State Street Corporation · NYSE:STT
State Street — Q3 2021 Earnings Presentation
21 slides from State Street's earnings presentation, Oct 18, 2021
Slide 1: 3Q 2021 Financial Highlights
October 18, 2021 3Q 2021 Financial Highlights (NYSE: STT)
Slide 2: Preface and forward-looking statements
Preface and forward-looking statements This presentation includes certain highlights of, and also material supplemental to, State Street Corporation’s news release announcing its third quarter 2021 financial results. That news release contains a more detailed discussion of many of the matters descri
Slide 3: 3Q21 highlights
3Q21 highlights All comparisons are to corresponding prior year periods unless noted otherwise • EPS of $1.96, up 35%; $2.00 ex-notable items, up 38%A • Total revenue of $3.0B ‒ Fee revenue of $2.5B, up 9%, reflecting growth in all businesses Financial ‒ Net interest income of $0.5B, up 2% performan
Slide 4: Summary of 3Q21 financial results
Summary of 3Q21 financial results Quarters %∆ 3Q20 %∆ (GAAP, $M, except EPS data, or where otherwise noted) ex-currency 3Q20 2Q21 3Q21 2Q21 3Q20 translation A Revenue: Servicing fees $1,301 $1,399 $1,395 (0)% 7% 7% Management fees 479 504 526 4 10 9 Notable Items Foreign exchange trading services 27
Slide 5: AUC/A and AUM levels, markets and flows performance
AUC/A and AUM levels, markets and flows performance A AUC/A and AUM Market indices7 AUC/A ($T, as of period-end) 2 (% change) 3Q21 vs 2Q21 3Q20 +18% • 18% increase from 3Q20 largely EOP 0% 28% +2% driven by: S&P 500 Daily Avg 6 33 – Higher market levels, client flows, and net $42.6 $43.3 new busines
Slide 6: Revenue: Servicing fees
Revenue: Servicing fees Servicing fees ($M) 3Q21 performance Total YoY +7% Servicing fees of $1,395M up 7% YoY and flat QoQ revenue $2,784 $2,917 $2,950 $3,034 $2,990 QoQ -1% • Up 7% YoY primarily driven by higher average equity market levels, client activity and flows, and net new business, partial
Slide 7: Revenue: Management fees
Revenue: Management fees Management fees ($M) 3Q21 performance Total YoY +7% Record Management fees of $526M up 10% YoY and revenue $2,784 $2,917 $2,950 $3,034 $2,990 QoQ -1% 4% QoQ +10% • Up 10% YoY primarily reflecting higher average equity market levels and +9% ex-FX A net inflows from ETFs, part
Slide 8: Revenue: Markets, Software and processing fees
Revenue: Markets, Software and processing fees Markets, Software & processing fees ($M) 3Q21 performance Total YoY +7% • FX trading services of $279M revenue $2,784 $2,917 $2,950 $3,034 $2,990 QoQ -1% – Up 3% YoY reflecting higher direct sales and trading revenue and indirect volumes, partially offs
Slide 9: CRD and Alpha mandates
CRD and Alpha mandates CRD financial performance CRD 3Q21 highlights (Standalone basis, $M)A • 3Q21 revenue of $121MA +22% – Up 22% YoY primarily due to higher client renewals, professional services, and software-enabled revenue $154 – Down (21)% QoQ largely driven by the absence of prior quarter ep
Slide 10: Revenue: Net interest income
Revenue: Net interest income NII and NIM ($M) 12 Average balance sheet highlights ($B) B Total YoY +7% 3Q20 2Q21 3Q21 revenue $2,784 $3,034 $2,990 QoQ -1% Total assets $264 $308 $291 +2% Interest-earning assets 226 266 255 +4% $478 $467 $487 Loans 26 29 32 Investment portfolio (ex. MMLF) 103 111 114
Slide 11: Expenses
Expenses Expenses 3Q21 performance A (Ex-notable items, non-GAAP, $M) (Ex-notable items, non-GAAP)A Flat Expenses of $2,098M flat YoY and down (1)% QoQ; A A -0.4% ex-FX ex-FX, down (0.4)% YoY -1% • Compensation and employee benefits of $1,054M $2,111 – Down (1)% YoY primarily driven by higher salary
Slide 12: Capital ratios
Capital ratios 5 Capital ratios Capital highlights (%, as of period-end) CET1 (Standardized) • 3Q21 standardized CET1 ratio of 13.5% increased 2.3%pts QoQ primarily reflecting the $1.9B common stock issuance to finance the proposed 13.5% acquisition of BBH Investor Services, higher retained earnings
Slide 13: Summary
Summary All comparisons are to corresponding prior year periods unless noted otherwise 3Q21 financial review • EPS of $1.96, up 35%; pre-tax margin of 29.3%, up 4.8%pts; ROE of 11.6%; generated positive operating leverage of 6.8%pts • EPS ex-notable items of $2.00, up 38%A – Fee revenue of $2.5B, up
Slide 14: Appendix
3Q21 line of business performance 15 Reconciliation of notable items 16 Reconciliation of constant currency impacts 17 Appendix Endnotes 18 Forward-looking statements 19 Non-GAAP measures 20 Definitions 21 14
Slide 15: 3Q21 line of business performance
3Q21 line of business performance Investment Servicing Investment Management State StreetB Total revenueA YoY % ∆ Total revenue YoY % ∆ Total revenue ex-notable itemsA, C YoY % ∆ $2,458M +7.9% $2,990M +7.4% $2,278M $2,784M $506M $532M +5.1% Fee 1,796 1,968 +9.6% Fee 2,504 +8.6% 2,306 revenue revenue
Slide 16: Reconciliation of notable items
Reconciliation of notable items Quarterly reconciliation % Change Year-to-Date % Change 3Q21 3Q21 YTD2021 vs. vs. vs. (Dollars in millions, unless noted otherwise) 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 3Q20 2Q21 2020 2021 YTD2020 Total revenue, GAAP-basis 3,065 2,937 2,784 2,917 2,950 3,034 2,990 7.4%
Slide 17: Reconciliation of constant currency impacts
Reconciliation of constant currency impacts Currency Translation Excluding Currency % Change Constant Reconciliation of Constant Currency FX Impacts Reported Impact Impact Currency 3Q21 3Q21 3Q21 3Q21 3Q21 3Q21 vs. vs. vs. vs. vs. vs. (Dollars in millions) 3Q20 2Q21 3Q21 3Q20 2Q21 3Q20 2Q21 3Q20 2Q2
Slide 18: Endnotes
Endnotes 1. Accretion assumes ~$35M of incremental NII, ~$40M of net revenue synergies, ~$260M in total cost synergies, and $100M of amortization expense; does not reflect acquisition and restructuring costs. Gross cost synergies represent the reduction in pre-tax expenses achieved in a given year r
Slide 19: Forward-looking statements
Forward-looking statements This presentation (and the conference call referenced herein) contains forward-looking statements within the meaning of United States securities laws, including statements about our goals and expectations regarding our business, financial and capital condition, results of
Slide 20: Non-GAAP measures
Non-GAAP measures In addition to presenting State Street's financial results in conformity with U.S. generally accepted accounting principles, or GAAP, management also presents certain financial information on a basis that excludes or adjusts one or more items from GAAP. This latter basis is a non-G
Slide 21: Definitions
Definitions ARR Annual recurring revenue AUC/A Assets under custody and/or administration AUM Assets under management Barclays Global Agg Barclays Global Agg represents Barclays Global Aggregate Bond Index BBH Brown Brothers Harriman Bps Basis points, with one basis point representing one hundredth