State Street Corporation · NYSE:STT
State Street — Q1 2018 Earnings Presentation
20 slides from State Street's earnings presentation, Apr 20, 2018
Slide 1: First Quarter 2018 Financial Highlights
First Quarter 2018 Financial Highlights April 20, 2018 (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 2018 financial results. That news release contains a more detailed discussion of many of the matters descri
Slide 3: 1Q18 Highlights
1Q18 Highlights All comparisons are to 1Q17 • Announced record new servicing business wins of ~$1.3T and servicing assets yet to be installed of ~$1.6T at quarter-end1 Growing • Strong AUCA and AUM levels resulting from market appreciation, new business and client Our Core activity Franchise • Stren
Slide 4: Summary of 1Q18 Results
Summary of 1Q18 Results Quarters %∆ ($M, except EPS data, or where otherwise noted) 1Q18 4Q17 1Q17 1Q17 4Q17 Revenue: Servicing fees $1,421 $1,379 $1,296 10% 3% Management fees A 472 418 382 24 13 Trading services 304 248 275 11 23 Securities finance 141 147 133 6 (4) Notable Items Processing fees a
Slide 5: Generated strong earnings growth and improved return on equity
Generated strong earnings growth and improved return on equity GAAP unless noted otherwise Diluted EPS ROE ($) (%) +41% +2.9% pts 1.66 1.62 12.6 13.0 12.8 1.53 9.9 1.15 0.89 6.9 1Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 Financial Highlights 1Q18 compared to 1Q17 EPS Growth of 41% ROE Improve
Slide 6: AUCA and AUM growth driven by market appreciation and client momentum
AUCA and AUM growth driven by market appreciation and client momentum All comparisons are to 1Q17 Assets Under Custody Assets Under and Administration (AUCA) Management (AUM) ($T, as of period-end) ($B, as of period-end) +12% +7% 32.1 33.1 33.3 2,782 2,729 31.0 2,561 2,606 2,673 29.8 1Q17 2Q17 3Q17
Slide 7: Continued fee revenue growth driven by equity market appreciation, new business and higher trading activity
Continued fee revenue growth driven by equity market appreciation, new business and higher trading activity Fee Revenue 1Q18 vs 1Q17 ($M) +8%A • Servicing fees increased mainly due to higher equity +5% ex FX markets, new business and the favorable impact of 2,363 currency translation, partially offs
Slide 8: Strong growth in NII and NIM driven by higher U.S. interest rates
Strong growth in NII and NIM driven by higher U.S. interest rates and disciplined liability pricing GAAP unless noted otherwise NII & NIMA 1Q18 vs 1Q17 (NII $M, NIM %) NII (FTE) +23% NIM (FTE) +26bps 679 • NII increased primarily due to higher U.S. interest rates, 645 656 disciplined liability prici
Slide 9: Expense growth reflects continued new business investments offset by Beacon benefits
Expense growth reflects continued new business investments offset by Beacon benefits Expenses 1Q18 vs 1Q17 ($M) A +8% +6% ex FX • Compensation and employee benefits increased B primarily driven by costs to support new business, annual 2,256 2,086 B 2,131 merit and performance-based incentives and th
Slide 10: Beacon continues to deliver client benefits, while achieving net savings of $58M
Beacon continues to deliver client benefits, while achieving net savings of $58M in 1Q18 Select Key Achievements 1Q18 Benefit Drivers 1Q18 YoY ∆ $M ~% • Global service expansion: Improving net asset value (NAV) delivery speed across geographies Optimization: Transaction Processing, • Product innovat
Slide 11: Strong balance sheet calibrated to provide capacity to support client growth
Strong balance sheet calibrated to provide capacity to support client growth Investment Portfolio Highlights Quarter-End Capital Positions ($B, as of March 31, 2018) (%, Fully phased-in as of period-end) Capital Ratios 3,4,5,6 -12% $97.5B 12.3% 11.7% 12.0% 12.1% $85.6B 10.9% 11.1% ABS 22% Non- 11.6%
Slide 12: 1Q18 Summary
1Q18 Summary GAAP unless noted otherwise; All comparisons are to 1Q17 Strong start to 2018 • EPS growth of 41% and ROE up to 12.8% • Announced record new servicing business wins of ~$1.3T1 • Strong revenue growth – Fee revenue growth of 8% driven by continued market appreciation, new business, stron
Slide 13: Appendix
Appendix 1Q18 vs 4Q17 variances for Total fee revenue, 14 – 16 NII and Total expenses Slide endnotes 17 Forward-looking statements 18 Non-GAAP measures 19 Definitions 20 13
Slide 14: Fee revenue growth driven by equity market appreciation, new business, increased client activity
Fee revenue growth driven by equity market appreciation, new business, increased client activity and higher trading Fee Revenue 1Q18 vs 4Q17 ($M) A +6% • Servicing fees increased primarily due to new business, +5% ex FX increased client activity and continued equity market appreciation 2,363 2,198 2
Slide 15: Higher U.S. interest rates drove NII and NIM growth
Higher U.S. interest rates drove NII and NIM growth GAAP unless noted otherwise NII & NIMA 1Q18 vs 4Q17 (NII $M, NIM %) NII (FTE) +4% NIM (FTE) +5bps • NII increased primarily due to higher U.S. interest rates, 645 656 679 partially offset by lower day count 617 553 1.43 • NIM increased driven by hi
Slide 16: Expense growth from seasonal deferred incentive compensation offset by lower restructuring costs
Expense growth from seasonal deferred incentive compensation offset by lower restructuring costs Expenses 1Q18 vs 4Q17 ($M) A +6% +5% ex FX • Compensation and employee benefits increased primarily due to seasonal deferred incentive compensation 2,256 B expense for retirement-eligible employees, as w
Slide 17: Slide endnotes
Slide endnotes 1 We expect that for the remainder of the year new ly announced asset servicing mandates w ill return to levels more commonly ref lected historically. New asset servicing mandates and servicing assets remaining to be installed in future periods exclude new business which has been cont
Slide 18: Forward-looking statements
Forward-looking statements This pres entati on (and the c onference call r eferenced her ein) c ontains for war d-looking statements within the meani ng of United States s ecurities laws, including s tatements about our goals and expectations regardi ng our business, financial and capital condition,
Slide 19: 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 non-GAAP basis. In general, our non-GAAP financial results adjust selected GAAP-basis fi
Slide 20: Definitions
Definitions ABS Asset-backed securities Available-for-sale (AFS) Security that is purchased with the ability of selling before it reaches maturity AUCA Assets under custody and administration AUM Assets under management Bps Basis points Diluted earnings per share (EPS) Net income available to common