State Street Corporation · NYSE:STT
State Street — Q3 2022 Earnings Presentation
21 slides from State Street's earnings presentation, Oct 18, 2022
Slide 1: 3Q 2022 Financial Highlights
October 18, 2022 3Q 2022 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 2022 financial results. That news release contains a more detailed discussion of many of the matters descri
Slide 3: 3Q22 highlights
3Q22 highlights All comparisons are to corresponding prior year period unless noted otherwise • EPS of $1.80, down (8)%; $1.82 ex-notable items, down (9)%A • Total revenue of ~$3.0B, down (1)% ‒ Fee revenue down (8)% largely due to lower equity and fixed income market levels, as well as the impact o
Slide 4: Summary of 3Q22 financial results
Summary of 3Q22 financial results Quarters %∆ 3Q21 %∆ (GAAP, $M, except EPS data, or where otherwise noted) ex-currency 3Q21 2Q22 3Q22 2Q22 3Q21 translation A Revenue: Back office servicing fees $1,289 $1,205 $1,126 (7)% (13)% (9)% Middle office services 102 92 93 1 (9) (6) Servicing fees 1,391 1,29
Slide 5: AUC/A and AUM levels, markets and flows performance
AUC/A and AUM levels, markets and flows performance AUC/A and AUM Market indices5 3Q22 vs AUC/A ($T, as of period-end) 1 • (18)% decrease from 3Q21 largely (% change) driven by: 2Q22 3Q21 -18% – Lower market levels, a previously disclosed EOP (5)% (17)% -7% client transition and the impact of curren
Slide 6: Revenue: Servicing fees
Revenue: Servicing fees Servicing fees ($M) 3Q22 performance Total YoY (1)% Servicing fees of $1,219M down (12)% YoY and (6)% QoQ; $2,990 $3,053 $3,081 $2,953 $2,959 QoQ flat revenue down (9)% YoY and (5)% QoQ ex-FXA • Down (12)% YoY primarily driven by lower average market levels, lower -12% client
Slide 7: Revenue: Management fees
Revenue: Management fees Management fees ($M) 3Q22 performance Total YoY (1)% Management fees of $472M down (10)% YoY and (4)% QoQ; $2,990 $3,053 $3,081 $2,953 $2,959 QoQ flat down (7)% YoY and (2)% QoQ ex-FXA revenue • Down (10)% YoY mainly due to lower average market levels, a previously -10% -7%
Slide 8: Revenue: Markets, Software and processing, and Other fee revenue
Revenue: Markets, Software and processing, and Other fee revenue Markets, Software & processing, and Other fees ($M) 3Q22 performance • FX trading services of $319M Total YoY (1)% $2,990 $3,053 $3,081 $2,953 $2,959 QoQ flat – Up 14% YoY primarily reflecting higher FX spreads, partially offset revenu
Slide 9: Enterprise solutions enabled by State Street Alpha
Enterprise solutions enabled by State Street Alpha Future growth driven by Front office, Middle Front office software and data ($M) A office, and Alpha Total ($M) 3Q21 2Q22 3Q22 YoY (1)% revenue $2,990 $3,053 $3,081 $2,953 $2,959 QoQ flat Front office metrics +9% New bookings 9 $29 $11 $14 +1% $138
Slide 10: Revenue: Net interest income
Revenue: Net interest income NII and NIM ($M) 12 Average balance sheet highlights ($B) A Total 3Q21 4Q21 1Q22 2Q22 3Q22 $2,990 $3,053 $3,081 $2,953 $2,959 YoY (1)% QoQ flat revenue Total assets $291 $303 $295 $291 $275 +36% +13% Loans 32 34 34 36 35 $660 $584 Investment portfolio 114 114 119 114 109
Slide 11: Expenses
Expenses Expenses 3Q22 performance A (Ex-notable items, non-GAAP, $M) (Ex-notable items, non-GAAP)A Flat Expenses of $2,097M flat YoY and QoQ; up 4% YoY and 2% A +4% ex-FX Flat QoQ ex-FXA A +2% ex-FX • Compensation and employee benefits of $1,042M $2,098 $2,096 $2,097 – Down (1)% YoY mainly due to t
Slide 12: Capital ratios
Capital ratios 3 Capital ratios Capital highlights (%, as of period-end) CET1 (Standardized) • 3Q22 standardized CET1 ratio at quarter-end of 13.2% increased 0.3%pts QoQ primarily driven by higher retained earnings and well controlled RWA 14.3% 13.5% 12.9% 13.2% 11.9% • 3Q22 Tier 1 leverage ratio of
Slide 13: Summary
Summary All comparisons are to corresponding prior year period unless noted otherwise 3Q22 financial review • EPS of $1.80; pre-tax margin of 28.7%; ROE of 11.2% • EPS ex-notable items of $1.82, down (9)%A – Total revenue of ~$3.0B, down (1)% YoY, primarily driven by lower equity and fixed income ma
Slide 14: Appendix
3Q22 line of business performance 15 Reconciliation of notable items 16 Reconciliation of constant currency FX impacts 17 Appendix Endnotes 18 Forward-looking statements 19 Non-GAAP measures 20 Definitions 21 14
Slide 15: 3Q22 line of business performance
3Q22 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 $2,476M +1% $2,990M $2,959M -1% Fee 1,813 -8% $532M Fee 2,299 1,968 1,813 $483M -9% 2,504 -8% revenue revenue NII
Slide 16: Reconciliation of notable items
Reconciliation of notable items Quarterly reconciliation % Change Year-to-Date % Change 3Q22 3Q22 YTD 2022 vs. vs. vs. (Dollars in millions, unless noted otherwise) 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 3Q21 2Q22 2021 2022 YTD 2021 Total revenue, GAAP-basis $ 2,950 $ 3,034 $ 2,990 $ 3,053 $ 3,081 $ 2,9
Slide 17: Reconciliation of constant currency FX impacts
Reconciliation of constant currency FX impacts Currency Translation Excluding Currency % Change Constant Reconciliation of Constant Currency FX Impacts Reported Impact Impact Currency 3Q22 3Q22 3Q22 3Q22 3Q22 3Q22 vs. vs. vs. vs. vs. vs. (Dollars in millions) 3Q21 2Q22 3Q22 3Q21 2Q22 3Q21 2Q22 3Q21
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 AOCI Accumulated other comprehensive income 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