Emily Portney
Chief Financial Officer at Bank of New York Mellon
Thank you, Todd, and good morning, everyone.
Before I review our financial results, I would like to spend a moment highlighting our new financial disclosures. Last time, we announced that starting with the fourth quarter, we're going to report Investment Services, which was our largest segment as two new business segments. Securities Services, which includes Asset Servicing and Issuer Services and Market and Wealth Services, which includes Pershing, Treasury Services and Clearing and Collateral Management.
Our third segment, Investment and Wealth Management remains unchanged. We made this change to increase the visibility of some of our most differentiated businesses to better align our reporting with how we already manage the firm and to provide additional granularity for all of our stakeholders to better track the performance against our strategy.
With that, I will turn to Page 3, and our results for the quarter. All comparisons will be on a year-over-year basis unless I specify otherwise. Total revenue for the fourth quarter was up 4%. Fee revenue also grew by 4% or 8%, excluding the impact of fee waivers. This reflects the benefit of higher market values and continued healthy organic growth. While not on the page, firm-wide AUC/A of $46.7 trillion increased by 14%, with roughly 60% of the increase driven by growth from new and existing business and 40% driven by higher market values. And the AUM of $2.4 trillion increased by 10%, reflecting higher market values and full-year net inflows.
Money market fee waivers, net of distribution and servicing expense, were $243 million in the quarter, an increase of $10 million compared to the prior quarter, entirely driven by higher money market fund balances with no meaningful impact on pre-tax income. Investment and other revenue was $107 million and included a roughly $40 million valuation gain on a strategic equity investment. Our investments continue to payoff both strategically, as well as in the form of higher valuation. Net interest revenue was flat. Expenses were up 1%, or 6%, excluding notable items.
Our provision for credit losses was a benefit of $17 million, primarily driven by an improvement in the macroeconomic forecast. EPS was $1.01. This includes a $0.04 negative impact of litigation reserves and severance expense, as well as a $0.02 positive impact of the provision benefit. Pre-tax margin was 27%. And our return on tangible common equity was 17%.
Revenues [Phonetic] for the full year, which Todd summarized earlier on Page 4, total revenue grew by 1%, reflecting higher fee revenue, partially offset by lower net interest revenue. Fee revenue grew by 4%, or 9%, excluding the impact of fee waivers. Investment and other revenue was $336 million, a strong year with meaningful gains on our strategic equity per volume. And net interest revenue was down 12%.
Expenses were up 5%, both on reported basis as well as excluding notable items. Excluding the impact of notable items, nearly half of the increase was driven by higher net incremental investments and the remainder was roughly evenly split between revenue-related expenses and the unfavorable impact of the weaker U.S. dollar. Provision for credit losses was a benefit of $231 million. EPS was $4.14. Our pre-tax margin of 29%, as well as our return on tangible common equity of 17% were roughly in line with the prior year.
On to capital and liquidity on Page 5. Our Tier 1 leverage ratio, which is our binding capital constraint was 5.5%, down approximately 20 basis points sequentially, primarily driven by a return of $1.5 billion of capital to our shareholders in the quarter, including $1.2 billion of buybacks, partially offset by earnings. And we ended the quarter with a CET1 ratio of 11.1%, down approximately 60 basis points compared to the end of the prior quarter. Finally, our LCR was 109%, slightly lower than in the prior quarter.
Turning to our net interest revenue and balance sheet trends on Page 6, which I will talk about in sequential terms. Net interest revenue was $677 million in the fourth quarter, up 6% sequentially. This increase was driven by the impact of higher short-term rates on floating rate securities on investment portfolio, disciplined deposits and liability pricing and higher loan and securities balances in the interest-earning asset mix.
Average deposit balances increased slightly by 1% sequentially. And while interest earning assets were roughly flat, average loans increased by about 6%, with growth primarily driven by margin loans, collateralized loans in Wealth Management and growth in capital call financing. We also deployed some additional cash in HQLA securities, resulting in a quarter-over-quarter increase as an overall average investment securities portfolio of 2%.
Moving on to expenses on Page 7. Expenses for the quarter were $3 billion, up 1% year-over-year. Excluding the impact of notable items, expenses were up 6%, just over half of which was driven by incremental investments, net of efficiency rating [Phonetic] and the remainder by higher revenue-related expenses, including higher GAAP expenses.
A few additional details regarding noteworthy quarter-over-quarter expense variances. Staff expense was up 3%, driven by severance expense and incentive compensation. Net occupancy expense was up 11%, driven by expenses associated with exiting lease space as we continue to optimize our real estate upfront and some expenses related to return to the office. Business development expense increased, driven by higher marketing expenses as well as T&E. Other expenses was down due to lower litigation reserves.
