SVB Financial Group (NASDAQ:SIVB) Q1 2018 Earnings Conference Call Transcript
Apr 26, 2018 • 06:00 pm ET
Thank you. We will now begin the question-and-answer session. (Operator Instructions) And our first question comes from Ebrahim Poonawala from Bank of America. Please go ahead.
Hey, guys, good afternoon.
Hey, how you doing, Ebrahim?
Good. So I guess just first question around the deposit growth outlook and the change there. One, would love to get your thoughts around the visibility that you have on the deposit growth outlook. We lowered the guidance in Jan relative to the preliminary outlook in October. I just wanted to understand in terms of how good we feel about that growth piece going forward. And then if you can just break down in terms of the outlook between non-interest-bearing and interest-bearing, it feels like we've started the strategy of bringing some of these off-balance sheet or money -- type deposits on the balance sheet. I would love any color around that.
Yes. So Ebrahim, I'll start and then Dan will add. So the quarter obviously was a great quarter from a liquidity perspective. We look at it from a total client funds perspective. And obviously, it's driven by what I talked about, which is an incredibly strong venture capital funding quarter at $28 billion. What we're seeing in the market, and this is what's driving it, is that funding sources are coming from a whole variety of different areas, right, so venture capitalists are flushed with cash, you have private equity firms that have a lot of cash.
You have -- our global business continues to generate deposits in total client funds. So it's not just in the US. The numbers that we're driving are actually global total client funds. And you look at whether it's the SoftBank Vision Fund, the sources are just greater and greater, and we're benefiting from that. So our outlook would say that a strong level of activity will continue. Will it be at $28 billion or would it be higher or lower? That's hard to predict, but we certainly believe it's going to remain robust.
Now I'll ask Dan to talk about how we think about the mix on and off and some of the initiatives that we have.
Yes. So as we look at the mix, what we ended the quarter was 82% of DDA to total deposits. We think with the implementation of the deposit strategies that, that could be in a range of the high 70s to the low 80s. So not a material change, and I -- to answer your first question a little bit more, we think, with the implementation of these new deposit strategies, that we have a bit more confidence that we'll be bringing some of that robust client growth on-balance sheet versus off-balance sheet. So I think with all those factors, that gives us a better view.
That's helpful. And just moving on to the investment fees, again, off-balance sheet growth also continues to remain strong. One, should we assume that, that growth will also look strong if the funding and