 8. Market and Wealth Services reported total revenue of $1.5 billion, up 22% Year-over-Year. Fee revenue was up 10% and net interest revenue increased by 53%. Encouraging investment services fees were up 15% primarily driven by the abatement of money market fee waivers, partially offset by lower client activity. Net-new assets were healthy $37 billion in the quarter, and average active clearing accounts were up 6% year-on year.
In Treasury Services, investment services fees decreased slightly by 1%, driven by higher earnings, credit on non-interest-bearing deposit balances on the back of higher interest rates, partially offset by lower money market fee waivers and net-new business. And in clearance and Collateral Management investment services fees were up 7%, largely reflecting higher U.S. government clearance volumes, and we [Phonetic] continued demand for U.S. Treasuries.
Moving on to Investment and Wealth Management, on Page 9. Investment and Wealth Management reported total revenue of $827 million, down 14% Year-over-Year. Fee revenue was down 15%. Investment and other revenue was $6 million in the quarter, primarily reflecting fee capital gain as opposed to losses in the first quarter of last year, and net interest revenue was down 21% Year-over-Year.
Assets under management of $1.9 trillion, decreased by 16% year-over-year. As I mentioned earlier, this decrease largely reflects lower market values and the unfavorable impact of the stronger dollar, partially offset by cumulative net inflows. In the quarter, we saw $5 billion of net inflows into long-term products. We continue to see healthy net inflows into our LDI strategies of $10 billion and we also saw $4 billion of net inflows into our fixed-income strategy. In cash, we expected outflows from a small number of clients. This was offset by healthy inflows on the back of our continued strong investment performance.
In Investment Management revenue was down 15% year-over-year. This decrease reflects the impact of the sale of Alcentra, the mix of cumulative net inflows, lower market value and the stronger dollar and was partially offset by lower money market fee waivers. In Wealth Management revenue was down 12% driven by lower market values and changes in-product mix. Client assets of $279 billion were down 9% Year-over-Year, primarily driven by lower market values. Page 10 shows the results of the other segments.
I’ll close with a few comments on how we’re currently thinking about our financial outlook for the year, which in short remains basically unchanged. From our earnings call in January, you will recall that based on March implied forward interest rates at the end of last year, we projected an approximately 20% year-over-year increase in net interest revenue for the full year ’23.
As you all know, we continue to see significant volatility in rates, markets and market implied forward interest rates currently suggest some meaningful fed easing relative to the dock plots [Phonetic]. We have positioned ourselves for continued interest rate volatility and retained ample flexibility and liquidity to respond to a wide range of outcomes as the ultimate impact of continued tightening remains uncertain.
We’re off to a good start in the first quarter and based on March implied forward interest rates at the end of March, we still believe our outlook for 20% year-over-year growth in net interest revenue is realistic with some skew to the upside. We also still expect expenses, excluding notable items to be up 4% year-over-year, assuming foreign exchange rates at the end of last year or by approximately 4.5% on a constant currency basis. As we said on our earnings call in January, we are determined to deliver some positive operating leverage this year.
We still expect an effective tax rate in the 21% to 22% range and finally, as we calibrate the amount and pace of our continuing share repurchases in the weeks and months ahead, we will be mindful of the continued uncertainty in the operating environment, especially as it relates to the uncertain path of interest rates and so we’re planning to maintain our current more conservative capital buffers for the time being.
So to wrap up, we’re pleased with the Company’s solid financial performance in the first quarter which have made a challenging operating environment once again showcased the strength and resilience of our business model. As we look forward, we are continuing to manage our balance sheet conservatively and we are confident that we are well positioned to help our clients navigate the elevated uncertainty in global markets.
With that, operator, can you please open the line for Q&A.
Questions and Answers:
Dermot McDonogh — Chief Financial Officer
[Operator Instructions] Our first question comes from the line of Ken Usdin with Jefferies.
Kenneth Usdin — Jefferies — Analyst
Hey, thanks guys. Welcome, Dermot. To follow up on your NII, you reiterated 20%, perhaps a little upside. Obviously, with a good start to the year that implies upon — sequential slide as the year goes through. Can you just kind of help us understand how that works through in terms of what you’re expecting for deposit trends and liability costs as you look through to that?
Dermot McDonogh — Chief Financial Officer
Okay. Good morning, Ken. And thanks for the question. Before I answer, I’d just like to acknowledge Emily, who is the former CFO and has been a tremendous partner with the transition and to the finance team and Investor Relations team who really helped me settle in well, and it’s a real privilege to be here, and I look forward to working with you all.
So on to your specific question around the mix between NII and deposits. Look, back in January, the environment was a little bit different to where it is today. We feel we’ve had a very good start to NII. We did a lot of scenario analysis in January to come up with that number. And look, there was a big kind of divergence between the market implied forward curve, which we use to kind of budget and project where we think NII is versus where the Fed is in the dot plots [Phonetic]. If you look at it today, there’s a little bit more of a coming together of that and there’s more of a market color around higher for longer.
We’re positioned for that. We feel good about this. And as a consequence of that, we’ve locked in a good quarter, and we feel good about subsequent quarters. And look, the important thing in my remarks was skewed to the upside. The range of outcomes is probably more uncertain today than it was in January. We have the debt ceiling to come, geopolitical uncertainty, all the factors that you would know about. And as a consequence, I don’t really want to update the guidance, but feel we’re solid on 20% with that skewed to the upside.
Kenneth Usdin — Jefferies — Analyst
Got it. Great. And just as a follow-up then, can you maybe just flesh out a little bit how you’re thinking about how the deposit trends go from here, both in an absolute sense? And then perhaps what that mix of DDAs to total looks like from, I think, the 26% that you posted this quarter? Thanks.
