State Street Corporation · NYSE:STT
State Street — Goldman Sachs Financial Services Conference 2011
36 slides from State Street's conference presentation, Dec 7, 2011
Slide 1: Resilience in a Challenging Environment
1 Joseph L. Hooley Chairman of the Board, President and Chief Executive Officer Goldman Sachs Financial Services Conference December 7, 2011 Exhibit 99.1 Resilience in a Challenging Environment
Slide 2: Agenda
2 Resilience in a Challenging Environment Overview Business Environment Widening Our Lead Summary Agenda
Slide 3: Forward-looking Statements
3 Forward-looking Statements This presentation contains forward-looking statements as defined by United States securities laws, including statements relating to our financial, operational, strategic, commercial, technological and other goals and expectations regarding our Business Operations and Inf
Slide 4: State Street
cSt STATE STREET
Slide 5: Key Messages
5 Overview Focused on Solutions for Institutional Investors Leading Global Market Share and Industry Recognition Outperforming Key Competitors Key Messages Focused on Solutions for Institutional Investors Leading Global Market Share and Industry Recognition Outperforming Key Competitors
Slide 6: Focused on Solutions for Institutional Investors
6 1 Overview Fiduciary heritage since 1792 Core Business: Managing and Servicing Financial Assets Operating-basis 1 revenue growth of 10% compounded annually over the 10 years 2000-2010 2 AA- senior debt rating (State Street Bank and Trust Company) Driving Long-term Shareholder Value Focused on Solu
Slide 7: Focused on Solutions for Institutional Investors
7 Overview $21.5 trillion in assets under custody and administration Largest provider of – Investment manager operations outsourcing – Alternative asset servicing – Mutual fund custody and accounting services in the U.S. – Securities lending Trading relationships with 89 of the top 100 global invest
Slide 8: Leading Global Market Share and Industry Recognition
8 Alternative Assets Under Administration as of 6/30/11 Source: Company reports. BNP and HSBC data as of 6/30/11. Custody Assets Held by Global Custodians as of 9/30/11 Overview Source: ICFA Annual Fund Admin Survey 2011. AUA, $B AUA / AUC, $T Leading Global Market Share and Industry Recognition
Slide 9: Leading Global Market Share and Industry Recognition
9 AUM, $B Global Institutional Assets Managed as of 12/31/10 Average Assets on Loan, $B Global Securities Lending as of 9/30/2011 Global ETF Assets Managed as of 9/30/11 Overview AUM, $B Source: Company reports as of 9/30/11 except BlackRock which is 12/31/10. Source: Pensions and Investments (5/201
Slide 10: Leading Global Market Share and Industry Recognition
Overview 2011 European Pensions Awards International Custody and Fund Administration Asia Asset Management 2011 Best of the Best Awards Global Custodian 2010 Global Custody Survey Global Investor / isf 2011 Equity Lending Survey Profit & Loss 2011 Readers’ Choice Digital Markets Awards The Asset 201
Slide 11: Outperforming Key Competitors
11 Overview 2011 YTD STT BK NTRS 26.2% 25.8% 8.0% 9.1% 1.39% 1.26% 12.5% 11.8% 6.5% 11.8% 1 All data as of 9/30/11. Each company’s operating/adjusted (non-GAAP) presentation may be calculated differently and therefore may not be comparable to other companies’ operating/adjusted (non-GAAP) presentati
Slide 12: Outperforming Key Competitors
Total Returns Significantly Outperformed Primary Peers and Broader Financials Index Overview Bank of New York Mellon Corp. Northern Trust Corp. S&P 500 / Financials State Street Corp. STT -13.3% S & P Fin. -18.5% NTRS -30.8% BK -34.4% Source: FactSet 12 Outperforming Key Competitors
Slide 13: Outperforming Key Competitors
Overview Bank of New York Mellon Corp. Northern Trust Corp. S&P 500 / Financials State Street Corp. STT -3.8% S & P Fin. 6.9% NTRS -12.3% BK -32.2% Source: FactSet Total Returns Significantly Outperformed Primary Peers 13 Outperforming Key Competitors
Slide 14: Business Environment
14 Business Environment
Slide 15: Global Headwinds
Business Environment Higher Capital Requirements Rising Cost of Compliance and Regulation Constrained Economic Growth Low Interest Rates 15 Global Headwinds
Slide 16: Our Response
Business Environment Optimizing Capital in a Regulated Environment Managing Risk Transforming Operations and IT Driving Growth in the Core 16 Our Response – Widening Our Lead
Slide 17: 17
17 Widening Our Lead
Slide 18: Well Positioned Against Long-term Trends
Widening Our Lead Globalization Retirement Increased Complexity Alpha / Beta Separation Regulation and Transparency Driving Growth in the Core 18 Well Positioned Against Long-term Trends
Slide 19: Globalization – Spanning the Globe with Investment Servicing and Investment Management
Widening Our Lead NORTH AMERICA EMEA ASIA PACIFIC 1 As of 9/30/11. Financial data is presented on an operating (non-GAAP) basis. For a description of this operating-basis presentation, and related reconciliations, see the Appendix. Driving Growth in the Core 19 $4,340B Revenues 17,676 Employees $2,3
