NYSE: STT

April 12, 2024

This presentation (and the conference call accompanying it) includes certain highlights of, and also material supplemental to, State Street Corporation's news release announcing its first quarter 2024 financial results. That news release contains a more detailed discussion of many of the matters described in this presentation and is accompanied by an Addendum with detailed financial tables. This presentation (and the conference call accompanying it) is designed to be reviewed together with that news release and that Addendum, which are available on State Street's website, at http://investors.statestreet.com, and are incorporated herein by reference. No other information on our website is incorporated herein by reference.

This presentation (and the conference call accompanying it) contains forward-looking statements as defined by United States securities laws. These statements are not guarantees of future performance, are inherently uncertain, are based on assumptions that are difficult to predict and have a number of risks and uncertainties. The forward-looking statements in this presentation speak only as of the time this presentation is first furnished to the SEC on a Current Report on Form 8-K, and State Street does not undertake efforts to revise forward- looking statements. See "Forward-looking statements" in the Appendix for more information, including a description of certain factors that could affect future results and outcomes.

Certain financial information in this presentation is presented on both a GAAP basis and on a basis that excludes or adjusts one or more items from GAAP. The latter basis is a non-GAAP presentation. Refer to the Appendix for explanations of our non-GAAP financial measures and to the Addendum for reconciliations of our non-GAAP financial information.

2

All comparisons are to corresponding prior year period unless otherwise noted

Financial performance

  • EPS of $1.37, down (10)%; $1.69 ex-notable items, up 11%A
  • Total revenue of $3.1B, up 1% YoY
    • Fee revenue up 4%, reflecting higher Management fees, Front office software and data revenue, and Servicing fees, partially offset by lower Securities finance and FX trading services revenues
    • NII down (7)% largely due to a deposit mix shift and lower average non-interest-bearing deposit balances, partially offset by the impact of higher average interest rates, client lending growth, and investment portfolio positions
  • Total expenses of $2.5B, up 6%, primarily driven by a $130M notable item representing the increased FDIC special assessment
    • Up 1% ex-notables, as continued business investments were largely offset by productivity savingsA
  • Operating leverage of (4.9)%pts; 0.6%pts ex-notablesA
    • Fee operating leverage of (2.4)%pts; 3.1%pts ex-notablesA

Investment Servicing

  • New servicing fee revenue wins of $67M primarily related to Back office wins across Asset Managers and Alternatives client segments in North America and Europe1

Business momentum

  • Record AUC/A of $43.9T at quarter-end; AUC/A wins of $474B and AUC/A yet to be installed of $2.6T2
  • State Street Alpha® reported 2 new Alpha mandates, including our second win associated with Alpha for Private Markets2
  • ARR for Front office software solutions of $326M, up 19%, driven by continued SaaS client implementations and conversions3
  • Completed the acquisition of CF Global Trading, strengthening State Street's outsourced trading services capabilities in Europe

Investment Management

  • Record AUM of $4.3T at quarter-end, with continued market share gains in U.S. Low Cost ETFs2

Transformation

  • Closed the second consolidation of an operations joint venture in India, advancing our productivity and transformation effortsB

Balance sheet

•

CET1 ratio of 11.1% at quarter end4

and capital

•

Returned $308M of capital in 1Q24, consisting of $100M in common share repurchases and $208M of declared common stock

dividends

A Financial metrics ex-notable items are non-GAAP measures; refer to the Appendix for explanations and reconciliations of our non-GAAP measures. B Consolidation occurred on April 1, 2024.

3

Refer to the Appendix included with this presentation for endnotes 1 to 23.

Financial results

Quarters

%∆

(GAAP; $M, except EPS data, or where otherwise noted)

1Q23

4Q23

1Q24

4Q23

1Q23

Revenue:

Back office servicing fees

$1,131

$1,128

$1,136

1%

0%

Middle office services

86

84

92

10

7

Servicing fees

1,217

1,212

1,228

1

1

Management fees

457

479

510

6

12

Foreign exchange trading services

342

307

331

8

(3)

Securities finance

109

97

96

(1)

(12)

Front office software and data

109

179

144

(20)

32

Lending related and other fees

56

58

63

9

13

Software and processing fees

165

237

207

(13)

25

Other fee revenue

45

33

50

52

11

Total fee revenue

2,335

2,365

2,422

2

4

Net interest income

766

678

716

6

(7)

Total revenue

$3,101

$3,043

$3,138

3%

1%

Provision for credit losses

44

20

27

35%

(39)%

Total expenses

$2,369

$2,822

$2,513

(11)%

6%

Net income before income taxes

$688

$201

$598

nm

(13)%

Net income

$549

$210

$463

nm

(16)%

Diluted earnings per share

$1.52

$0.55

$1.37

nm

(10)%

Return on average common equity

9.3%

3.1%

7.7%

4.6%pts

(1.6)%pts

Pre-tax margin

22.2%

6.6%

19.1%

12.5%pts

(3.1)%pts

Tax rate

20.2%

(4.4%)