Dermot McDonogh — Chief Financial Officer
Sure. So, if you kind of take a step back on deposits and think about coming out of the pandemic and as people started to focus on inflation and having better yield opportunities and you look at the system in total, you see over the course of the last 15 months across the industry, deposits leaving the system, we’re kind of tracking that and we’re the same really as everybody else. We’re down 3% in terms of average deposits and maybe if I kind of double-click on what happened in the quarter, a little bit, up to March, we were in line with our forecast, which kind of gave us the 20% year-over-year growth. We kind of had a blip to the upside for deposits in the latter part of March as a result of a little bit of the turmoil that happens there. We saw a flight to our balance sheet. People wanted to use our platform. And so, we saw deposits elevate.
Now that’s largely moderated, albeit we’re a little bit above our forecast, we expect that to moderate further like the rest of the industry in the coming quarters as our clients are sophisticated and they will look for yield. But look, I refer you to Robin’s comments and his remarks where he talked about the cash ecosystem and we kind of touched $1.3 trillion of a cash ecosystem, we want to point them to our products and services. So, while they may not use our deposit platform, we want them to use other products within our ecosystem. So, we feel very good about where our deposit balances are and the trajectory for the rest of the year.
Kenneth Usdin — Jefferies — Analyst
Okay great. Thanks again Dermot and best of luck.
Dermot McDonogh — Chief Financial Officer
Thank you.
Operator
And our next question will come from Steven Chubak with Wolfe Research.
Steven Chubak — Wolfe Research — Analyst
Hey, good morning.
Robin Vince — President and Chief Executive Officer
Good morning, Steven.
Steven Chubak — Wolfe Research — Analyst
So, wanted to start off with just a question on some of the buyback commentary. We saw a strong capital return in the quarter. You noted plans to temper the pace of buyback, was hoping to get some more context as to what’s informing that decision. If I think about some of the key inputs, the leverage denominator should be shrinking, albeit modestly, given some of the deposit commentary you decided, you’ve sounded more [Indecipherable] on Basel IV, you’re less exposed to credit shocks. It just feels like you’re better placed than most to continue a healthy pace of buyback. Just want to understand the decision to retrench a bit in terms of the pace of deployment.
Dermot McDonogh — Chief Financial Officer
Thanks for the question, Steven. I wouldn’t use the word retrench. I would just go back to January and kind of just reaffirm what we said we’d do, which is return north of 100% of earnings to our shareholders this year. In Q1, it was a total of $1.6 billion, of which $300 million was dividends, $1.3 billion in share repurchases. So, a good start, March came along, and maybe some of it is me being a freshman CFO and wanting to just slow down the pace a bit to see how the macro environment plays out. There’s a lot of uncertainty out there.
I would reiterate, we are going to continue to buy back but we’re just going to take it easy now and watch the situation day by day, week by week. If the situation clarifies itself, if we get debt ceiling resolution, there are a lot of things that could play into the next couple of months, and we’ll watch and see and adjust accordingly.
Steven Chubak — Wolfe Research — Analyst
So just to understand, it’s — you’re making adjustments, but are you still committed to the 100% payout or north of 100% payout at least for the time being?
Dermot McDonogh — Chief Financial Officer
That’s correct, Steven.
Steven Chubak — Wolfe Research — Analyst
Okay, great. And just for my follow-up on the topic of efficiency, really encouraging to hear that you’re doubling the efficiency savings this year. I know you had highlighted that previously. We saw some really nice progress in improving the Security Services operating margin. You talked about staying disciplined on managing cost there. With the margin there above 25%, how quickly do you think you can get to that 30% margin?
I wanted to understand what your plans are for the Investment Management segment, in particular. The pro forma, the Alcentra sale, the margin there is fairly subdued, just wanted to get some expectation around where you think that margin could potentially traject to over time, what your plans are in terms of efficiency, if there are any for the investment management segment as well?
Dermot McDonogh — Chief Financial Officer
Okay. So, there were a few questions there. So, I’ll try and deal with them as best I can. So, if we kind of zoom out for a second and look at the firm, yeah, a 28% margin with a 20% ROTCE, the highest in three years, okay. So, margin goods always want to improve. And then you double click into that, and you go Security Services, 26% going to 30%. The positive in there is Emily was the CFO for a number of years, and now I get to partner with her figuring out how to drive that margin higher. And so, we have a plan, you will have noted that we committed to half the expense growth year-over-year. We’re off to a good start and that will have a — that will — that segment will be a beneficiary of that.
Then you double click into the next segment, which is Market & Wealth Services, which is a 48% margin, which I have no problems as CFO with that long may it continue. And then we go into Investment and Wealth Management, which 11% margin is a bit — to be honest, it’s probably a bit disappointing. But 18 months ago, that was a 30% margin business. And we don’t see any reason why we can’t get back there with a lot of hard work.
There were quite a number of headwinds going into that last year, lower market values, a significant strengthening of the dollar. And some of our clients wanted to do a bit of a mix shift from equities to fixed income, and that was going from higher fee to lower fee, but the important point that I would draw to you there is the clients stayed in our ecosystem and that’s the key message. Clients are in our ecosystem and just mix shifting, and we’re working with our clients to deliver good outcomes for them.
Steven Chubak — Wolfe Research — Analyst
That’s great, Dermot. Thank you so much for accommodating the multi-partners [Phonetic] and welcome.
Dermot McDonogh — Chief Financial Officer
Thank you, sir.
Operator
And our next question will come from Alex Blostein with Goldman Sachs.
Alex Blostein — Goldman Sachs — Analyst
Hey, good morning, everybody. Thanks for the question. I was hoping we can zone in on fees in Investment Services, particularly within Asset Servicing and Pershing. At a macro level, it feels like a lot of things have gone your way, markets were up. Activity rates were very strong, particularly in treasuries, money market funds, retail, etc. So, all sort of things in your wheelhouse, yet the revenues in both businesses were down sequentially.
So, can you just unpack a little bit what were some of the offsets that drove to disappointment on fees? And as you look out, I guess, for the rest of the year, I think on the Q4 call, you guys made comments around just the overall firm-wide fee growth for 2023. Just wondering to get your latest thoughts on that? Thanks.
