State Street Corporation · NYSE:STT
State Street — BancAnalysts Association of Boston Conference 2012
26 slides from State Street's conference presentation, Nov 1, 2012
Slide 1: Path to the Future
Edward J. Resch Executive Vice President and Chief Financial Officer BancAnalysts Association of Boston Conference November 1, 2012 Path to the Future
Slide 2: Agenda
LIMITED ACCESS Path to the Future Agenda Introduction Long-Term Goals Resilience Amid Global Headwinds Successfully Navigating Headwinds Summary 2
Slide 3: Forward-Looking Statements
LIMITED ACCESS Forward-Looking Statements This presentation contains forward-looking statements as defined by United States securities laws, including statements relating to our goals and expectations regarding our business, financial and capital condition, including, without limitation our capital
Slide 4: Long-Term Goals
4 Long-Term Goals
Slide 5: Secular Trends, Financial Goals and Strategy Remain Intact
LIMITED ACCESS Long-Term Goals Secular Trends, Financial Goals and Strategy Remain Intact 1 Financial information is presented on an operating, or non-GAAP, basis. For a description of GAAP- and operating-basis results, see the Appendix. Leverage the Power of the Core Franchise Drive New Revenue Gro
Slide 6: Resilience Amid Global Headwinds
6 Resilience Amid Global Headwinds
Slide 7: Current Environment
LIMITED ACCESS Resilience Amid Global Headwinds • Eurozone debt challenges, reduced industrial production and high unemployment exacerbate global uncertainty • Subdued economic outlook is reflected in historically low interest rates in developed markets • Global headwinds continue to affect client b
Slide 8: Current Priorities
LIMITED ACCESS Resilience Amid Global Headwinds Strategy Strategy Current Priorities Leverage the Power of the Core Franchise • Deepen share in high-growth markets • Continue improvement in client pricing • Drive operating efficiencies through operational transformation and expense management • Exec
Slide 9: Leverage the Core Franchise: Deepen Share in High-Growth Markets
LIMITED ACCESS Resilience Amid Global Headwinds Leverage the Power of the Core Franchise-Deepen Share in High-Growth Markets Leader in Alternative Asset Servicing Alternative Assets Under Administration (AUA)1, $BN 1 HFM Week AUA Survey Assets as of April 2012 and Custody Risk Alternative Fund Admin
Slide 10: Business Operations and IT Transformation Program on Track
LIMITED ACCESS Resilience Amid Global Headwinds Leverage the Power of the Core Franchise ‒ Business Operations and IT Transformation Program on Track 1 Compared to 2010 run-rate expenses from operations, all else being equal. The full effect of the annual pre-tax, run-rate savings is not expected to
Slide 11: Increase Exchange Traded Fund (ETF) Offerings
LIMITED ACCESS $2.0 $2.3 $2.7 $3.1 $2.3 $2.9 $3.7 $4.7 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 $5.0 2012 2013 2014 2015 1 Based on State Street’s assets serviced compared to total market (see footnote 3). 2 Bloomberg, 6/30/12. 3 Source: McKinsey analysis, the Second Act Begins for ETFs, 2011; chart refle
Slide 12: Investment Manager Operations Outsourcing
LIMITED ACCESS Resilience Amid Global Headwinds Drive New Revenue Growth Through Innovation ‒ Investment Manager Operations Outsourcing Global Middle Office Outsourced Assets, $TN 6/30/121 $TN 1 Scrip Issue Global Report (9/2012). 2 PwC 15th Global CEO Survey, Asset Management Industry Insights, 201
Slide 13: Optimize Capital: Returning Capital to Shareholders is a Priority
LIMITED ACCESS Resilience Amid Global Headwinds • Return capital to shareholders in the form of dividends and share purchases – 2012 CCAR stress test: Highest tier 1 common ratio of the 19 banks tested under stress by the Federal Reserve1 – YTD: Paid three quarterly common share dividends of $0.24 p
Slide 14: Successfully Navigating Headwinds
14 Successfully Navigating Headwinds
Slide 15: Summary of 3Q 2012 Operating-Basis Financial Results
LIMITED ACCESS Successfully Navigating Headwinds Summary of 3Q 2012 Operating-Basis (Non-GAAP) Financial Results1 % Change $ in millions, except per share data Q3 ’12 Q2 ’12 Q3 ’11 Revenue $2,348 (3.2)% (2.7)% Expenses $1,664 (3.7)% (2.9)% EPS $0.99 (2.0)% 3.1% ROE 9.6% (70) bps (20) bps Pre-Tax Ope
Slide 16: Expense Management Highlights
LIMITED ACCESS Successfully Navigating Headwinds • Business Operations and Information Technology Transformation program on track – Successful use of global locations to improve operating efficiency, enhance service and reduce cost • Headcount controlled and actively monitored – Expect compensation-
Slide 17: Balance Sheet Management Strategy
LIMITED ACCESS Successfully Navigating Headwinds Balance Sheet Management Strategy Third Quarter Highlights (as of 9/30/2012) Invest in High Quality Assets • Invest through the cycle • Investment portfolio: $115 BN at 9/30, up from $114 BN at 6/30 • Solid credit profile: 88% AAA/AA • Diversify by as
Slide 18: Impact of Sustained Low Interest Rates on Net Interest Margin
LIMITED ACCESS Successfully Navigating Headwinds Impact of Sustained Low Interest Rates on Net Interest Margin Operating-Basis1 Net Interest Margin 3Q 2012 • 144 basis points 2012 Outlook • Continue to expect full-year NIM to be around the middle of a 145 to 155 basis points range 2013 Outlook • Con
Slide 19: Key Takeaways
LIMITED ACCESS Successful Navigating Headwinds • Achieving solid performance amid headwinds – Solid core asset servicing and asset management revenue; good new business growth and strong pipeline – Market-driven revenues under pressure due to weak environment, client risk aversion and weak trading a
Slide 20: Summary
20 Summary
Slide 21: Path to the Future
21 Path to the Future Globalization Retirement Savings Regulation and Complexity Long-Term Annual Operating-Basis1 Goals: Revenue Growth 8% ‒ 12% EPS Growth 10% ‒ 15% ROE 12% ‒ 15% 1 Financial information is presented on an operating, or non-GAAP, basis. For a description of GAAP- and operating-basi
Slide 22: LIMITED ACCESS 22
LIMITED ACCESS 22
Slide 23: LIMITED ACCESS 23
LIMITED ACCESS 23
Slide 24: Appendix
LIMITED ACCESS 24 Appendix The foregoing presentation includes financial information presented on a GAAP basis as well as on a non-GAAP, or “operating” basis, in addition to other measures not presented in accordance with GAAP and used in the calculation of identified capital ratios. Management meas
Slide 25: Operating-Basis Reconciliation Q3 2012
LIMITED ACCESS 25 Q3 2012 Q3 2012 vs. vs. (Dollars in millions, except per share amounts) Q2 2012 Q3 2011 Total Revenue: Total revenue, GAAP basis $ 2,356 $ 2,423 $ 2,427 Add: Tax-equivalent adjustment not included in reported results 32 31 32 Loss on sale of Greek investment securities - 46 - Less:
Slide 26: Operating-Basis Reconciliation Q3 2012 (continued)
LIMITED ACCESS 26 Q3 2012 Q3 2012 vs. vs. (Dollars in millions, except per share amounts) Q2 2012 Q3 2011 Pre-Tax Operating Margin(4): Income before income tax expense, GAAP basis $ 941 $ 651 $ 629 Net adjustments to revenue (8) 3 (14) Net adjustments to expenses (249) 44 85 Income before income tax
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