Slide 1: Third Quarter 2018 Financial Highlights
Third Quarter 2018 Financial Highlights October 19, 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 third quarter 2018 financial results. That news release contains a more detailed discussion of many of the matters descri
Slide 3: 3Q18 Highlights
3Q18 Highlights All comparisons are to prior year periods unless noted otherwise • Growth in 3Q18 AUCA and AUM resulting from market appreciation and new business wins Growing • 3Q18 new servicing business wins of ~$300B, with ~$465B of new business yet to be Our Core installed, and new business pip
Slide 4: Summary of 3Q18 Results
Summary of 3Q18 Results Quarters %∆ ($M, except EPS data, or where otherwise noted) 3Q18 2Q18 3Q17 3Q17 2Q18 Revenue: Servicing fees $1,333 $1,381 $1,351 (1)% (4)% A Management fees 474 465 419 13 2 Trading services A 288 315 259 11 (9) Securities finance 128 154 147 (13) (17) Processing fees and ot
Slide 5: Earnings growth and return on equity driven by solid net interest income growth and active expense management
Earnings growth and return on equity driven by solid net interest income growth and active expense management Diluted EPS ROE ($) (%) +24% +1.9%pts +1.0%pts 5.38 14.7 14.0 13.8 +13% 13.0 12.8 11.9 4.35 1.88 1.87 1.66 1.62 6.9 0.89 3Q17 4Q17 1Q18 2Q18 3Q18 2017 2018 3Q17 4Q17 1Q18 2Q18 3Q18 2017 2018
Slide 6: AUCA & AUM growth driven by equity market appreciation and new business wins
AUCA & AUM growth driven by equity market appreciation and new business wins Assets Under Custody Assets Under and Administration (AUCA)A Management (AUM)A ($T, as of period-end) ($B, as of period-end) +6% +5% 33.1 33.3 33.9 34.0 2,673 2,782 2,729 2,723 2,810 32.1 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17
Slide 7: Fee revenue growth supported by equity market appreciation and trading activity
Fee revenue growth supported by equity market appreciation and trading activity Fee Revenue 3Q18 vs 3Q17 ($M) Fee revenue growth primarily driven by higher +2%A management fees, trading services and revenue YoY recognition, partially offset by lower servicing fees 2,378 2,358 %∆ 2,242 2,230 2,280 •
Slide 8: Continued NII and NIM expansion driven by higher U.S. interest rates and disciplined liability pricing
Continued NII and NIM expansion driven by higher U.S. interest rates and disciplined liability pricing NII & NIMA 3Q18 vs 3Q17 (NII $M, NIM %) NII +11% NIM (FTE) +13bps • NII increased primarily due to higher U.S. interest rates, B disciplined liability pricing and increased client 643 659 672 603 6
Slide 9: Actively managing expenses while prudently investing for the future
Actively managing expenses while prudently investing for the future Expenses 3Q18 vs 3Q17 ($M) +3%A Expenses increased primarily due investments and 2,256 B YoY revenue recognition, partially offset by savings from 2,131 2,159 C 2,079 %∆ Beacon and tighter expense control 2,021 • Compensation and em
Slide 10: Continue to invest for the future while reducing legacy costs
Continue to invest for the future while reducing legacy costs Beacon Net Savings Beacon Investments and Savings Highlights ($M) 2018 YTD Savings 3Q18 YTD ~% • Achieved 3Q18 Beacon net savings of ~$65M Digitization & - On track to complete Beacon by early-2019, more than 18 42 116 50% Footprint Optim
Slide 11: Investment Portfolio & Capital Position Highlights
Investment Portfolio & Capital Position Highlights Investment Portfolio Highlights Quarter-End Capital Positions ($B, as of quarter-end) (%, Fully phased-in as of period-end) Capital Ratios4,5,6,7 14.0% $97.5B 12.4% 12.0% 12.1% $85.6B $87.1B $87.2B 12.9% 11.6% 11.3% 39% 23% 10.8% 24% 8.1% 30% 7.2% 6
Slide 12: Summary
Summary All comparisons are to prior year periods unless noted otherwise 3Q18 and 2018YTD results reflect a strong focus on disciplined expense management • YTD EPS growth of 24% and ROE improved 1.9%pts to 13.8% • Solid overall performance: – Announced new servicing business wins of ~$300B in 3Q18,
Slide 13: Appendix
Appendix Summary of 2018YTD Results 14 3Q18 vs 2Q18 Variances for Total Fee 15 – 17 Revenue, NII and Total Expenses Slide Endnotes 18 Forward-looking Statements 19 Non-GAAP Measures 20 Definitions 21 13
Slide 14: Summary of 2018YTD Results
Summary of 2018YTD Results Quarters 2018 Quarters 2017 1Q18 v 2Q18 v 3Q18 v 2018YTD v ($M, except EPS data, or where otherwise noted) 1Q18 2Q18 3Q18 YTD 1Q17 2Q17 3Q17 YTD 1Q17 % ∆ 2Q17 % ∆ 3Q17 % ∆ 2017YTD % ∆ Revenue: Servicing fees $1,421 $1,381 $1,333 $4,135 $1,296 $1,339 $1,351 $3,986 10% 3% (1
Slide 15: Decline in fee revenue driven by 2Q18 seasonality and a previously announced client transition
Decline in fee revenue driven by 2Q18 seasonality and a previously announced client transition Fee Revenue 3Q18 vs 2Q18 ($M) -3%A Muted fee revenue in light of modest market returns and lower client activity, as well as 2Q18 seasonal 2,378 2,358 QoQ impact 2,242 2,230 2,280 %∆ • Servicing fees decre
Slide 16: Continued NII and NIM growth driven by higher U.S. interest rates and disciplined liability pricing
Continued NII and NIM growth driven by higher U.S. interest rates and disciplined liability pricing NII & NIMA 3Q18 vs 2Q18 (NII $M, NIM %) NII +2% NIM (FTE) +2bps • NII increased primarily due to higher U.S. interest rates B 672 and disciplined liability pricing 616 643 659 603 1.46 1.48 1.38 1.40
Slide 17: Continued expense discipline calibrated to the current revenue environment
Continued expense discipline calibrated to the current revenue environment Expenses 3Q18 vs 2Q18 ($M) -4%A Active expense management resulted in flat underlying B 2,256 expensesD 2,131 2,159 C 2,079 QoQ 2,021 %∆ • Compensation and employee benefits decreased primarily due to the 2Q18 repositioning c
Slide 18: Slide Endnotes
Slide Endnotes 1 New asset servicing mandates and servicing assets remaining to be installed in future periods exclude new business which has been contracted except when the client has not yet provided permission to publicly disclose and the new business is not yet installed. These excluded assets,
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 non-GAAP basis. In general, our non-GAAP financial results adjust selected GAAP-basis fi
Slide 21: Definitions
Definitions ABS Asset-backed securities Available-for-sale (AFS) Security that is purchased with the opportunity of selling before it reaches maturity AUCA Assets under custody and administration AUM Assets under management Bps Basis points, with one basis point representing one hundredth of one per