Slide 1: 4Q and FY 2022 Financial Highlights
4Q and FY 2022 Financial Highlights January 20, 2023 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 and full year 2022 financial results. That news release contains a more detailed discussion of many of the
Slide 3: FY2022 highlights
FY2022 highlights All comparisons are to FY2021, unless otherwise noted A,B Key financial performance Business momentum Operating leverageC • New wins1: Achieved servicing wins of $1.9T, with $3.6T of new business yet to be installed at year-end +1.8%pts (ex-notables) Won 3 new Alpha mandates, while
Slide 4: 4Q22 highlights
4Q22 highlights All comparisons are to corresponding prior year period unless noted otherwise 1 • AUC/A of $36.7T at quarter-end; Servicing wins of $434B and business yet to be installed of $3.6T at quarter-end ‒ New mandates reflect strong broad-based traditional wins across client segments and reg
Slide 5: 4Q22 notable items
4Q22 notable items Quarters A ($M, except EPS data) 4Q21 3Q22 4Q22 Acquisition and restructuring costs of $31M • Acquisition and restructuring costs related to the BBH Investor Acquisition and restructuring costs ($26) ($13) ($31) Services acquisition transaction that State Street is no longer pursu
Slide 6: Summary of 4Q22 and FY2022 financial results
Summary of 4Q22 and FY2022 financial results Quarters %∆ 4Q21 %∆ Full Year FY21 %∆ (GAAP; $M, except EPS data, or where ex-currency ex-currency otherwise noted) 4Q21 3Q22 4Q22 3Q22 4Q21 translation A 2021 2022 %∆ translation A Revenue: Back office servicing fees $1,272 $1,126 $1,115 (1)% (12)% (9)%
Slide 7: AUC/A and AUM levels, markets and flows performance
AUC/A and AUM levels, markets and flows performance 1 8 AUC/A ($T, as of period-end) Market indices 4Q22 vs -16% (% change) 3Q22 4Q21 +3% • Down (16)% YoY largely driven by lower EOP 7% (19)% quarter-end market levels, a previously S&P 500 Daily Avg (3) (16) disclosed client transition and the impac
Slide 8: Revenue: Servicing fees
Revenue: Servicing fees Servicing fees ($M) 4Q22 performance Total $3,053 $3,081 $2,953 $2,959 $3,155 YoY +3% Servicing fees of $1,203M down (13)% YoY and (1)% QoQ; revenue QoQ +7% down (10)% YoY ex-FX • Down (13)% YoY primarily driven by lower average market levels, lower -13% client activity/adjus
Slide 9: Revenue: Management fees
Revenue: Management fees Management fees ($M) 4Q22 performance Total $3,053 $3,081 $2,953 $2,959 $3,155 YoY +3% Management fees of $457M down (14)% YoY and (3)% QoQ; revenue QoQ +7% down (12)% YoY ex-FX • Down (14)% YoY and (3)% QoQ mainly due to lower average market -14% levels A -12% ex-FX -3% $53
Slide 10: Revenue: Markets, Software and processing, and Other fee revenue
Revenue: Markets, Software and processing, and Other fee revenue Markets, Software & processing, and Other fees 4Q22 performance A (Ex-notable items, non-GAAP, $M) (Ex-notable items, non-GAAP, $M)A Total $3,053 $3,081 $2,953 $2,959 $3,155 YoY +3% • FX trading services of $344M3 revenue QoQ +7% – Up
Slide 11: Enterprise solutions enabled by State Street Alpha
Enterprise solutions enabled by State Street Alpha Front office software and data ($M) A Future growth driven by Front, Middle and Alpha Total YoY +3% ($M) 4Q21 3Q22 4Q22 revenue $3,053 $3,081 $2,953 $2,959 $3,155 QoQ +7% Front office metrics +28% +25% New bookings12 $11 $14 $21 $159 ARR5 229 267 27
Slide 12: Revenue: Net interest income
Revenue: Net interest income NII and NIM ($M)15 Average balance sheet highlights ($B)A Total YoY +3% 4Q21 1Q22 2Q22 3Q22 4Q22 $3,053 $3,081 $2,953 $2,959 $3,155 QoQ +7% revenue Total assets $303 $295 $291 $275 $284 +63% +20% Loans 34 34 36 35 35 $791 $660 Investment portfolio 114 119 114 109 106 $58
Slide 13: Expenses