Dermot McDonogh — Chief Financial Officer
Hi Alex, hope you’re well. As a former colleague, I think you were supposed to ask me an easy question, not a hard question. And — so look, Asset Servicing, the way I kind of think about Asset Servicing is — and look, the headline number is 2% down, yeah. That equates to a little over $50 million, yeah. In the context of our quarter, that’s a small number. So, the way I kind of think big picture, again, I’ve said this in the answer to other questions, did we attract clients to our ecosystem?
Yes. And then within that, is like how do we derive fee revenue from those clients. Some of it has to do with market levels, some of it has to do with volume and some of it is other stuff like account opening. So, within that context, we did see a risk-off sentiment from our clients wanting to pause, push stuff out to subsequent quarters. So, the client volumes were down, and so that really kind of drove the Asset Servicing side of it.
And if you kind of look at Issuer Services, it’s a smaller number for us, but that’s a seasonal business, and depository receipt is within that. And Q1 is typically a quiet quarter there, and we’ll expect that to pick up in Q2 for dividend season. And on the plus side for Asset Servicing, we had higher market levels, and we got some fees from that. So overall, I feel good about Asset Servicing. We have to work hard on the fee outlook, but it’s not — I would say, it’s not as negative as some commentators would portray the fee outlook to be as I see the situation today.
As it goes to Pershing, look, we’re very excited about the Pershing business. You’ll see from our commentary in our prepared remarks that we had $37 billion onto our system. Robin talked about it in his prepared remarks. We’re very excited about Pershing X. The partnership with Snowflake and [Phonetic] we’re going to do a lot of great stuff in that area, and we will tell you about it as the quarters unfold, but Pershing and Pershing X is very, very exciting for us.
Alex Blostein — Goldman Sachs — Analyst
Got you, thanks. Maybe as a former colleague, an easier question on the follow-up. I guess as you sort of think about the dynamics in the banking space over the last month, month and half, and sort of the disruption that’s created and some of the opportunities that you guys might see on the back of that, whether it’s retaining some of the deposits that came over or some new areas within the fee side of the equation, where do you think you could lean into most to gain extra share?
Robin Vince — President and Chief Executive Officer
Look, Alex, I’ll start that. Look, I think the events of March have really shown the importance of asset liability management as a key discipline. And so, whether you start on the asset side and think about tailoring your liabilities accordingly or you start on the liability side and make sure that you’ve got the right duration of assets and the right composition of assets. That to me is lesson number one. I’m sure we’ll see a bunch of outcomes from that from policymakers over time as that all gets digested. We’re in the preparedness business, not the predicting business. And that goes to everything across the franchise. We’ve positioned ourselves well for this, and we positioned ourselves so that we would be able to deal with lots of different eventualities, and critically, to your question that we could help clients through those various different eventualities. And so, we’re proud of the fact that we’ve served as a little bit of a port in the storm for some of our clients. We’ve had a lot of net new accounts opened in various angles on the business, and I think it’s reaffirmed for us, and we’ve said this before, that resiliency is a commercial attribute.
We spend a lot of money on resiliency. We spend money in terms of making sure that our technology systems are state-of-the-art, all of the investment that we’ve made over the course of the past few years, our investment in cyber, but it’s also investment in the resiliency of our balance sheet and the combination of that allows us to then be able to use times like this to be able to attract clients to the platform.
Dermot talked about a bit more about that ecosystem, which is another example, which is we built businesses over time, and we’ve lent into investments in those businesses that allow clients to be able to get what they need within our ecosystem, even when they may be a little risk on, they may be a little risk off, they may favor deposits, they may favor a money market fund, they may favor equities, they may favor fixed income, but we have all of those cylinders, if you will, to the engine to be able to help our clients.
We think that breadth and that diversification of the business which is built up over a period of time and which we have been leaning into is very, very important. I know we get described as a trust bank. And by the way, we’re proud of the trust that Monica implies, but remember that our most profitable, highest growth, highest margin segment of Market and Wealth Services contains a set of businesses which you would not find in a trust bank.
Alex Blostein — Goldman Sachs — Analyst
Totally great. Alright, thank you, both.
Operator
And our next question will come from Brennan Hawken with UBS.
Brennan Hawken — UBS — Analyst
Good morning. Thanks for taking my question. Dermot, welcome to — welcome to the role. Looking forward to working with you.
A question on the NII reiteration, Dermot. So previously, there was an expectation that noninterest-bearing deposits would get back to the historic 20% to 25% range. Is that still the case? And can you maybe add a little color on why you think the noninterest bearing deposits have stayed above that range that we’ve seen in prior history. Is there a business mix shift change that has happened or any other structural reason which could cause it?
Dermot McDonogh — Chief Financial Officer
Thanks for the question, Brennan. So, like the way I kind of think about it again is like I know I’ve said it a couple of times, it really is NIBs and BNY Mellon is really as an ecosystem point that I will start with. Clients leave and we don’t leave with the deposit product. Clients come to our ecosystem for a range of products, and they leave their cash with us to prosecute that business. So, I’ll pick out three examples like Corporate Trust, NIB stay with us because they have to make coupon payments. Treasury Services clients leave balances with us to offset fees. Asset Servicing balances stay with us because of underlying client activity. And then our Clearance and Collateral Management business, I mentioned another one, we have decent NIBs there.
So, our businesses are bigger than a few years ago. Balances are bigger and clients are doing more with us. So, NIBs are just attractive to the ecosystem. So, then you kind of take a look at history and you do the bottoms-up analysis. And through the last cycle, NIBs did bottom out at the 20% range. Currently, we’re at — we’re still at around the 26% range. It stayed sticky. And I think our reason that you could describe to that is clients left cash with us in March because they just wanted to leave and use the safety and resilience of our balance sheet and just it stays there.