22.5%

26.9%pts

2.3%pts

Ex-notable items, non-GAAPA:

Total revenue

$3,101

$3,043

$3,138

3%

1%

Total expenses

$2,369

$2,202

$2,383

8%

1%

EPS

$1.52

$2.04

$1.69

(17)%

11%

Return on average common equity

9.3%

11.6%

9.5%

(2.1)%pts

0.2%pts

Pre-tax margin

22.2%

27.0%

23.2%

(3.8)%pts

1.0%pts

Tax Rate

20.2%

17.9%

22.8%

4.9%pts

2.6%pts

Notable items

($M, except EPS data)

Quarters

1Q23

4Q23

1Q24

FDIC special assessmentB

-

($387)

($130)

Net repositioning chargesC

-

(203)

-

Other notable items (net)D

-

(30)

-

Total notable items (pre-tax)

-

($620) ($130)

Income tax impact from notable items

-

(156)

(31)

EPS impact

-

($1.49)

($0.32)

  1. These are non-GAAP presentations; refer to the Appendix for a reconciliation of ex-notable items and further explanations of non-GAAP measures. B FDIC special assessment of $387M in 4Q23 and $130M in 1Q24

reflected in Other expenses. C 4Q23 net repositioning charges of $203M represents $182M related to Compensation and employee benefits and $21M related to Occupancy costs. D 4Q23 Other notable items (net) of

4

$30M represents $41M in Information Systems and Communications and $4M in Other expenses, primarily associated with operating model changes, partially offset by Acquisition and restructuring benefit of $15M.

AUC/A ($T, as of period-end)2

+17%

+5%

•

Up 17% YoY largely driven by higher

$43.9

quarter-end market levels, net new

$41.8

$37.6

business and client flows

• Up 5% QoQ primarily due to higher quarter-end market levels and client flows

1Q23 4Q23 1Q24

AUM ($B, as of period-end)2

Market indices5

(% change)

1Q24 vs

4Q23

1Q23

Equity & Bond Indices:

S&P 500

EOP

10%

28%

Daily Avg

12

25

MSCI EAFE

EOP

5

12

Daily Avg

9

10

MSCI EM

EOP

2

5

Daily Avg

5

1

MSCI ACWI

EOP

8

21

Daily Avg

10

18

Bloomberg Global Agg

EOP

(2)

0

Daily Avg

3

1

Volatility Indices:

VIX

Daily Avg

(10)%

(34)%

JPM G7 FX

Daily Avg

(7)

(29)

JPM EM FX

Daily Avg

(15)

(37)

Specials Volumes:

S&P Global Industry Specials Avg Volumes

(6)%

(32)%

+20%

+5%

$3,618 $4,128 $4,336

  • Up 20% YoY reflecting higher quarter- end market levels and net inflows
  • Up 5% QoQ primarily due to higher quarter-end market levels

Select industry flows6

($B)

Total flowsA

1Q23

4Q23

1Q24

Long Term Funds

$(58)

$(207)

$(2)

Money Market

445

154

(9)

ETF

79

265

190

North America Total

466

212

179

EMEA Total

112

115

109

1Q23 4Q23 1Q24

A Line items may not sum to total due to rounding.

5

Refer to the Appendix included with this presentation for endnotes 1 to 23.

Servicing fees ($M)

Total

$3,101

$3,110

$2,691

$3,043

$3,138

YoY +1%

revenue

QoQ +3%

+1%

+1%

$1,217 $1,259 $1,234 $1,212 $1,228 YoY %

1Q24 performance

Servicing fees of $1,228M up 1% YoY and QoQA

  • Up 1% YoY primarily from higher average market levels, partially offset by pricing headwinds, lower client activity/adjustments including changes in client asset mix, and a previously disclosed client transition
  • Up 1% QoQ mainly due to higher average market levels, partially offset by lower client activity/adjustments including changes in client asset mix, and pricing headwinds

Back office servicing 1,131

fees

Middle office

services 86

1Q23

1,164

95

2Q23

1,138

96

3Q23

1,128

84

4Q23

1,136

Flat

92 +7% 1Q24

Asset Services business momentum

• New 1Q24 servicing fee revenue wins of $67M primarily related to

Performance indicators

AUC/A

$112

$141

$149

$501

$474

2

wins ($B)

AUC/A to be

3,647

2,365

2,255

2,302

2,576

installed2 ($B)

Servicing fee

68

39

91

103

67

rev. wins1 ($M)

Back office wins across Asset Managers and Alternatives client

segments in North America and Europe1

• $291M of servicing fee revenue to be installed as of quarter-end, up

$71M YoY and $21M QoQ1,2

• $474B in new servicing AUC/A wins, with the majority from the Asset

Managers segment in both North America and Europe2

A Servicing fees were positively impacted by currency translation both YoY and QoQ by $3M and $4M, respectively.

