State Street Corporation · NYSE:STT
State Street — Q1 2020 Earnings Presentation
22 slides from State Street's earnings presentation, Apr 17, 2020
Slide 1: 1Q 2020 Financial Highlights
April 17, 2020 1Q 2020 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 first quarter 2020 financial results. That news release contains a more detailed discussion of many of the matters descri
Slide 3: State Street’s response to the COVID-19 pandemic
State Street’s response to the COVID-19 pandemic • Proactive deployment of safe workspace and extensive work from home operations to protect the health and safety of our employees; leveraging experience from large China operations since mid-January to Maintaining mitigate operational disruptions acr
Slide 4: 1Q20 highlights
1Q20 highlights All comparisons are to corresponding prior year periods unless noted otherwise • EPS of $1.62, up 37% YoY; $1.67 excluding notable items, up 35% YoY; ROE of 10.9%A • Total revenue of $3.1B Financial – Up 5% YoY primarily driven by higher FX volume and improved servicing and managemen
Slide 5: Summary of 1Q20 results
Summary of 1Q20 results Quarters %∆ ($M, except EPS data, or w here otherw ise noted) 1Q19 4Q19 1Q20 1Q19 4Q19 Revenue: Notable Items Servicing fees $1,251 $1,299 $1,287 3% (1)% Management fees 420 465 449 7 (3) ($M, except EPS data) QuartersD 1Q19 4Q19 1Q20 Foreign exchange trading services 280 274
Slide 6: AUC/A and AUM levels declined YoY and QoQ due to lower equity market levels
AUC/A and AUM levels declined YoY and QoQ due to lower equity market levels A AUC/A and AUM Market indices6 AUC/A ($T, as of period-end) • (2)% decrease from 1Q19 primarily (% change) 1Q20 vs 1Q19 4Q19 -2% driven by: – Lower end of period equity market levels EOP (9)% (20)% -7% S&P 500 and a previou
Slide 7: Revenue: Servicing fee performance reflects increased client activity, new business growth and moderating fee pressure
Revenue: Servicing fee performance reflects increased client activity, new business growth and moderating fee pressure Servicing fees ($M) 1Q20 performance Servicing fees of $1,287M up 3% YoY, down (1)% QoQ Total YoY +5% revenue $2,932 $2,873 $2,903 $3,048 $3,065 QoQ +1% • Up 3% YoY primarily driven
Slide 8: Revenue: Management, Markets, Software and processing fee revenue impacted by market volatility and levels
Revenue: Management, Markets, Software and processing fee revenue impacted by market volatility and levels Management, Markets, Software and processing fee 1Q20 performance revenue ($M)A Management, Markets, Software and processing fee Total $3,048 $3,065 revenue $2,932 revenue of $1,112M up 10% YoY
Slide 9: Prior investments in our Global Markets infrastructure and increased engagement with clients
Prior investments in our Global Markets infrastructure and increased engagement with clients built market share and supported higher than usual FX volume demand FX Sales and Trading FX Trading Platforms Euromoney RankingsC FX VolumeA FX VolumeA #1 in Real Money +40% +53% 2 years in a row 18.4% marke
Slide 10: CRD performance and Alpha integration progress
CRD performance and Alpha integration progress Quarterly metrics ($M) Achieving key milestones and business momentum Standalone CRD revenueA • Confident in achieving both revenue and expense synergy targets9 +1% • Robust pipeline, with one new Alpha client deal in 1Q20 -21% – New sovereign wealth fu
Slide 11: Revenue: Despite lower market rates, NII up QoQ primarily due to strong deposit growth
Revenue: Despite lower market rates, NII up QoQ primarily due to strong deposit growth associated with flight-to-quality, and episodic market-related benefits NII and NIM ($M)A Balance sheet highlights Total revenue $2,932 $3,048 $3,065 1Q19 4Q19 1Q20 ($B) Avg Avg Avg EOP Servicing -1% fees Total as
Slide 12: High quality loan portfolio primarily in support of client activity
High quality loan portfolio primarily in support of client activity Average loans by segment ($B) A Average loans highlights $13 $13 High quality loan portfolio; 84% investment grade; majority of $12 credit extended primarily to existing clients 19% 81% 84% 84% $9 • Fund Finance of $13B: $7 – Primar
Slide 13: Expenses ex-notable items and seasonal expenses down YoY
Expenses ex-notable items and seasonal expenses down YoY driven by expense management and discipline Expenses 1Q20 YoY: Expenses ex-notable items and seasonal A (Ex-notable items and seasonal expenses, non-GAAP, $M) expenses down (2)% • Compensation and benefits down (3)% YoY primarily driven by opt
Slide 14: Capital and liquidity management
Capital and liquidity management Investment portfolio highlightsA Quarter-end capital ratios11 ($B, portfolio metrics as of quarter-end) (%, as of period-end) CET1 (Standardized) CET1 (Advanced) $123.8 B 12% 11.5% 11.7% 10.7% 12.1% 11.7% 11.1% $90.1 $95.6 ~$27B from MMLF 8% Non-HQLA 16% 17% require-
Slide 15: Summary
Summary 1Q20 financial performance • EPS of $1.62, up 37% YoY; ROE of 10.9% – Fee revenue increased QoQ due to higher FX trading services driven by higher than usual FX volume and high market volatility, partially offset by unfavorable equity markets impacting servicing, management and software and
Slide 16: Appendix
Medium-term financial targets 17 Reconciliation of notable items 18 Endnotes 19 Appendix Forward-looking statements 20 Non-GAAP measures 21 Definitions 22 16
Slide 17: Medium-term financial targets
Medium-term financial targets A Our strategic priorities will deliver growth, drive innovation and enhance shareholder value Revenue growth 4–5% with CRD Pre-tax margin Further improve by an additional 2%pts EPS growth 10–15% ROE 12–15% Capital return Targeting total payout ratio greater than or equ
Slide 18: Reconciliation of notable items
Reconciliation of notable items Quarterly reconciliation (Dollars in millions, unless noted otherwise) 1Q19 2Q19 3Q19 4Q19 1Q20 Total revenue, GAAP-basis 2,932 2,873 2,903 3,048 3,065 Less: Other income (44) Total revenue, excluding notable items 2,932 2,873 2,903 3,004 3,065 Total expenses, GAAP ba
Slide 19: 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 20: 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 21: 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 22: Definitions
Definitions AUC/A Assets under custody and/or administration AUM Assets under management Barclays Agg Barclays Agg represents Barclays Global Aggregate Bond Index Bps Basis points, with one basis point representing one hundredth of one percent CCAR Comprehensive Capital Analysis and Review CET1 Comm