State Street Corporation · NYSE:STT
State Street — Q4 2021 Earnings Presentation
25 slides from State Street's earnings presentation, Jan 19, 2022
Slide 1: 4Q and FY 2021 Financial Highlights
January 19, 2022 4Q and FY 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 fourth quarter 2021 financial results. That news release contains a more detailed discussion of many of the matters descr
Slide 3: FY2021 highlights
FY2021 highlights All comparisons are to 2020, unless otherwise noted Business momentum Revenue generation Expense management • Record AUC/A of $43.7T and record AUM of • Record Servicing fees of $5.5B, up 7% • Company-wide productivity efforts achieved $4.1T at year-end1 gross savings of ~$330M3 •
Slide 4: 4Q21 highlights
4Q21 highlights All comparisons are to corresponding prior year periods unless noted otherwise • EPS of $1.78, up 28%; $2.00 ex-notable items, up 18%A • Total revenue of $3.1B, up 5%; 3% ex-notablesA ‒ Fee revenue up 4%, with Servicing and Management fees up 6% and 8%, respectively Financial ‒ Net i
Slide 5: 4Q21 notable items
4Q21 notable items QuartersA 4Q21 EPS Acquisition and restructuring of $26M ($M, except EPS data) 4Q20 3Q21 4Q21 Impact • Acquisition and restructuring costs primarily associated with the CRD acquisition Acquisition and restructuring costs ($12) ($18) ($26) ($0.05) Net repositioning release of $3M •
Slide 6: Summary of 4Q21 and FY2021 financial results
Summary of 4Q21 and FY2021 financial results Quarters %∆ Full Year (GAAP, $M, except EPS data, or where otherwise noted) 4Q20 3Q21 4Q21 3Q21 4Q20 2020 2021 %∆A Revenue: Servicing fees $1,307 $1,395 $1,384 (1)% 6% $5,167 $5,549 7% Management fees 493 526 530 1 8 1,880 2,053 9 Foreign exchange trading
Slide 7: AUC/A and AUM levels, markets and flows performance
AUC/A and AUM levels, markets and flows performance A AUC/A and AUM Market indices6 AUC/A ($T, as of period-end) 1 (% change) 4Q21 vs 3Q21 4Q20 +13% EOP 11% 27% +1% S&P 500 Daily Avg 4 29 • 13% and 1% increase from 4Q20 and $43.3 $43.7 EOP 2 9 $38.8 3Q21, respectively, largely driven by: MSCI EAFE D
Slide 8: Revenue: Servicing fees
Revenue: Servicing fees Servicing fees ($M) 4Q21 performance Total YoY +5% Servicing fees of $1,384M up 6% YoY and down (1)% QoQ revenue $2,917 $2,950 $3,034 $2,990 $3,053 QoQ +2% • Up 6% YoY primarily driven by higher average equity market levels, client activity and flows and net new business, par
Slide 9: Revenue: Management fees
Revenue: Management fees Management fees ($M) 4Q21 performance Total YoY +5% Record management fees of $530M up 8% YoY; up 1% QoQ revenue $2,917 $2,950 $3,034 $2,990 $3,053 QoQ +2% • Up 8% YoY primarily reflecting higher average equity market levels and ETF net inflows, partially offset by a previou
Slide 10: Revenue: Markets, Software and processing fees
Revenue: Markets, Software and processing fees Markets, Software & processing fees ($M) 4Q21 performance Total YoY +5% • FX trading services of $300M revenue $2,917 $2,950 $3,034 $2,990 $3,053 QoQ +2% – Down (7)% YoY primarily reflecting lower FX volatility $616 $619 – Up 8% QoQ mainly due to higher
Slide 11: CRD and Alpha mandates
CRD and Alpha mandates CRD financial performance CRD 4Q21 highlights (Standalone basis, $M)A (Standalone basis)A +13% • 4Q21 revenue of $130M +7% – Up 13% YoY primarily due to growth in software-enabled and professional services revenue $154 – Up 7% QoQ largely driven by software-enabled revenue $13
