The Transcript

We're developing marginal levels of revenue production, and sort of not growing our human capital footprint quite the same way. Recognizing instead that we need to have sort of the quality of capabilities and technology to scale. That's been a learning that I think is one of the big pieces of the driver to our efficiency ratio. I would not say that there's been any structural change in our expense base at this point.

Now, we all know, because we've all been around for a long time, that these things don't go in a straight line, they can ebb and flow. I'm not smart enough to tell you whether or not there can be resets or recalibrations in the short term, sometime in the next six months, the next 18 months. I will tell you that when you look over a three-year period or a five-year period, we're investing in long-term growth to support this, and we're going to continue to be very consistent about that.

I think we're early in the cycle to build out, but it won't be without bumps and recalibrations as people can understand just what the ultimate demand is for this technology and enterprises. We're excited about i

While sponsor volumes are still subdued versus historical averages, this represents a meaningful source of potential upside as activity picks up.

While we continue to see a largely resilient economic backdrop in the US, risks can emerge quickly and drive periods of disruption and volatility across markets.

I think the most important thing that is driving the backlog activity is really strategic M&A. We are just in an environment where if you think about what is going on with technology change and scale broadly, if you are running a big business, you have to be focused strategically on scale advantage. That means you have to be open to thinking about how you enhance your competitive position. We are now also in a regulatory environment where when the question is asked, could I inorganically enhance my competitive position? The answer is maybe after a period of time where the answer would have been, absolutely no way, whatever the question was.

. In equity underwriting, revenues were $985 million, up 130% year-over-year, supported by robust deal volumes across a broad range of transactions, including the marquee mandates for Alphabet and SpaceX, helping to drive our number one league table position through the H1 of the year.

e. Even with very strong investment banking revenues this quarter, our backlog increased to its highest level in five years and its second highest level on record, underpinned by a record advisory backlog and reflecting the strength and breadth of our client engagement.

So our top line numbers, sales for the year of GBP 1.828 billion, up 13% on last year in constant currency. The U.S. was plus 24% in constant currency, which saw it become our largest revenue and profits market, and the U.K. was plus 5% on last year.

The housing sector, however, gives a different picture and continues to lag.

economic activity is expanding at a solid pace, showing resilience in the face of recent developments. Household consumption growth is moderate. Manufacturing output has moved up steadily this year. The housing sector, however, gives a different picture and continues to lag.

The members of our Committee have no tolerance for persistently elevated inflation. And we share a resolute commitment to restoring price stability.

. I would actually bifurcate that a little bit between investment banking and markets. In the sense that by historical standards, investment banking fees were fine, but they weren't at sort of super peak levels, so they had some room to come up a little bit. One of the things we looked at is, okay, how much cannibalization of the future pipeline might have happened through the acceleration this quarter and/or to what extent were this quarter's results particularly elevated as a result of some of the large high-profile IPOs and other capital raisings in particular. I think clearly there was some pull forward, and clearly the large deals contributed meaningfully to the quarter results.

. Not to be pedantic, I think the question, the we matters, right? The market is clearly extremely risk-on. We are kind of takers of that, and we are trying to strike the right balance between supporting all our clients and being appropriately cautious in an environment that has some complicated dynamics in it.

It's getting close to as good as it gets. We just don't know how long it's going to last.

We are preparing to make sure we can retrain our people, we have had discrete areas where we did reduce jobs by 30% or 40%, and most of those people offered jobs elsewhere.

I think one topic which is not financially meaningful this year, but which I think is interesting and may become in the future, is the question of token expense. That is something that we're spending a bunch of time on, I think as probably pretty much everyone in corporate America is. Just for the avoidance of doubt, it is a trivial number for the H1. We are forecasting some meaningful acceleration in that number for H2 of the year. Still, nonetheless, the full year contribution of that is still trivial. Obviously we had budgeted some of that, so it's not in any way a meaningful driver of the current outlook or to the revision of the outlook. Obviously, when you listen to the Frontier Labs talk, they talk about the exponential and the acceleration of usage, which is obviously driving their revenues, and someone's paying those bills. We're, in a sense, a representation of the economy as a whole, that we're probably lagging a little bit some of the cutting-edge adoption and usage as we should given who we are as a company. It is an important question for us as we go into next year and the subsequent years.