And so, in our forward outlook in terms of why we reiterate the 20% guidance with the skew to the upside is, we expect that to moderate, not meaningfully, but in line with our projection and the work that we did at the beginning of the year. So, we feel good about where it is at the moment. We feel good about the forecast. And it’s been stickier in the past than we projected it to be, is how I would answer this [Phonetic].
Robin Vince — President and Chief Executive Officer
But we’re not relying on that stickiness. And I think that is an important point that Dermot mentioned. And so, to the extent that we are — we will harvest the benefits as we have them, but we definitely recognize that they could go down to the prior cycle lows [Phonetic] in percentage composition terms, and we’re managing ourselves accordingly.
Brennan Hawken — UBS — Analyst
Yup, that’s very, very clear. Thanks for all that color.
Robin, you spoke to — you actually said it very eloquently resiliency is a commercial attribute. In the past, you’ve spoken to the embedded position that BK of New York has a counterparty. How are you thinking about utilizing that position and that commercial attribute of resiliency in order to drive revenue? Do you have any additional color or commentary that you can provide on how you’ve been thinking about that?
Robin Vince — President and Chief Executive Officer
Sure. So, look [Phonetic] we’ve been quite careful over the course of the events of March to spend in the financial system with a large deposit. And so, we are very cognizant of our role in the system and the responsibility that we have to the system given the role that we play, but at the same time, over time, we do view this resiliency to be a strong commercial asset. So, if you step back from the whole of BNY Mellon, I think of ourselves as sort of offering a couple of things that are really differentiating. One is this 239-year history where we touch 20% of the world’s investable assets. We are the world’s largest custodian. We are the world’s largest collateral manager. We have that $1.3 trillion worth of cash in the ecosystem. We have another $5.5 trillion worth of tri-party. That’s $7 trillion in total in that space, largest depository receipts firm, number one in the broker-dealer, Pershing, Wealth Management Infrastructure space, etc.
We have these terrific individual components and for us, bringing them together and actually being able to demonstrate to our clients the breadth of the platform with the resiliency that we offer, we think that’s a winning combination and one that over time, as I’ve talked about before, we don’t think we’ve taken full advantage of. So, it is telling the story of who we are, our place in the world, the roles that we play and helping our clients to realize just the breadth of activity that they can actually do with us and the fact that they can trust and rely on us.
Brennan Hawken — UBS — Analyst
Thanks for the comment.
Operator
And our next question will come from Mike Mayo with Wells Fargo Securities.
Mike Mayo — Wells Fargo Securities — Analyst
Hey Dermot.
Dermot McDonogh — Chief Financial Officer
Hey Mike, good morning.
Mike Mayo — Wells Fargo Securities — Analyst
Hey, well, as you said to me at the annual meeting, it’s a new country, new firm, a new job. And so just pulling the lens out a little bit, now that I can ask you a question specifically, how do you approach the CFO job? I mean, what skill set do you bring to the position. I know Emily is still there, bigger and better, but how might you look at things a little bit differently? What kind of lens do you use? And what are your kind of objectives say, over the next several years?
Dermot McDonogh — Chief Financial Officer
Okay. So, it’s kind of interesting, you asked the question, Mike. When Robin and I talked about the opportunity and when I decided to join, I listened to the first earnings call after I’ve made the decision to join. And Robin, and his first as kind of CEO apparent, he talked about connecting the dots across the enterprise, and he’s just answered in the question, he just answered there, he talked about that, too. And so, in my prior life, connecting the dots across the enterprise was a thing that I majored on.
I also grew up in the financial world, and I intend, hope and plan to bring financial discipline across the firm. We have a great finance team here at BNY Mellon. I couldn’t be prouder of what they do. And so, I kind of think about the role in three ways. One is working with all of you. Clients, regulators, external stakeholders, really kind of delivering the message of what we’re about at BNY Mellon over the next several years. So, I see that as very important.
And then internally, working with the executive committee and the rest of the leadership of the firm and the finance team to develop really good financial analysis in which we can make good strategic decisions about the way we want to take the firm. And that’s a lot of work. But the team has already done a good job. And look, you’re beginning to see the fruits of this come out in the expense area and other parts. In terms of our top three priority for this year, it really is about slowing the expense growth of the firm.
We’ve made a commitment, one quarter in, we’re delivering on it. And this is not about — I don’t think about it in some ways as expense cutting, it’s like — it’s attacking structural expense basis in the firm where we can think — we really fundamentally believe we can do the same thing in just a better way and more efficiently and we want to invest and grow the firm. So, it’s kind of — I think about my expense priority is like how do I think about run the bank? And how do I think about grow the bank? Because we really want to take those dollars that we get from efficiency and invest in things like Pershing X and other really key growth initiatives.
So, it’s all about financial discipline and giving the team the financial resources, they need to grow the firm and just managing the balance sheet, which is kind of a thing that we’ve had to do in the last couple of months quite aggressively.
Mike Mayo — Wells Fargo Securities — Analyst
Yeah, just one follow-up. Connecting the dots, it makes sense. And you and Robin both came from Goldman Sachs where there’s the culture of connecting the dots. It’s just the incentives to get people to connect the dots, right? You are [Phonetic] breaking down the barriers, breaking down the silos and don’t people just ultimately do what they get paid for. And isn’t that like a big, tough task to change the incentive scheme to get people to connect the dots with each other?
Robin Vince — President and Chief Executive Officer
So, if your question is, does it take a lot of work? And is it a big task to run a company differently than it’s been run before? The answer is absolutely yes. And we have got a leadership team who are very focused on approaching the next decade differently than the last decade. And this point of connecting the dots is a very important one.
Let me give you one example. So, Dermot was talking about in our Investment Management business. And he also mentioned Pershing. And so, Mike, when you look at those two businesses, just interestingly, they couldn’t have been run more separately within the ecosystem of BNY Mellon. Investment Management was run as essentially almost a separate company off to the side. Pershing was run essentially as a different separate company off to a different side and we never really explored the opportunities to be able to think about the manufacturing of investment management with the fact that we have across Pershing and Wealth Management, a $2.5 trillion distribution base. Now we’re an open architecture firm. And so, we aren’t distributing all of our manufactured product into our distribution arms, but we have opportunity to explore that which frankly hasn’t been fully explored up until now.