On to Page 8 for a closer look at our new business segment. Securities Services reported total revenue of $1.8 billion, or up 5%. Let me just describe a little about what makes up this 5% increase. Fee revenue was up 6% and up 10%, excluding the impact of fee waivers. Investment and other revenue benefited from a gain on strategic equity investments. And net interest revenue was down 3% driven by lower interest rates, partially offset by higher loan and deposit balances. As I discussed the lines of business within our Securities Services and Market and Wealth Services segment, I will focus my comments on the Investment Services fees, details, which you can find in our financial supplement.
In Asset Servicing, Investment Services fees grew by 10%. Excluding the impact of fee waivers, Investment Services fees were up 12%, primarily driven by higher activity from existing clients, higher market values and net new business. Our strong performance last year came on the back of already healthy sales in 2020, and we gained further sales momentum in 2021, as our continued investments in innovation are paying off.
In Issuer Services, Investment Services fees were down 3%. But excluding the impact of fee waivers, Investment Services fees were up 1%. Healthy growth in depository receipts was largely offset by the impact of the previously disclosed discontinued public sector mandate in Corporate Trust. FX revenue in our Securities Services segment increased by 6%, as solid volume growth from existing and new clients more than offset the impact of lower volatility.
Next, onto Market and Wealth Services on Page 9. Market and Wealth Services reported total revenue of $1.2 billion, up 1%, primarily driven by higher net interest revenue and fees. Fee revenue was up 1% and up 4%, excluding the impact of fee waivers. Net interest revenue was up 2% on the back of higher loan balances, partially offset by lower interest rates.
In Pershing, Investment Services fees were down 2%. However, excluding the impact of fee waivers, Investment Services fees were up 3%, and the impact of clients lost earlier in the year was more than offset by growth on the back of higher market values, client balances and activity from existing clients. The business continued to see good underlying growth. Net new assets in the quarter were $69 million and clearing accounts were up 5% year-over-year.
In Treasury Services, Investment Services fees were up 4%. Excluding the impact of fee waivers, the Investment Services fees were up 8%, primarily driven by higher payment volume. And in Clearance and Collateral Management, Investment Services fees were up 7%, reflecting broad-based growth on the back of higher tri-party collateral management balances and clearance volumes, both in the U.S. and internationally.
Turning to Investment and Wealth Management on Page 10. Investment and Wealth Management reported total revenue of $1 billion, up 3%. Fee revenue was up 4% and 9%, excluding the impact of fee waivers. Net interest revenue was up 2% on the back of higher loan balances, partially offset by lower interest rates.
Assets under management grew to $2.4 trillion, up 10% year-over-year, reflecting higher market values and full-year net inflows into both long-term, specifically LDI and fixed income and cash products. For the quarter, we saw $31 billion of net inflows into cash and $4 billion of outflows from long-term products.
Investment Management revenue was down 1%. However, excluding the impact of fee waivers, revenue was up 6%, primarily driven by higher market values and full-year net inflows, partially offset by lower seed capital gains and performance fees.
Wealth Management revenue grew by 13%, driven by higher market values, the absence of a loss on a business sale in the fourth quarter of the prior year and higher net interest revenue on the back of healthy loan growth as we continue to deepen client relationships into banking. Client assets continue to grow at a steady pace and were $321 billion, up 12% year-on-year. Page 11 shows the results of the Other segment.
I will close with our outlook for 2022 on Page 12. I'll start with a reminder that our outlook is based on the current forward curve. With that in mind, we currently expect NIR to increase by approximately 10% in 2022, primarily driven by higher rates and balance sheet mix, partially offset by an expectation for lower deposit balance. Our expectation for continued organic growth and lower fee waivers results in total fee growth of approximately 7% in 2022.
More specifically, we expect roughly 4%, up to 7% increase to be driven by the recovery of money market fee waivers based on the current forward curve and assuming some runoff in money market fund balances from current levels. We expect roughly 2% to be driven by organic growth and approximately 1% by market-driven factors. And as a reminder, we generally expect a quarterly run rate of around $60 million on investments and other revenues. But as you know, this line can be lumpy due to seed capital gains, strategic equity investments and other components.
For expenses, ex-notable items, we expect an increase of approximately 5.5% year-over-year. Roughly, 60% of the increase is expected to be driven by higher revenue-related expenses, which include higher distribution and servicing expenses associated with fee waivers and the impacts of inflationary pressures. The remainder is driven by investments, roughly half of which is just the annualization of incremental investment in the second half of last year.
Specific to the first quarter, I'd like to remind you that staff expenses were typically elevated due to long-term incentive compensation expense for retiring eligible employees. As a result, we expect first quarter expense and ex-notables to be up approximately 6% year-over-year. With regards to capital management, we expect to return roughly 100% of earnings, subject to changes in AOCI and deposit balances. Under the [Phonetic] sake of completeness, we continue to expect our effective tax rate for the year to be approximately 19%.
To sum up, and as Todd alluded to earlier, we expect to generate positive operating leverage on the back of continued organic growth and higher rates translating into higher NIR and lower fee waivers, while continuing to invest in the future growth and efficiency of our businesses.
With that, operator, please open the line for questions.
