State Street Corporation · NYSE:STT
State Street — Q2 2021 Earnings Presentation
21 slides from State Street's earnings presentation, Jul 16, 2021
Slide 1: 2Q 2021 Financial Highlights
July 16, 2021 2Q 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 second quarter 2021 financial results. That news release contains a more detailed discussion of many of the matters descr
Slide 3: 2Q21 highlights
2Q21 highlights All comparisons are to corresponding prior year periods unless noted otherwise • EPS of $2.07, up 11%; $1.97 ex-notable items, up 5%A • Total revenue of $3.0B, up 3%; up 1.5% ex-notable itemsA ‒ Record fee revenue of $2.5B, up 6% (4% ex-currency translationA) primarily reflecting str
Slide 4: Summary of 2Q21 financial results
Summary of 2Q21 financial results Quarters %∆ 2Q20 %∆ (GAAP, $M, except EPS data, or where otherwise noted) ex-currency 2Q20 1Q21 2Q21 1Q21 2Q20 translation A Revenue: Servicing fees $1,272 $1,371 $1,399 2% 10% 7% Notable Items Management fees 444 493 504 2 14 11 Foreign exchange trading services 32
Slide 5: AUC/A and AUM levels, markets and flows performance
AUC/A and AUM levels, markets and flows performance A AUC/A and AUM Market indices7 AUC/A ($T, as of period-end) (% change) 2Q21 vs 1Q21 2Q20 +27% EOP 8% 39% +6% S&P 500 Daily Avg 8 43 • 27% and 6% increase from 2Q20 and $40.3 $42.6 EOP 4 29 1Q21, respectively, largely driven by: MSCI EAFE $33.5 Dai
Slide 6: Revenue: Servicing fees
Revenue: Servicing fees Servicing fees ($M) 2Q21 performance Total YoY +3% Servicing fees of $1,399M up 10% YoY and up 2% QoQ; revenue $2,937 $2,784 $2,917 $2,950 $3,034 QoQ +3% ex-FX, up 7% YoY A • Up 10% YoY (7% ex-FX) primarily driven by higher average equity market +10% +7% ex-FX A levels, clien
Slide 7: Revenue: Management fees
Revenue: Management fees Management fees ($M) 2Q21 performance Total YoY +3% Management fees of $504M up 14% YoY and 2% QoQ; revenue $2,937 $2,784 $2,917 $2,950 $3,034 QoQ +3% A ex-FX, up 11% YoY • Up 14% YoY primarily reflecting higher average equity market levels and +14% A net inflows from ETFs,
Slide 8: Revenue: Markets, Software and processing fees
Revenue: Markets, Software and processing fees Markets, Software & processing fees ($M) 2Q21 performance Total YoY +3% • FX trading services of $286M revenue $2,937 $2,784 $2,917 $2,950 $3,034 QoQ +3% – Down (12)% YoY reflecting lower FX volatility, partially offset by higher client FX volumes $662
Slide 9: CRD and Alpha mandates
CRD and Alpha mandates CRD financial performance CRD 2Q21 highlights (Standalone basis, $M)A • 2Q21 revenue of $154MA +6% +48% – Up 6% YoY primarily due to higher software-enabled revenue $154 $145 – Up 48% QoQ largely driven by episodic fees and higher client renewals $115 63 • Continued business m
Slide 10: Revenue: Net interest income
Revenue: Net interest income NII and NIM ($M) 13 Average balance sheet highlights ($B) A Total YoY +3% 2Q20 1Q21 2Q21 revenue $2,937 $2,950 $3,034 QoQ +3% Total assets $285 $296 $308 -16% Flat Interest-earning assets 245 255 266 $559 $467 $467 Loans 27 28 29 B Investment portfolio (ex. MMLF) 98 107
Slide 11: Expenses
Expenses Expenses 2Q21 performance A (Ex-notable items, non-GAAP, $M) (Ex-notable items, non-GAAP)A +2% Expenses of $2,111M up 2% YoY and down (8)% QoQ; A -0.4% ex-FX A ex-FX, down (0.4)% YoY -8% • Compensation and employee benefits of $1,077M $2,293 – Up 2% YoY (flat ex-FX) primarily driven by high
Slide 12: Capital ratios
Capital ratios 4 Capital ratios Capital highlights (%, as of period-end) • 2Q21 standardized CET1 ratio of 11.2% increased 0.4%pts QoQ primarily CET1 (Standardized) reflecting lower risk-weighted assets 12.3% • 2Q21 Tier 1 leverage ratio of 5.2% decreased (0.2)%pts QoQ mainly driven 10.8% 11.2% 10-1
Slide 13: Summary
Summary All comparisons are to corresponding prior year periods unless noted otherwise 2Q21 financial review • EPS of $2.07, up 11%; pre-tax margin of 30.9%, up 3.6%pts; ROE of 12.6% • EPS ex-notable items of $1.97, up 5%A – Fee revenue of $2.5B, up 6% (4% ex-currency translationA), primarily driven
Slide 14: Appendix
2Q21 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: 2Q21 line of business performance
2Q21 line of business performance Investment Servicing Investment Management State StreetA Total revenue YoY % ∆ Total revenue YoY % ∆ Total revenue ex-notable itemsB YoY % ∆ $2,472M $2,452M -0.8% $2,937M $2,981M +1.5% Fee $529M +13.8% Fee 1,901 1,984 +4.4% 2,378 revenue $465M revenue 2,514 +5.7% NI
Slide 16: Reconciliation of notable items
Reconciliation of notable items Quarterly reconciliation % Change Year-to-Date % Change 2Q21 2Q21 YTD2021 vs. vs. vs. (Dollars in millions, unless noted otherwise) 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 2Q20 1Q21 2020 2021 YTD2020 Total revenue, GAAP-basis 3,065 2,937 2,784 2,917 2,950 3,034 3.3% 2.8% # 6,00
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 2Q21 2Q21 2Q21 2Q21 2Q21 2Q21 vs. vs. vs. vs. vs. vs. (Dollars in millions) 2Q20 1Q21 2Q21 2Q20 1Q21 2Q20 1Q21 2Q20 1Q2
Slide 18: Endnotes
Endnotes 1. New asset servicing mandates, including announced front-to-back investment servicing clients, may be subject to completion of definitive agreements, approval of applicable boards and shareholders and customary regulatory approvals. New asset servicing mandates and servicing assets remain
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 Bps Basis points, with one basis point representing one hundredth of one percent CET1 ratio Co