Take the adjacency between margin where we’ve seen a significant growth for our Collateral Management business associated with new margin rules of un-cleared margin, exchanges need more efficient margin delivery. Those products are very adjacent to the rest of our Collateral Management business in tri-party. They’re also quite adjacent to our foreign exchange business. They’re quite adjacent to our cash management ecosystem.
So, we have both diversification in the firm, but we also have a lot of natural adjacencies that people haven’t explored before. So that’s the way I think strategically about it.
And then your question is one of the several pillars of execution, which is what are the things that we have to do to actually get after that. Some of those things are structural, some of them are incentive based, some people based, some of them are organizational based. And so, we’re going to approach all of those different pillars so that we ultimately attack that strategy effectively, and we’re very committed to doing it.
Mike Mayo — Wells Fargo Securities — Analyst
Thank you.
Operator
Thanks, Mike. And moving on to Gerard Cassidy with RBC.
Gerard Cassidy — RBC Capital Markets — Analyst
Good morning, gentlemen. Can you…
Robin Vince — President and Chief Executive Officer
Good morning.
Gerard Cassidy — RBC Capital Markets — Analyst
Robin, around the debt ceiling that’s coming up for this country, what type of risks there are for your business if a debt ceiling isn’t negotiated effectively by Congress and the President. Can you — what kind of risk do you see in just that situation developing as we go forward?
Robin Vince — President and Chief Executive Officer
So first of all, we obviously do play an important and somewhat special role as a market infrastructure provider in this space, and we have a good vintage point on the operating of the treasury market. We don’t have a crystal ball though, obviously, in terms of how debt ceiling is going to get resolved. And we do think of the Fed and the treasury as clients of ours as well, and we want a seamless experience as much as possible for them and also, of course, for a broader client franchise. And so, we’re really doing a couple of things.
Number one, we think it’s our responsibility to the system to lean into the dialogue that’s going on in D.C. in a way that can be helpful. And so doing our bit for raising awareness, sort of educating on various things, debt ceiling breach is not the same thing as a government shutdown and making sure that that folks really understand what would happen and some of those consequences. And so, we’re spending time there. We obviously spend time with the Fed and the treasury on the topic, as you would imagine.
And then internally, really for the benefit of our clients, we’re using all of the lessons learned from the past to update our playbooks. We’re putting in automation on various different things, and we are organized around being very ready to be able to execute come what may. Now of course, we’re going to take a lot of guidance from the Fed and the Treasury on that as well as we go through it. So, there are a whole bunch of different things that we are doing.
I will also note that in the background, our own iFlow data, which, as you know, we have quite good insights into market liquidity. It shows that once again, treasury market liquidity isn’t great. The market is a little bit less supported from foreign buyers. We can see that from our iFlow data will have access to the information on sort of off the run versus on the run it offers, etc. And so, it’s not great from a starting point, which I think is a cautionary tale to the official sector that we really do want to try to get good outcome on this thing.
Gerard Cassidy — RBC Capital Markets — Analyst
Very good, Robin. And then Dermot, more of a technical question. In your average balance sheet, I think in the supplement, it’s Page 7. Can you share with us why is the Fed funds sold yield so high? And the same thing with the Fed funds purchase. The yields 16.3% [Phonetic] in the first quarter and then the Fed funds sold looks like it’s 19.75%. Any particular reason why these seem to be out of line with the rest of the yields in the balance sheet?
Robin Vince — President and Chief Executive Officer
Hey Gerard, I think that’s kind of largely kind of a gross-up netting issue, but I will get Marius to follow up with you after the call and kind of give you a more detailed explanation.
Gerard Cassidy — RBC Capital Markets — Analyst
Okay. Yeah. It just seems very odd to be so high. Okay, I appreciate it. Thank you.
Operator
And we’ll take a question from Brian Bedell with Deutsche Bank.
Brian Bedell — Deutsche Bank — Analyst
Great, thanks. Good morning, folks and welcome Dermot, looking forward to working with you. Maybe to the growth outlook for — can you guys hear me, okay?
Robin Vince — President and Chief Executive Officer
You’re breaking up for a second, Brian, but I think you’ve come back.
Brian Bedell — Deutsche Bank — Analyst
Come back, yeah. My handset, it is much better than the headset. Okay. I just wanted to come back to the growth in Pershing and Asset Servicing revenue growth. I heard you loud and clear on the drivers for 1Q as we think about the trajectory over the course of this year, I guess two questions on this. First of all, did you benefit, do you think, from a revenue perspective in those areas on the fee side in March versus January, February? So just to get a sense of how volatility can help the revenue picture?
And then secondarily, if you can talk about what you mentioned before in terms of connecting the dots, if you will, and how sort of quickly that can work its way into the revenue picture? Or is that much more of a longer-term goal? And then I’ll do a follow-up question separately.
Dermot McDonogh — Chief Financial Officer
Okay. So, Brian, let me start with Pershing. So, I would say in both businesses that you asked a question on Q1 was — it was predominantly a risk-off environment, but notwithstanding the risk-off environment for Pershing, we attracted $37 billion of new assets onto our system. And so, we’re growing organically at a nice clip, which we’re very pleased about. So, I would say Pershing feels good. The outlook feels good and we’re going to do the launch — official launch of Pershing X in June. And so, the clients that are beta testing that feel good about what they’re seeing. We’ve got the partnership with Snowflake. So, I would say the outlook for that business overall in terms of our continued growth in assets — and as a consequence of that, notwithstanding the risk off sentiment in Q1, we believe being the number one in the market with broker-dealers and several million active clearing accounts that we have on the system, we feel pretty good about the future for that one.