Expenses Expenses 4Q22 performance A (Ex-notable items, non-GAAP, $M) (Ex-notable items, non-GAAP, $M)A Flat Expenses of $2,155M flat YoY and up 3% QoQ; up 3% YoY A +3% ex-FX +3% ex-FXA • Compensation and employee benefits of $1,058M18 $2,160 $2,097 $2,155 – Down (1)% YoY mainly due to the impact of
Slide 14: Capital ratios
Capital ratios 6 Ratios (%, as of period-end) Highlights CET1 (Standardized) • 4Q22 standardized CET1 ratio at quarter-end of 13.6% increased 0.4%pts 14.3% QoQ primarily driven by episodically lower RWAs and higher retained 13.2% 13.6% earnings, partially offset by the resumption of share repurchase
Slide 15: FY2023 outlook: Macro assumptions and revenue growth
FY2023 outlook: Macro assumptions and revenue growth A FY2022 review FY2023 Outlook Operating • Equity market EOP MSCI ACWI down (20)% YoY; Average MSCI ACWI down • Expect global equity markets EOP growth of 10% YoY, which translates to (10)% average global equity markets down (2)% YoY Environment •
Slide 16: FY2023 outlook: Expense management and tax rate
FY2023 outlook: Expense management and tax rate Ex-notables, non-GAAPA B Expense outlook Expense outlook drivers • Optimization savings of ~3% +3.5-4% – Continued focus on process automation and optimization – Vendor management and consolidation – Organizational simplification ~(3)% ~5-5.5% ~(0.5)%
Slide 17: FY2023 priorities
FY2023 priorities Our strategic priorities are intended to deliver growth, drive innovation and enhance shareholder value • Continue to drive core growth in traditional Investment Services globally • Advance build-out of Alpha as an industry-leading platform with growth in Front, Middle and Back Off
Slide 18: Appendix
Appendix 4Q22 and FY2022 line of business performance 19-20 FY2022 fee revenue, NII, expenses 21 Reconciliation of notable items 22 Reconciliation of constant currency impacts 23 Endnotes 24 Forward-looking statements 25 Non-GAAP measures 26 Definitions 27 18
Slide 19: 4Q22 line of business performance
4Q22 line of business performance Investment Servicing Investment Management State StreetA Total revenue YoY % ∆ Total revenue YoY % ∆ Total revenue ex-notable itemsB YoY % ∆ $2,630M +8% $3,132M +5% $2,443M $2,995M Fee 1,839 $552M -9% 2,341 1,839 -6% $502M Fee -7% revenue 1,956 revenue 2,511 NII 791
Slide 20: FY2022 line of business performance
FY2022 line of business performance Investment Servicing Investment Management State StreetB Total revenueA YoY % ∆ Total revenue YoY % ∆ Total revenue ex-notable itemsA, C YoY % ∆ $10,139M +4% $11,916M $12,125M +2% $9,797M Fee 7,590 $2,119M -6% 7,590 -4% $1,986M Fee 9,583 -4% 7,879 10,012 revenue r
Slide 21: FY2022 fee revenue, NII and expenses
FY2022 fee revenue, NII and expenses Fee revenue NII Expenses -4% $10,012 $9,606 YoY % -1% $8,889 $8,801 YoY % Servicing fees 5,531 5,087 (8)% Comp. 4,554 4,428 (3)% & benefits +34% $2,544 Management fees 2,053 1,939 (6)% $1,905 Info. sys. 1,661 1,630 (2)% Tran. 971 (5)% 1,024 FX trading 1,211 1,376
Slide 22: Reconciliation of notable items
Reconciliation of notable items Quarterly reconciliation % Change Year-to-Date % Change 4Q22 4Q22 YTD 2022 vs. vs. vs. (Dollars in millions, unless noted otherwise) 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 4Q21 3Q22 2021 2022 YTD 2021 Total revenue, GAAP-basis $ 2,950 $ 3,034 $ 2,990 $ 3,053 $ 3,081
Slide 23: 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 4Q22 4Q22 4Q22 4Q22 4Q22 4Q22 vs. vs. vs. vs. vs. vs. (Dollars in millions) 4Q21 3Q22 4Q22 4Q21 3Q22 4Q21 3Q22 4Q21 3Q2
Slide 24: 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 25: 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 26: 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 27: Definitions
Definitions ACWI All Country World Index AOCI Accumulated other comprehensive income APAC Asia-Pacific 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