State Street Corporation · NYSE:STT
State Street — Q2 2023 Earnings Presentation
22 slides from State Street's earnings presentation, Jul 14, 2023
Slide 1: 2Q 2023 Financial Highlights
2Q 2023 Financial Highlights July 14, 2023 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 2023 financial results. That news release contains a more detailed discussion of many of the matters descr
Slide 3: 2Q23 highlights
2Q23 highlights All comparisons are to corresponding prior year period unless noted otherwise • EPS of $2.17, up 14% YoY • Total revenue of $3.1B, up 5% YoY, with fee revenue up 2% mainly reflecting higher Front office software and data revenue, Securities finance, and Other fee revenue primarily as
Slide 4: Summary of 2Q23 financial results
Summary of 2Q23 financial results Financial results Notable items (GAAP; $M, except EPS data, or where otherwise Quarters %∆ noted) ($M, except EPS data) QuartersA 2Q22 1Q23 2Q23 1Q23 2Q22 2Q22 1Q23 2Q23 Revenue: Acquisition and restructuring ($12) - - Back office servicing fees $1,205 $1,131 $1,164
Slide 5: AUC/A and AUM levels, markets and flows performance
AUC/A and AUM levels, markets and flows performance AUC/A ($T, as of period-end) 2 Market indices 8 2Q23 vs (% change) +4% 1Q23 2Q22 +5% • Up 4% YoY largely driven by higher quarter- S&P 500 EOP 8% 18% Daily Avg 5 2 end equity market levels and client flows $38.2 $37.6 $39.6 MSCI EAFE EOP 2 15 Daily
Slide 6: Revenue: Servicing fees
Revenue: Servicing fees Servicing fees ($M) 2Q23 performance Total $2,953 $2,959 $3,155 $3,101 $3,110 YoY +5% Servicing fees of $1,259M down (3)% YoY and up 3% QoQ revenue QoQ flat • Down (3)% YoY primarily as net new business was more than offset by lower client activity/adjustments and below avera
Slide 7: Revenue: Management fees
Revenue: Management fees Management fees ($M) 2Q23 performance Total $2,953 $2,959 $3,155 $3,101 $3,110 YoY +5% Management fees of $461M down (6)% YoY and up 1% QoQ revenue QoQ flat • Down (6)% YoY primarily due to net outflows in prior periods and a previously described shift of certain management
Slide 8: Revenue: Markets, Software and processing, and Other fee revenue
Revenue: Markets, Software and processing, and Other fee revenue Markets, Software & processing, and Other fees (Ex-notable items, non-GAAP, $M)A 2Q23 performance Total Revenue $2,953 $2,959 $3,155 $3,101 $3,110 YoY +5% • FX trading services of $303M QoQ flat (GAAP) – Down (8)% YoY and (11)% QoQ pri
Slide 9: Revenue: Enterprise solutions enabled by State Street Alpha
Revenue: Enterprise solutions enabled by State Street Alpha Front office software and data ($M) A Future growth driven by Front, Middle and Alpha Total YoY +5% ($M) 2Q22 1Q23 2Q23 revenue $2,953 $2,959 $3,155 $3,101 $3,110 QoQ flat Front office metrics +29% +49% New bookings12 $11 $2 $4 $159 $162 AR
Slide 10: Revenue: Net interest income
Revenue: Net interest income NII and NIM ($M)15 Average balance sheet highlights ($B)A Total YoY +5% 2Q22 3Q22 4Q22 1Q23 2Q23 $2,953 $2,959 $3,155 $3,101 $3,110 QoQ flat revenue Total assets $291 $275 $284 $277 $275 +18% CashB 80 72 87 81 73 -10% Investment portfolio 114 109 106 107 108 $791 $766 $6
Slide 11: Expenses
Expenses Expenses 2Q23 performance A (Ex-notable items, non-GAAP, $M) (Ex-notable items, non-GAAP, $M)A +6% Expenses of $2,212M up 6% YoY and down (7)% QoQ • Compensation and employee benefits of $1,123M -7% – Up 7% YoY mainly due to higher salaries and headcount $2,369 – Down (13)% QoQ largely driv
Slide 12: Capital and liquidity ratios
Capital and liquidity ratios Ratios (%, as of period-end) 6 Capital and liquidity highlights CET1 (Standardized) • 2Q23 standardized CET1 ratio at quarter-end of 11.8% decreased (0.3)%pts QoQ primarily driven by the continuation of common share 12.9% 13.2% 13.6% 12.1% 11.8% repurchases, partially of
Slide 13: Summary
Summary All comparisons are to corresponding prior year period unless noted otherwise 2Q23 financial review • EPS of $2.17, up 14%; pre-tax margin of 29.5%; ROE of 13.0% ‒ Fee revenue up 2% mainly driven by higher Front office software and data revenue, Securities finance, and Other fee revenue asso
Slide 14: Appendix
Appendix 2Q23 line of business performance 15 State Street NII trends through cycles 16 Reconciliation of notable items 17 Reconciliation of constant currency impacts 18 Endnotes 19 Forward-looking statements 20 Non-GAAP measures 21 Definitions 22 14
Slide 15: 2Q23 line of business performance
2Q23 line of business performance Investment Servicing Investment Management State StreetC Total revenueA YoY % ∆ Total revenueB YoY % ∆ Total revenue ex-notable itemsA,D YoY % ∆ $2,607M +5% $3,110M +5% $2,475M $2,953M Fee 1,920 +2% $478M $503M +5% +2% 1,888 1,920 Fee 2,419 revenue 2,370 revenue NII
Slide 16: State Street NII trends through cycles
State Street NII trends through cycles Before prior Current Prior tightening / easing cycle COVID-19 period tightening cycle tightening cycle 242 240 233 233 226 228 213 217 210 206 206 197 189 180 5.16 174 174 4.69 Total Deposits 165 169 165 167 165 162 161 163 164 ($B, Quarterly Avg) 160 158 157 1
Slide 17: Reconciliation of notable items
Reconciliation of notable items Quarterly reconciliation % Change Year-to-Date % Change 2Q23 2Q23 YTD 2023 vs. vs. vs. (Dollars in millions, unless noted otherwise) 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 2Q22 1Q23 2022 2023 YTD 2022 Total revenue, GAAP-basis $ 3,081 $ 2,953 $ 2,959 $ 3,155 $ 3,101 $ 3,110 5.
Slide 18: Reconciliation of constant currency impacts
Reconciliation of constant currency impacts Currency Translation Excluding Currency % Change Constant Reconciliation of Constant Currency FX Impacts Reported Impact Impact Currency 2Q23 2Q23 2Q23 2Q23 2Q23 2Q23 vs. vs. vs. vs. vs. vs. (Dollars in millions) 2Q22 1Q23 2Q23 2Q22 1Q23 2Q22 1Q23 2Q22 1Q2
Slide 19: Endnotes
Endnotes 1. In March 2023, the Financial Accounting Standards Board issued new accounting guidance that expands the use of proportional amortization accounting to other types of tax credit investments regardless of the tax credit program from which the income tax credits are received. We adopted the
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 strategy, growth and sales prospects, capital manageme
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 ACWI All Country World Index AOCI Accumulated other comprehensive income APAC Asia-Pacific ARR Annual recurring revenue AUC/A Assets under custody and/or administration AUM Assets under management Bloomberg Global Aggregate Bloomberg Global Aggregate represents Bloomberg Global Aggregate