Asset Servicing, I think the way I would kind of think about asset Servicing is more steady as she goes, yeah. It’s a big business. We kind of have a mixtures like, in the past, people have talked about as of as being a fixed income house. And so, I would characterize it, we’re both a fixed income house and an equity house. And so, two-thirds of what comes in is kind of largely fixed income related, and one-third is equities. And we continue to grow our AUC and our AUM and so over time, that mix shift between fixed income and equities, where they either play to our strengths or kind of it will slow us down a bit. So overall, we feel like it’s a steady as she goes environment for Asset Servicing.
Brian Bedell — Deutsche Bank — Analyst
Okay. That’s great color. And then if I could just follow up with the comments you made on the global multi-asset trading capabilities. It is similar question there. Is that something more near term or a little bit of a longer-term build out? And is that coming in Asset Servicing? Or the FX and other trading line? And then if I can sneak in on Pershing X, if you’re rolling that out in June, should we expect a revenue ramp contribution in the second half to that? Or again, is that more of a longer-term build?
Robin Vince — President and Chief Executive Officer
So, I’ll start with Pershing X. That is a longer-term build. We’ve talked about the fact that it wasn’t going to meaningfully contribute over the course of couple of years since we first talked about that. And so, that’s really a ’22, ’23 thing. You should expect essentially nothing from it in that period of time, but we’ll update as we go past launch, we’ll give you some updated view on that. But I view that as being a ’24, ’25, ’26 story overall in terms of its ramp. And again, we’re still in beta testing. We feel quite enthusiastic about the client response to the product, but I’m going to reserve judgment until we start signing contracts and we have launched live in the market on that.
In terms of outsourced trading, so this is something that we’ve launched, and we made the public launch during the quarter, hence, we’ve made the comment, but this is a very medium, long-term opportunity. We talked before about the fact that as a firm, we are very interested in up the value chain of the various different businesses that we do in Asset Servicing. Once upon a time it was custody and then middle office got added and now data solutions get added, and integration and these various different components that create a broader solution set for investment management and asset owner clients, and now we’re adding to that and saying, “Hey, there’s not actually a ton of alpha for an asset owner or investment manager, particularly one that is managing in the tens or hundreds of billions of dollars of AUM. There’s not a lot of alpha associated with execution.” The alpha is in portfolio construction, asset selection, but the actual buy-sell action isn’t.
And in fact, it’s not great scale because clients often need desks in multiple locations. If they’re a multi-asset asset manager, they need lots of different specializations when it comes to the execution. So, we have all of that. We’ve executed $1 trillion or so a year of exactly that type of broad-based asset management execution for our own investment management firm and so now we’ve turned that into a platform that can operate not only for ourselves, but also operate for clients. So, we’re externalizing an existing at-scale platform, which is fully capable across products and we’re externalizing that now for clients and saying, “Hey, there’s no real alpha for you associated with your own trade execution. Let us take it off hands.” And I view this in also in a way as an extension of what we already do in foreign exchange, where we do exactly that on a range of different execution basis for our clients in foreign exchange.
And so, this is something that we know how to do and something that we already do, now we’re externalizing it, and I view it as quite an exciting evolution, but it’s a very medium long-term thing as part of our overall journey on fee growth over time.
Brian Bedell — Deutsche Bank — Analyst
That’s very interesting. Looking forward to hearing a lot more about that in the future. Thanks.
Operator
And our next question will come from Robert Wildhack with Autonomous Research.
Robert Wildhack — Autonomous Research — Analyst
Good morning, guys. You called out the strong pipeline in asset servicing, while holding the line on price, and I wanted to unpack that a little more. First, how does the current backlog and velocity of new business compare to past periods?
And then second, given that you’re being disciplined on price, what are the common elements that you think are driving your success here? Thanks.
Robin Vince — President and Chief Executive Officer
So, this is part of our overall March to 30% margin in the Security Services business, Rob. And so, when we look at that, Dermot talked a little bit about the focus on the expense line. That’s important. And it goes a little bit hand-in-hand here. If you look at our margin last year of 20%, now 26%, depending on last year or this year’s stat, but if you just take this year stat, we should be putting four times as much energy into the expense line as the revenue line in order to be able to get the same net effect at the bottom line. And so, we’re doing that.
But on the revenue line as well as driving new activities, this discipline point, pricing pressure is a normal part of this business, but as we look back and we review certain deals that have been struck over the course of the past few years, going back, in some cases, going back several years, I think we did win in some cases, on price. And we look at and we now have new capabilities about reviewing the margin on a deal-by-deal level. And when we look at some of those deals, we’re pretty disappointed. So that’s causing us to engage with those clients and talk to them about the other things that we would like to do for them that help us to be able to broadly improve the margin at a client level.
And then in some cases, there have been deals and I’m thinking of one example in my mind of a client who came, and they had a real expectation about pricing at a certain level. And we were like, we’re just not going to do the business at that level, and we negotiated, and we substantially increased the price to a level which we thought was appropriate for the actual business involved.
And look, I don’t know about the past, how that would have happened. But if I look at the history of deals that we’ve actually got on the platform, my guess is that, that behavior is not something that would have occurred before and therefore, it’s yielded a different outcome. So, this focus on the true cost to serve and then the standardization that needs to be done across the platforms that will improve and in fact, reduce over time the cost to serve. So even the same piece of business can be more profitable, not only because we’re pressuring on price, but also because we’re making it cheaper to actually execute that business and the trick will be doing both.
Dermot McDonogh — Chief Financial Officer
Yeah. Look, the point I would add in there having the growth rates and becoming more efficient as a company. So, all the work that we do on expenses and efficiency management feed into that discussion as well. So, you kind of have to join the expense narrative again with the pricing good business narrative to get the complete picture.
Robert Wildhack — Autonomous Research — Analyst
Thanks a lot guys, and Dermot welcome to the role.
