Slide 1: 2Q 2019 Financial Highlights
2Q 2019 Financial Highlights July 19, 2019 (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 second quarter 2019 financial results. That news release contains a more detailed discussion of many of the matters descr
Slide 3: 2Q19 highlights
2Q19 highlights All comparisons are to corresponding prior year periods unless noted otherwise • Total revenue of $2.9B down (6)%, primarily driven by ongoing challenging industry conditions, partially offset by CRD revenue Financial • NII of $613M down (7)%, reflecting continued deposit rotation an
Slide 4: Summary of 2Q19 results
Summary of 2Q19 results Quarters 5 %∆ ($M, except EPS data, or where otherwise noted) 2Q18 1Q19 2Q19 2Q18 1Q19 Revenue: Servicing fees $1,381 $1,251 $1,252 (9)% 0% Notable items Management fees 465 420 441 (5) 5 ($M, except Foreign exchange trading services 315 280 273 (13) (3) 2Q18 1Q19 2Q19 EPS da
Slide 5: AUC/A and AUM levels reflect higher spot market levels and new business wins
AUC/A and AUM levels reflect higher spot market levels and new business wins AUC/A and AUMA Market indices6 AUC/A ($T, as of period-end) 2Q19 vs 0% (% change) • (3)% decrease from 2Q18 2Q18 1Q19 -3% primarily driven by: $33.9 – A previously announced client EOP 8% 4% $32.6 $32.8 S&P 500 transition,
Slide 6: Revenue: Servicing fee performance currently reflects signs of moderating fee pressure
Revenue: Servicing fee performance currently reflects signs of moderating fee pressure Total revenue and Servicing fees Servicing fees performance ($M) 2Q19 Servicing fees of $1,252M down (9)% YoY, but -6%, -5% ex FX A flat QoQ -2% A • Down (9)% YoY, or (8)% ex FX, primarily driven by : Total $3,063
Slide 7: Revenue: Management Fees, Markets and other revenue impacted by average market levels and seasonal activity
Revenue: Management Fees, Markets and other revenue impacted by average market levels and seasonal activity Management fees, Markets and other revenueA 2Q19 performance ($M) Management fees, Markets and other revenue of $1,008M down (1)% YoY and flat QoQ Total • Management fees of $441M revenue $3,0
Slide 8: Advancing our front-to-back strategy
Advancing our front-to-back strategy CRD financial performance Continued strong client engagement 2Q19 select metrics (Unconsolidated, $M) D Active discussions with clients CRD core financials 1Q19 2Q19 RevenueA $99 $91 STT & STT CRD New Operating expenses 41 46 Total CRD Only Only Prospect Pre-tax
Slide 9: Revenue: NII and NIM decline driven by deposit balances and challenging U.S. market rate environment
Revenue: NII and NIM decline driven by deposit balances and challenging U.S. market rate environment NII and NIMA 2Q19 performance ($M) Total revenue $3,063 $2,932 NII of $613M $2,873 • Down YoY and QoQ by (7)% and (9)%, respectively, primarily Servicing driven by lower noninterest-bearing deposits,
Slide 10: Underlying expenses flat QoQ driven by disciplined cost management
Underlying expenses flat QoQ driven by disciplined cost management Non-GAAP ex notable items and seasonal expensesA Expenses ex notables and seasonal items YoY: Underlying expenses up 2% including ~$65M of ($M) CRD costs, or down (1)% excluding CRD +2%, • Compensation and benefits up 2% YoY primaril
Slide 11: Expense Program increased to ~$400M, exceeding initial goal; ~$175M savings already realized YTD
Expense Program increased to ~$400M, exceeding initial goal; ~$175M savings already realized YTD 2019 action plans -1.5% 14 Resource discipline of ~$210M 8.57 • Reduce senior pyramid by 15% Underlying 8.43 • Hiring freeze successful; strengthening internal ExpensesA,B 8.01 talent growth and enabling
Slide 12: Investment portfolio & capital ratios
Investment portfolio & capital ratios Investment portfolio highlights Quarter-end capital ratios ($B, book value as of quarter-end) (%, Fully phased-in as of period-end) Capital Ratios16,17,18 97.5 $92.0 13.0% $90.1 $87.4 11.6% 11.7% 11.3% 11.5% 11.4% 16% 17% 10.8% Non-HQLA 39% 19% 8.1% 7.4% 7.6% 7.
Slide 13: Summary
Summary 2Q19 Financial performance • EPS of $1.42, or $1.45 excluding notablesA • Flat fee revenue sequentially • Underlying expenses flat sequentially driven by disciplined cost managementA – $175M expense savings already realized YTD – Headcount down (2)% YTD • Returned $475M to shareholders, cons
Slide 14: Appendix
Appendix FY2019 Outlook 15 Medium-term financial targets 16 Reconciliation of underlying expenses 17 Endnotes 18 – 19 Forward-looking statements 20 Non-GAAP measures 21 Definitions 22 14
Slide 15: FY2019 Outlook
FY2019 Outlook Increasing productivity savings from 4% to 4.5%, resulting in an underlying expense reduction of 1.5% A Market and operating environment • Slowing global growth • 2H19 daily average equity market levels flat to current levels • Market forward interest rates, with rest of year includin
Slide 16: 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 greater than or equal to
Slide 17: Reconciliation of underlying expenses
Reconciliation of underlying expenses Quarterly reconciliation (Dollars in millions) 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Total expenses, GAAP basis 2,268 2,170 2,091 2,486 2,293 2,154 Less: Notable expense items: Repositioning charges: Compensation and employee benefits (61) (198) Occupancy (16) (25) Repo
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 remaini
Slide 19: Endnotes
Endnotes 16 Unless otherwise noted, all capital ratios referenced on this slide and elsewhere in this presentation refer to State Street Corporation, or State Street, and not State Street Bank and Trust Company, or State Street Bank. The lower of capital ratios calculated under the Basel III advance
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