State Street Corporation · NYSE:STT
State Street — Barclays America Select Franchise Conference 2013
38 slides from State Street's conference presentation, May 20, 2013
Slide 1: Positioned for Growth
Joseph L. Hooley Chairman, President and Chief Executive Officer Barclays America Select Franchise Conference 22 May 2013 Positioned for Growth
Slide 2: Forward-Looking Statements
LIMITED ACCESS Forward-Looking Statements 2 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 capita
Slide 3: Positioned for Growth Agenda
LIMITED ACCESS Positioned for Growth Agenda Strong Foundation Trends and Business Strategy Financial Performance Summary 3
Slide 4: Strong Foundation
LIMITED ACCESS 4 Strong Foundation 4
Slide 5: Focused on Solutions for Institutional Investors
LIMITED ACCESS 1 Financial information presented on an operating basis, a non-GAAP presentation. See Appendix for a description of our non-GAAP financial measures and for reconciliations of our operating-basis financial information. 2 31 December 2002 to 31 December 2012. Past performance is not a g
Slide 6: Focused on Solutions for Institutional Investors
LIMITED ACCESS • $2.2 trillion2 in assets under management1 • Approximately $354 billion2 in ETF assets • One of the world’s largest managers of institutional assets • Provider of a comprehensive range of investment strategies across the risk / return spectrum • $25.4 trillion of assets under custod
Slide 7: We Service Some of the World's Largest and Most Complex Global Institutions
LIMITED ACCESS We Service Some of the World’s Largest and Most Complex Global Institutions 7
Slide 8: And We Receive Industry Recognition for Our Solutions and Service
LIMITED ACCESS … And We Receive Industry Recognition for Our Solutions and Service 8 Most Recognized ETF Brand, Best ETF Service Provider in Asia Pacific and Europe exchangetradedfunds.com 2012 Global ETF Awards Best Global Custodian for Fund Managers, Best Transition Management Provider AsianInvest
Slide 9: Our Long-Term Operating-Basis Financial Goals
LIMITED ACCESS Our Long-Term Operating-Basis1 Financial Goals Earnings Per Share Growth of 10% – 15% Revenue Growth of 8% – 12% Return on Equity of 12% – 15% 9 1 Financial information presented on an operating basis, a non-GAAP presentation. See Appendix for a description of our non-GAAP financial m
Slide 10: Our Strong Foundation Drives Value
LIMITED ACCESS Our Strong Foundation Drives Value Strong Global Footprint Long-Term Shareholder Value Among Highest Capital Ratios in Industry Focused Strategy Fueled by Macro Trends Extensive Global Footprint No. 1 or No. 2 Position in High-Growth Markets 10
Slide 11: Trends and Business Strategy
LIMITED ACCESS 11 Trends and Business Strategy 11
Slide 12: Macro Trends Fuel Our Confidence for Continued Long-Term Growth
LIMITED ACCESS Macro Trends Fuel Our Confidence for Continued Long-Term Growth 12 Trend Driven by Globalisation • Ongoing globalisation of investment and distribution channels • 40% of the growth in financial assets expected to come from emerging markets over the next decade1 Retirement Savings • Ev
Slide 13: We're Pursuing Key Strategies for Success
LIMITED ACCESS We’re Pursuing Key Strategies for Success 13 Priorities Strategy • Extending geographic reach • Opening new vertical high-growth markets – Expanded presence in alternative investment servicing • Broadening our solutions – Continuing to build SSgA with increased ETF and solutions offer
Slide 14: Why Clients Choose Us
LIMITED ACCESS Why Clients Choose Us Broad Set of Global Servicing Solutions Uniform Global Platform Leader in Middle Office Solutions-Based Asset Management Leader in Technology Transformation Our Extensive Global Footprint and Solutions Set Us Apart in Meeting the Needs of Institutional Investors
Slide 15: We Have a Deep Commitment to Europe
LIMITED ACCESS We Have a Deep Commitment to Europe 15 Switzerland Established:1998 Employees: 190 Luxembourg Established: 1990 Employees: 760 Ireland Established: 1996 Employees: 1,900 Channel Islands Established: 1988 Employees: 400 United Kingdom Established: 1972 Employees: 2,400 Austria Establis