Dermot McDonogh — Chief Financial Officer
Thank you, sir.
Operator
And we’ll take a question from Vivek Juneja with JPMorgan.
Vivek Juneja — JPMorgan — Analyst
Hi, thanks for taking my questions. [Speech Overlap] A couple of clarifications. The deposit inflows in March that you were talking about, which businesses did you see that in?
Dermot McDonogh — Chief Financial Officer
So, I would say, broadly speaking, we saw it across the ecosystem. The point-to-point was up 1%. We finished the quarter on a period-end basis at $281 billion. our average for the quarter was, I think, roughly $277 billion. But there was no one business. It really was broadly spread. And I guess the important point that I would call out here is, we made a strategic decision about 15 months ago to kind of centralize how we think about deposits into one platform.
So, we kind of think of deposits as a platform as well as a product. And we have very, very good client connectivity and engagement. So, when we talk about deposits, we talk about it across the system, and that will echo Robin’s point about connecting the firm, dissolving different businesses, so we think of deposits as an enterprise effort. And that’s how it came together for us in the quarter.
Vivek Juneja — JPMorgan — Analyst
Thanks, and the flip side, during this turmoil in March, there was a lot of inflows into money market funds. But when I look at your cash AUM, you had no — for the quarter, it shows no inflows. Any color on why you didn’t benefit in that business also because you’ve historically been a big player in there?
Robin Vince — President and Chief Executive Officer
So yeah, like I think — and historically, I would say, and continue to be a very big player in that. Our performance in our Dreyfus cash business has been excellent and continues to be excellent this year. The simple answer to that question is, we had some — we knew in January, we were going to have some known outflows. So, we were projecting to be slightly down in Q1. And with the inflows as a result of what happened in March, that got us back to flat. So overall, I think the average balances were higher, but on a period-to-period basis, we’re flat, but we continue to feel very good about the business and more importantly, performance. And in this business performance matters, so we expect that will — you’ll see better balances going forward.
Vivek Juneja — JPMorgan — Analyst
And the outflows that you’re talking about in January, what was driving that? Is that pricing? Is that something else? What drives that?
Dermot McDonogh — Chief Financial Officer
It was clients wanting to do something else with their cash. They told us that they were doing it. It was in our forecast at that time. We knew it was going to happen. There was no specific reason.
Robin Vince — President and Chief Executive Officer
And I will just add on to that. I think this quarter was a little idiosyncratic in a couple of different ways. And we — last year, we outgrew the market in the driver’s money market platform and sort of two other observations. There’s a little bit of composition that you have to look at under the hood on these institutional money market funds in terms of where the money is coming from. Was it really coming from sort of mega individual ultra-high net worth or was it coming from actual institutional flows. And so, I think you have to look a little bit at that on a money market fund by money market fund basis as well.
And then as Dermot pointed out, the broader — our broader connectivity to money market funds goes beyond our own money market fund. And so, we have this market-leading liquidity direct product. And so, even when money goes to other money market funds, we are benefiting from that because we have this connectivity. And so, we are a very large source of inflows to some of those other money market funds that you’ve seen growing.
And again, this is the benefit of the ecosystem. It might be on our balance sheet, it might be on a money market fund, it might be in someone else’s money market fund. It might be that we’re selling treasury bills to clients, but all of those things are in the mix as is the repo and Fed’s reverse repo facility.
Vivek Juneja — JPMorgan — Analyst
Thank you.
Operator
And we will take a question from Rajiv Bhatia with Morningstar.
Rajiv Bhatia — Morningstar — Analyst
Good morning. Yeah, thinking about operational interest-bearing deposits versus nonoperational interest-bearing deposits, how much of the rate you paid differ between those two buckets?
Robin Vince — President and Chief Executive Officer
So, we don’t disclose the exact rates on the different components but let me just sort of broadly talk to you about the deposits, Rajiv, because I think this is quite important. So first of all, to me, the decision tree is not insured versus uninsured. That’s a convenience. It’s sort of a retail expression. It’s a short hand that gets used in the market. The ultimate decision tree is whether deposits are stable and sticky or whether they’re not.
And in short, it’s just one lens of that, and that lens is a bit more relevant to retail than institutional. And by the way, even within insured, not all deposits are equally sticky, right? Because you’ve got checking, you’ve got high-yield savings, you’re going to have different outcomes for these, whether they’re true operational accounts, even on the retail side, but there are other types of sticky and stable.
And so, for us, two-thirds of our deposits in the first quarter are operational across our portfolio of businesses. And those are, as Dermot said earlier on, those are required in order to be able to provide clients with those operational services. And it’s diversified across our portfolio, and you are custody, cash management, clearing, corporate trust, there are a bunch of different sort of business cylinders that give rise in that operational cash engine.
And we obviously spend a lot of time and effort modeling all of these types of things and sort of — and we’ve seen that has really proven to be stable over multiple cycles. And so that’s sort of why we focus so much on operational. And then for nonoperational deposits, look, there’s a little bit there associated with which we don’t expect them to leave, but we plan for them to be able to leave at obviously at a much, much higher rate than we would think about that on the operational side because we just think that’s good asset liability management.
Rajiv Bhatia — Morningstar — Analyst
Okay. And then just one follow-up. In your prepared remarks, you mentioned that Wealth Management revenues were down in part due to changes in product mix. Can you expand on what that is and whether you expect that to continue?
Dermot McDonogh — Chief Financial Officer
So I think that just goes back to the point of the risk off sentiment in — that we saw in Q1 as people just wanting to; A: not do activity and move from fixed income products to equity products, normal behavior, nothing out of the ordinary that I would call out, totally expected just us working with the clients to deliver the risk appetite that they wanted to have for that quarter.
The turmoil of March is kind of you would say, for now, may have a basis and we may see a change in client behavior, but back when they took these actions in March, we didn’t know how long we’re going to be in this situation for us. So, it’s behavior that we expected to see and is kind of I would view it as normal BAU.