Slide 20: Globalization – Expansion through Acquisitions
20 Widening Our Lead 1 On an operating basis. Operating basis is a non-GAAP presentation. See Appendix for a description of operating-basis presentation. Driving Growth in the Core Intesa SanPaolo Deutsche GSS MIFA BIAM Achieved in Aggregate 90% Revenue Retention All Were Accretive in First Year of
Slide 21: Globalization – 79% of New Revenue Growth From Existing Clients
21 Widening Our Lead 79% of New Revenue Growth Comes From Existing Clients 1 9 months ended 9/30/11, compared to 9 months ended 9/30/10. Average Number of Products Used Average Length of Relationship 14.1 Products 20.1 Years 8.4 Products 11.1 Years Driving Growth in the Core Globalization Top 100 Cl
Slide 22: Retirement
Positioned as market leader in servicing solutions for pension funds Advanced performance and analytics capabilities Investment management solutions for DB and DC – Portfolio Solutions – Target-date funds – Liability-driven Investing – Alternative Strategies to support allocations to this asset clas
Slide 23: Increased Complexity
Widening Our Lead Opportunity Increased product sophistication driving need for global solutions Increased IT / Operational investment requirements; market for middle-office outsourcing set to grow in next three years from about 20% to 35% 1 Increased regulatory requirements Largest middle office ad
Slide 24: Investing for Growth – Alpha / Beta Separation
24 Widening Our Lead Growth opportunities exist in both beta and alternatives ETF assets growing at 15% per annum Hedge fund assets expected to grow with a 12% CAGR from 2011-2014 Private equity market expected to grow at 6% CAGR from 2011-2014 Opportunity No. 1 ETF servicer No. 1 in alternative inv
Slide 25: Transforming Operations and IT – Goals
25 Position the company for accelerated growth Achieve estimated annual pre-tax run-rate expense savings of $575MN to $625MN by the end of 2014 for full effect in 2015 Achieve, by the end of 2015, a 400bp improvement in operating-basis pre-tax margin, compared to 2010 operating- basis pre-tax margin
Slide 26: Operations Plan
26 14 Core Business Operations Processes are in Scope 2012 Milestones Four key operations transformation levers – Process transformation – Automation – Consolidation – Workforce optimization Operations transformation portfolio includes 160+ initiatives Initiatives have been sequenced into master pla
Slide 27: IT Plan
27 Widening Our Lead Industrial-strength Application Development Key Program Benefits Proprietary Real-time Information Automation / capacity on demand Accelerated time to market Integrated security environment Real-time data infrastructure Advanced platform for product innovation Strengthened clien
Slide 28: Estimated Annual, Pre-tax, Run-rate Expense Savings
28 Technology Transformation program; actual operating expenses of the Company may increase or decrease due to other factors. $MN 2011 2012 2013 2014 2015 $150 $250 $370 $430 $440 5 20 90 150 160 155 270 460 580 600 75 100 70 40 0 1 Transforming Operations and IT The full effect of the annual pre-ta
Slide 29: Strong Enterprise-wide Governance
Culture Values Alignment Governance Risk Management Objectives Embedded into Business Unit and Individual Goals Overarching Structure Sets Risk Appetite and Risk Policies Globally • Dedicated Risk Teams in All Business and Geographies • Comprehensive Stress and Scenario Testing • Deep Expertise in C
Slide 30: Optimizing Capital in a Regulated Environment
30 Widening Our Lead State Street Corporation “Well Capitalized” 1 9/30/11 Actual under Basel I 9/30/11 Adjusted to Reflect Basel III Proposal 5 5.0% 2 7.8% 6.0% 6.0% 17.9% 12.8% ---- 16.0% 11.7% 10.0% 19.5% 14.4% ---- 7.0% 7.0% Optimizing Capital in a Regulated Environment 1 Except as noted in note
Slide 31: Performance in 2011
31 Widening Our Lead Median payout ratio for those banks that participated in the CCAR stress test and were able to increase dividends and repurchase shares was 58.6% of consensus earnings 1 Median payout ratio for all banks that were allowed to return capital in some form to shareholders was about
Slide 32: Committed to Returning Capital to Shareholders
Widening Our Lead Expect to request in January 2012 a share purchase plan in keeping with the limits imposed by the Federal Reserve Expect to target a 20%-25% payout ratio Intend to be opportunistic; Pressure on European banks may accelerate prospects Rigorous financial analysis and hurdle rates mus
Slide 33: State Street
cSt STATE STREET
Slide 34: Summary
34 Summary No. 1 or No. 2 Position in Key Growth Markets Financial Results Outperforming Peers Most Diversified Global Footprint Strongest Capital of Peer Group Driving Growth in the Core Transforming Operations and IT Managing Risk Optimizing Capital in a Regulated Environment Driving Long-term Sha
Slide 35: State Street
STATE STREET. bea) STATE STREET.
Slide 36: State Street
STATE STREET. bea) STATE STREET.
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