Slide 16: We Generate Strong Organic Growth as Our Clients Grow and Diversify
LIMITED ACCESS We Generate Strong Organic Growth as Our Clients Grow and Diversify 16 AUC/A 0 5 10 15 20 Top 1000 Clients Top 100 Clients Top 25 Clients 9 14 17 Average Number of Products Used by State Street Clients1 2002 2007 2012 Asia-Pacific Americas $4.7T $13.1T $17.2T EMEA Clients Within State
Slide 17: Our Alternative Investment Solutions Business Has Grown at More Than Twice the Market Rate
LIMITED ACCESS Our Alternative Investment Solutions Business Has Grown at More Than Twice the Rate of the Market1 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 2005 2006 2007 2008 2009 2010 2011 2012 $4.7T Alternative Investments Market $4.4T $5.2T $5.7T $6.5T $6.7T $0 $200 $400 $600 $8
Slide 18: We Lead the Industry in Alternative Asset Servicing Globally
LIMITED ACCESS $1,045B2 $670B $563B $467B $411B $355B $246B $165B $0 $200 $400 $600 $800 $1,000 $1,200 STT CITCO BK JPM C SS&C GlobeOp NTRS HSBC We Lead the Industry in Alternative Asset Servicing Globally 1 HFM Week AUA Survey Assets as of Nov 2012 (hedge funds) and Custody Risk Alternative Fund Ad
Slide 19: State Street Global Advisors is Well Positioned for Growth
LIMITED ACCESS DRIVE NEW REVENUE State Street Global Advisors is Well Positioned for Growth $2.2T AUM1 1 As of 31 March 2013. 2 Operating leverage is defined as the rate of growth of total investment management revenue less the rate of growth of total investment management expenses. Broad Capabiliti
Slide 20: We Are a Leading Sponsor of Exchange-Traded Funds
LIMITED ACCESS DRIVE NEW REVENUE 1 1 Source: Deutsche Bank Markets Research, 11 January 2013 2 2 Source: McKinsey & Company, The Second Act Begins for ETFs, August 2011. We Are a Leading Sponsor of Exchange-Traded Funds Global Market Size ETFs / Other Exchange-Traded Products1 $0.41T $0.59T $0.80T $
Slide 21: We Are Driving Operating Efficiencies
LIMITED ACCESS LEVERAGE THE POWER OF THE CORE We Are Driving Operating Efficiencies • Three key operations transformation levers: – Process transformation and standardisation – Automation of key business processes – Centres of Excellence in a globally balanced model Business Operations Plan • New te
Slide 22: On Track to Achieve Expected Expense Savings
LIMITED ACCESS LEVERAGE THE POWER OF THE CORE Total Estimated Pre-Tax Expense Savings1 … and We Are on Track to Achieve Expected Savings 1 Compared to total 2010 operating-basis expenses, all else being equal. The full effect of the annual pre-tax, run-rate savings is not expected to be achieved unt
Slide 23: We Have a High Quality Balance Sheet Profile
LIMITED ACCESS OPTIMISE CAPITAL We Have a High Quality Balance Sheet 23 Profile (As of and for the quarter ended 31 March 2013) Average Total Assets • ~$208B Average Investment Portfolio • ~$120B Investment Portfolio Risk Position • Portfolio duration: 1.7 years • Credit profile: 88% AAA/AA • Ratio
Slide 24: We Have a Strong Capital Position
LIMITED ACCESS We Have a Strong Capital Position Results of the Federal Reserve’s 2013 CCAR Stress Test* 13.2% 9.7% 8.6% 8.2% 7.8% 7.5% 7.0% 6.9% 6.8% 6.7% 6.6% 6.4% 6.0% 5.9% 5.6% 5.6% 5.3% 1.5% 7.0% 0% 2% 4% 6% 8% 10% 12% 14% B N Y M e llo n S ta te S tree t PN C Financia l C it ig rou p B B & T F
Slide 25: Returning Capital to Our Shareholders is a Priority
LIMITED ACCESS Returning Capital to Our Shareholders is a Priority 25 Dividend Payout • Increased 2013 quarterly common stock dividends by $0.02 to $0.26 per share Common Stock Purchase Program • Board approved a common stock purchase program of up to $2.1B through 31 March 2014 OPTIMISE CAPITAL
Slide 26: Financial Performance
LIMITED ACCESS 26 Financial Performance 26
Slide 27: We're Executing Well Amid a Challenging Economic Environment
LIMITED ACCESS We’re Executing Well Amid a Challenging Economic Environment … 1 Results presented on an operating basis, a non-GAAP presentation. See Appendix for a description of our non-GAAP financial measures and for reconciliations of our operating-basis financial information. Operating-Basis (N
