State Street Corporation · NYSE:STT
State Street — Q3 2020 Earnings Presentation
21 slides from State Street's earnings presentation, Oct 16, 2020
Slide 1: 3Q 2020 Financial Highlights
October 16, 2020 3Q 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 third quarter 2020 financial results. That news release contains a more detailed discussion of many of the matters descri
Slide 3: Implementing our strategy while navigating the challenging environment
Implementing our strategy while navigating the challenging environment Client Product performance Productivity and Employees and the engagement and innovation efficiencies financial system • Record AUC/A of $36.6T at • Enhancing the client • Company-wide productivity and • Developed a safe and 1 qua
Slide 4: 3Q20 and 2020YTD highlights
3Q20 and 2020YTD highlights All comparisons are to corresponding prior year periods unless noted otherwise 3Q20 2020YTD • EPS of $1.45, up 2% • EPS of $4.93, up 22% • Total revenue of $2.8B reflecting: • Total revenue of $8.8B reflecting: Financial ‒ Fee revenue of $2.3B, up 2% ‒ Fee revenue of $7.1
Slide 5: Summary of 3Q20 results
Summary of 3Q20 results Quarters %∆ (GAAP, $M, except EPS data, or where otherwise noted) 3Q19 2Q20 3Q20 3Q19 2Q20 Revenue: Servicing fees $1,272 $1,272 $1,301 2% 2% Management fees 445 425 455 2 7 Foreign exchange trading services 284 344 294 4 (15) Securities finance 116 92 84 (28) (9) Excluding e
Slide 6: AUC/A and AUM levels, markets and flows performance
AUC/A and AUM levels, markets and flows performance A AUC/A and AUM Market indices4 AUC/A ($T, as of period-end) (% change) 3Q20 vs 3Q19 2Q20 +11% • 11% increase from 3Q19 primarily driven by: EOP 13% 8% +9% S&P 500 – Higher period-end market levels, net new Daily Avg 12 13 $36.6 business growth, an
Slide 7: Revenue: Servicing fees
Revenue: Servicing fees Servicing fees ($M) 3Q20 performance Total YoY -4% Servicing fees of $1,301M up 2% YoY and QoQ revenue $2,903 $3,048 $3,065 $2,937 $2,784 QoQ -5% • Up 2% YoY primarily driven by higher average market levels, net new business and client activity, partially offset by moderating
Slide 8: Revenue: Management, Markets, Software and processing fee revenue
Revenue: Management, Markets, Software and processing fee revenue Management, Markets, Software & processing fee ($M) 3Q20 performance Total YoY -4% Management, Markets, Software and processing fee revenue $2,903 $3,048 $3,065 $2,937 $2,784 QoQ -5% revenue of $1,005M up 2% YoY, down (9)% QoQ • Manag
Slide 9: CRD performance
CRD performance Financial performance Business momentum A (Standalone basis, $M) 9 • New SaaS clients increased ~14% YTD +16% -32% • Average new client contract term increased over 40% and deal sizes doubled since acquisition9 $145M ® • CRD now live on Microsoft Azure’s cloud-based computing platfor
Slide 10: Revenue: Net interest income
Revenue: Net interest income NII and NIM ($M)11 Average balance sheet highlights ($B) Total YoY -4% revenue $2,903 $2,937 $2,784 QoQ -5% 3Q19 2Q20 3Q20 -26% -20% ex-episodic & Total assets $223 $285 $264 true-up itemsA -14% 245 280 EOP 272 -11% ex-episodic $644 & true-up itemsA $624 Loans 24 27 26 $
Slide 11: Expenses
Expenses Expenses 3Q20 performance A (Ex-notable items, non-GAAP, $M) (Ex-notable items, non-GAAP)A Expenses ex-notable items of $2,097M down (2)% -2% YoY, up 1% QoQ +1% • Compensation and benefits of $1,062M – Down (2)% YoY primarily driven by lower headcount, medical costs and $2,135 $2,070 $2,097
Slide 12: Investment portfolio and capital ratios
Investment portfolio and capital ratios Investment portfolio highlights13 Capital ratios14 ($B, portfolio metrics as of quarter-end) (%, as of period-end) CET1 (Standardized) 12.3% 12.4% 11.3% Headroom 4.4% $109 $112 A 1.0% G-SIB surcharge $16 15% 2.5% CCB/SCB15 $94 $15 14% 8.0% ~$5B from 4.5% Minim
Slide 13: Summary
Summary 3Q20 and 2020YTD financial performance • 3Q20 EPS of $1.45, up 2%, and 2020YTD EPS of $4.93, up 22% • 3Q20 financials: – Fee revenue up 2% YoY primarily driven by improved servicing and management fees, and CRD performance, partially offset by lower securities finance revenue – NII down (26)
Slide 14: Appendix
Medium-term financial targets 15 Loan portfolio 16 Reconciliation of notable items 17 Appendix Endnotes 18 Forward-looking statements 19 Non-GAAP measures 20 Definitions 21 14
Slide 15: Medium-term financial targets
Medium-term financial targets A Our strategic priorities will deliver growth, drive innovation and enhance shareholder value Revenue growth 4–5% with CRD Pre-tax margin Further improve by an additional 2%pts EPS growth 10–15% ROE 12–15% Capital return Targeting total payout ratio greater than or equ
Slide 16: Loan portfolio
Loan portfolio Average loans by segment ($B)17 3Q20 loan portfolio highlights $13 $14 High quality loan portfolio; 81% investment grade; majority of $12 credit extended to existing clients 19% 81% 84% 84% • Fund Finance: Primarily includes ‘40 Act Funds, PE Capital Call Finance, and Business Develop
Slide 17: Reconciliation of notable items
Reconciliation of notable items Quarterly reconciliation % Change Year-to-Date % Change 3Q20 3Q20 YTD2020 vs. vs. vs. (Dollars in millions, unless noted otherwise) 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 3Q19 2Q20 2019 2020 YTD2019 Total revenue, GAAP-basis 2,932 2,873 2,903 3,048 3,065 2,937 2,784 (4.1)
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 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 CCB Capit