Slide 12: Revenue: Net interest income
Revenue: Net interest income NII and NIM ($M) 11 Average balance sheet highlights ($B) A Total YoY +5% 4Q20 3Q21 4Q21 revenue $2,917 $2,950 $3,034 $2,990 $3,053 QoQ +2% Total assets $277 $291 $303 -3% -1% Interest-earning assets 238 255 265 $499 $487 $484 Loans 28 32 34 $467 $467 Investment portfoli
Slide 13: Expenses
Expenses Expenses 4Q21 performance A (Ex-notable items, non-GAAP, $M) (Ex-notable items, non-GAAP)A +1% Expenses of $2,160M up 1% YoY and up 3% QoQ A +2% ex-FX +3% • Compensation and employee benefits of $1,066M14 – Up 2% YoY primarily driven by higher incentive compensation and $2,131 $2,098 $2,160
Slide 14: Capital ratios
Capital ratios 4 Capital ratios Capital highlights (%, as of period-end) CET1 (Standardized) • 4Q21 standardized CET1 ratio of 14.2% increased 0.7%pts QoQ primarily 14.2% reflecting an episodic reduction in risk-weighted assets and higher 13.5% retained earnings 12.3% 10-11% STT Target • 4Q21 Tier 1
Slide 15: Summary
Summary All comparisons are to corresponding prior year periods unless noted otherwise 4Q21 financial review • EPS of $1.78, up 28%; pre-tax margin of 23.9%, up 1.9%pts; ROE of 10.3%; generated positive total and fee operating leverage of 2.3%pts and 1.5%pts • EPS ex-notable items of $2.00, up 18%A
Slide 16: FY2022 Outlook
FY2022 Outlook Does not yet include the previously announced acquisition of BBH Investor ServicesA FY2021 review FY2022 outlook • Equity market period-end levels: S&P 500 up 27%; • Equity market period-end growth, up 5% Operating MSCI EAFE up 9%; MSCI EM down (5)% • Continued normalization of FX mar
Slide 17: Appendix
4Q21 and FY2021 line of business performance 18-19 Reconciliation of notable items 20 Reconciliation of constant currency impacts 21 Appendix Endnotes 22 Forward-looking statements 23 Non-GAAP measures 24 Definitions 25 17
Slide 18: 4Q21 line of business performance
4Q21 line of business performance Investment Servicing Investment Management State StreetB Total revenueA YoY % ∆ Total revenue YoY % ∆ Total revenue ex-notable itemsA, C YoY % ∆ $2,367M $2,443M +3% $2,917M $2,995M +3% $550M $552M Flat Fee 1,870 1,956 +5% Fee 2,416 2,511 +4% revenue revenue NII 495
Slide 19: FY2021 line of business performance
FY2021 line of business performance Investment Servicing Investment Management State StreetB Total revenueA YoY % ∆ Total revenue YoY % ∆ Total revenue ex-notable itemsA, C YoY % ∆ $9,729M $9,797M +1% $11,703M $11,916M +2% 7,514 $2,119M +7% Fee 7,879 +5% $1,974M Fee 9,499 10,012 +5% revenue revenue
Slide 20: Reconciliation of notable items
Reconciliation of notable items Quarterly reconciliation % Change Year-to-Date % Change 4Q21 4Q21 YTD2021 vs. vs. vs. (Dollars in millions, unless noted otherwise) 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 4Q20 3Q21 2020 2021 YTD2020 Total revenue, GAAP-basis 3,065 2,937 2,784 2,917 2,950 3,034 2,990
Slide 21: 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 4Q21 4Q21 4Q21 4Q21 4Q21 4Q21 vs. vs. vs. vs. vs. vs. (Dollars in millions) 4Q20 3Q21 4Q21 4Q20 3Q21 4Q20 3Q21 4Q20 3Q2
Slide 22: 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 23: 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 24: 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 25: 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