Slide 28: In 2012 We Performed Well
LIMITED ACCESS In 2012 We Performed Well1 … 1 Results presented on an operating basis, a non-GAAP presentation. See Appendix for a description of our non-GAAP financial measures and for reconciliations of our operating- basis financial information. 9.7 6 8 10 STT (%) 1.46 0.5 1 1.5 STT (%) Net Inter
Slide 29: And Outperformed Our Primary Peers
LIMITED ACCESS … and Outperformed Our Primary Peers1 Well Positioned to Maintain Our Lead 9.7 8.8 9.3 6 8 10 STT BK NTRS (%) 1.46 1.21 1.22 0.5 1 1.5 STT BK NTRS (%) Net Interest Margin Return on Equity 29.1 22.9 26.2 20 25 30 STT BK NTRS (%) Pre-Tax Margin 1 As described in the Appendix: (i) data f
Slide 30: Our Total Return Has Outperformed Primary Peers and the Broader Financial Index
LIMITED ACCESS Our Total Return Has Outperformed Primary Peers and the Broader Financial Index … 30 1/12 4/12 7/12 10/12 1/13 4/13 -10% 0% 10% 20% 30% 40% 50% 60% 70% 1/1/2012 - 5/15/2013 Total Return STT 62.0% S & P Fin. 56.4% NTRS 48.5% BK 56.9% State Street Corporation S & P Financial Index North
Slide 31: Summary
LIMITED ACCESS 31 Well Positioned for the Long Term Managing Through the Short Term Delivering Value Today and for the Future Summary
Slide 32: Appendix
Appendix 32 The foregoing presentation includes financial information presented on a GAAP basis as well as on a non-GAAP, or “operating basis.” Management measures and compares certain financial information on an operating basis, as it believes that this presentation supports meaningful comparisons
Slide 33: (Dollars in millions, except per share amounts) Total Revenue: Total revenue, GAAP basis $
33 (Dollars in millions, except per share amounts) Total Revenue: Total revenue, GAAP basis $ 9,649 $ 9,594 $ 8,953 $ 8,640 Tax-equivalent adjustment associated with tax-exempt investment securities 124 128 129 126 Tax-equivalent adjustment associated with tax-advantaged investments 126 62 44 59 Los
Slide 34: (Dollars in millions, except per share amounts) Diluted Earnings per Common Share: Diluted earnings
34 (Dollars in millions, except per share amounts) Diluted Earnings per Common Share: Diluted earnings per common share, GAAP basis $ 4.20 $ 3.79 $ 3.09 $ 3.46 Benefit related to claims associated with Lehman bankruptcy (.46) - - - Loss from sale of Greek investment securities .06 - - - Net loss rel
Slide 35: Reconciliations of Operating-Basis (Non-GAAP) Financial Information
35 (Dollars in millions, except per share amounts) Total Revenue: Total revenue, GAAP basis $ 9,649 $ 4,400 Tax-equivalent adjustment associated with tax-exempt investment securities 124 46 Tax-equivalent adjustment associated with tax-advantaged investments 126 - Loss from sale of Greek investment
Slide 36: (Dollars in millions, except per share amounts) Total Revenue: Total revenue, GAAP basis $
36 (Dollars in millions, except per share amounts) Total Revenue: Total revenue, GAAP basis $ 9,649 Tax-equivalent adjustment associated with tax-exempt investment securities 124 Tax-equivalent adjustment associated with tax-advantaged investments 126 Loss from sale of Greek investment securities 46
Slide 37: (Dollars in millions, except per share amounts) Net Interest Revenue: Net interest revenue, GAAP
37 (Dollars in millions, except per share amounts) Net Interest Revenue: Net interest revenue, GAAP basis $ 2,538 Tax-equivalent adjustment associated with tax-exempt investment securities 124 Discount accretion related to former conduit securities (215) Net interest revenue, operating basis $ 2,447
Slide 38: Peer Comparison: Operating-Basis (Non-GAAP) Pre-tax Operating Margin
38 Peer Comparison: Operating-Basis (Non-GAAP) Pre-tax Operating Margin Page 29 of this presentation contains a comparison of pre-tax operating margin for State Street Corporation (STT), The Bank of New York Mellon Corporation (BK) and Northern Trust Corporation (NTRS). The data in the comparison on
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