Rajiv Bhatia — Morningstar — Analyst
Alright, thank you. Thanks, Rajiv.
Operator
And our last question will come from Betsy Graseck with Morgan Stanley. Please go ahead.
Betsy Graseck — Morgan Stanley — Analyst
Hi good morning.
Robin Vince — President and Chief Executive Officer
Hey Betsy, good morning.
Betsy Graseck — Morgan Stanley — Analyst
Yeah, okay. Just a couple of things. One, on the MMF discussion that you just had with Vivek. You also benefited from MMF through your custody platform as well, right, because your custody a lot of MMF, is that fair?
Robin Vince — President and Chief Executive Officer
Yeah, that’s right. We touch — it’s another touch point with money market funds on the Asset Servicing side.
Betsy Graseck — Morgan Stanley — Analyst
Right. Okay. And that helped the deposits, I’m guessing so. My question really has to do with your role as a global payment provider, one of the top, obviously. And I think you’re involved in the FedNow pilot. I just wanted to get a sense as to how you’re thinking about how FedNow is integrated within your Global Payments platform, get an update on the BNY Mellon digital asset platform, and is there anything that’s going on within crypto that would have you lean in or out? So, kind of three legs of that question.
Robin Vince — President and Chief Executive Officer
Okay. So let me start with real time. We are part of the FedNow test. I think actually might have been the first bank to start testing on it. We were the first bank to do a test on the clearinghouse real-time payment rails. And look, overall, when I step back from real-time payments, if I use that as the generic term that would cover both FedNow and the clearinghouse, it is a couple of things.
It is a new payment rail. And I think that represents an interesting disruption, and we would like to participate in that disruption, which is one of the reasons why we’ve been leaning in. I think there’s a bunch of opportunities for clients there, quicker, cheaper, more control over the payments. And so that’s a good thing, saves them dollars and ultimately, it’s quite helpful for the industry’s carbon footprint as well because it’s really a check, should be over time a check, eradicates and there’s a lot of sort of carbon footprint and ESG more broadly in the handling of checks. So that would be a good thing.
We’ve got the opportunity to be part of that disruption because of our existing Treasury Services business, and we see that also as part of a broader solution set because we wrapped up in real-time payments, there’s payment validation, there’s fraud protection and there are other data services, and we find ourselves selling that bundle more often than not when we sell RTP. And I think we have a position you sort of framed it in terms of FedNow. But we have a position in terms of real-time payments and payments more broadly as a pretty un-conflicted provider. As you said, we’re a very large provider. But that un-conflicted nature means that whether you’re a Fintech, whether you’re a smaller or medium size, regional bank, whether you’re a foreign bank, we’re not threatening as a set of rails to plug into, and that makes us pretty appealing as a partner.
But look, this is a multiyear endeavor. We’re pleased with the traction. We’ve done a bunch of stuff, and we’re playing it forward. But obviously, the story is going to be inextricably linked to seeing all of this take hold in the U.S.
The other key question that you asked, Betsy, was on digital assets. And look, I haven’t changed my point of view here at all. I view it as a completely different thing than real-time payments. And in fact, in digital assets, some people do complete the two and view things like coins and Central Bank digital currencies as solutions to problems which I would actually argue that real-time payments might be a better solution for. So, there is a little bit of overlap, but I do favor real-time payments more broadly the question of how to speed up payment rails and payment processes in the United States to make them more efficient.
But then on digital assets, we think this is about the tech. We believed in the fact that distributed ledger technology, smart contracts that you can build on top of it have good opportunity over time. That’s many years, maybe several decades evolution. It’s still early hasn’t really been proven and we’ll see opportunities to have more efficiency, easier handling of certain asset types, think about things that aren’t standardized today. So, they’re messy in the financial services system like real estate and loans probably speed up settlement there on tokenization as a sort of as a new form of handling assets. So, we like all of those concepts.
But in terms of the actual crypto, we’ve said all along, we’re going to be incredibly slow accrual before we role — before we run on digital assets broadly and cryptos are, it’s something that we’ve gone exceptionally [Technical Issues] on.
Betsy Graseck — Morgan Stanley — Analyst
I’m sorry, you broke up at the end. On crypto, you mentioned…
Robin Vince — President and Chief Executive Officer
We’ve gone exceptionally slowly.
Betsy Graseck — Morgan Stanley — Analyst
Yeah. And just because of all of the opportunity — of all the infrastructure that you have I would think you would be an attractive place for crypto deposits. I’m wondering if that’s something that you would agree with or not?
Robin Vince — President and Chief Executive Officer
I don’t particularly agree with that, no. I understand that there are other firms who’ve over time made it part of their business model to really attract a ton of cash in that space. We do not view ourselves as a crypto bank. We have a variety of clients. We have some clients who touch the digital assets ecosystem, but that’s not been a business strategy of ours to grow that aggressively.
Betsy Graseck — Morgan Stanley — Analyst
Okay. And then just lastly, on FedNow, it launches in the next quarter or so. Is that accurate? And is there a meaningful impact? Or is this, as you mentioned, a really long runway to have an impact on your revenues? Thanks.
Robin Vince — President and Chief Executive Officer
It’s a longer runway. You have to get confirmation from the Fed about their exact launch plans because it has evolved a little bit. But it’s a long runway. And it isn’t so much FedNow as real-time payments of which FedNow is one provider.
Betsy Graseck — Morgan Stanley — Analyst
Okay, super. Thank you so much. Appreciate it.
Robin Vince — President and Chief Executive Officer
Welcome.
Operator
Thank you and with that, that does conclude our question-and-answer session for today. I would now like to hand the call back over to Robin with any additional or closing remarks.
Robin Vince — President and Chief Executive Officer
Thank you very much, operator, and thank you, everyone, for your interest in BNY Mellon. If you have any follow-up questions, please reach out to Marius and the IR team, and we wish you well.
Operator
[Operator Closing Remarks]