6

Refer to the Appendix included with this presentation for endnotes 1 to 23.

Management fees ($M)

Total

$3,101

$3,110

$2,691

$3,043

$3,138

YoY +1%

revenue

QoQ +3%

+12%

+6%

$457 $461 $479 $479 $510

1Q23

2Q23

3Q23

4Q23

1Q24

Performance indicators ($B)2

AUM

$3,618

$3,797

$3,687

$4,128

$4,336

Net flows

(26)

38

10

103

(9)

(QoQ)

1Q24 performance

Management fees of $510M up 12% YoY and 6% QoQA

  • Up 12% YoY primarily due to higher average market levels and net inflows from prior periods, partially offset by the impacts of a strategic ETF product suite repricing initiative
  • Up 6% QoQ mainly driven by higher average market levels and net inflows from prior periods, partially offset by lower performance fees

Investment Management business momentum2

  • ETFs: Overall flows were relatively flat, while SPDR® Portfolio U.S. Low-Cost suite experienced positive net inflows of $13B and sustained market share gains with record AUM of ~$200B
  • Institutional: Net outflows primarily driven by a single client; continued momentum in U.S. Defined Contribution with record AUM of ~$730B
  • Cash: Strong net inflows of $9B, marking the fourth consecutive quarter of positive net inflows for our Cash business

A Management fees were negatively impacted by currency translation YoY by $1M and positively impacted by currency translation QoQ by $1M.

7

Refer to the Appendix included with this presentation for endnotes 1 to 23.

Markets, Software & processing, and Other fees ($M)

Total

$3,101

$3,110

$2,691

$3,043

$3,138

YoY +1%

Revenue

QoQ +3%

1Q24 performance

• FX trading services of $331M

- Down (3)% YoY mainly due to lower spreads associated with

subdued FX volatility, partially offset by higher volumes

- Up 8% QoQ primarily reflecting higher volumes and Direct FX

FX trading

Securities finance

Software & processing

Other fees7

$661

342

109

165

45

$699

303

117

221

58

$648

313

103

188

44

$674

307

97

237

33

$684

331

96

207

50

YoY %

(3)%

(12)%

+25%

+11%

spreads

•

Securities finance of $96M

- Down (12)% YoY mainly due to lower Agency balances and lower

spreads primarily due to muted industry specials activity

- Down (1)% QoQ primarily due to lower spreads, partially offset by

higher balances

•

Software and processing fees of $207M

- Up 25% YoY mainly driven by higher Front office software and data

revenue associated with CRD

- Down (13)% QoQ primarily due to lower On-premises renewals in

Front office software and data, partially offset by higher Lending

related and other fees

•

Other fee revenue of $50M7

- Increased $5M YoY primarily due to a tax credit investment

accounting change, partially offset by lower positive fair value

adjustments on equity investments8

1Q23

2Q23

3Q23

4Q23

1Q24

Refer to the Appendix included with this presentation for endnotes 1 to 23.

- Increased $17M QoQ primarily driven by the absence of the impact

of the Argentine peso devaluation

8

Front office software and data ($M)9

Future growth driven by Front, Middle and Alpha

Total

$3,101

$3,110

$2,691

$3,043

$3,138

YoY +1%

revenue

QoQ +3%

+32%

-20%

$162

$179

47

$130

52

$144

15

$109

14

On-premises10

33

31

6

29

27

Professional

22

services

25% YoY

Software-

78

82

85

89

94

Growth

enabled

(incl. SaaS)10

1Q23

2Q23

3Q23

4Q23

1Q24

1Q24 performance

  • Up 32% YoY primarily due to continued SaaS implementations and conversions, driving Professional services and Software-enabled revenue growth
  • Down (20)% QoQ primarily driven by lower On-premises renewals and installations

Refer to the Appendix included with this presentation for endnotes 1 to 23.

($M)

1Q23

4Q23

1Q24

Front office metrics

New bookings11

$2

$32

$10

ARR3

273

315

326

Uninstalled revenue backlog12

100

100

102

Middle office metric

Uninstalled revenue backlog13

104

102

106

Alpha metrics

# of mandate wins2

1

4

2

Live mandates to-date

12

18

21

Business momentum

  • 1Q24 ARR increased 19% YoY driven by 20+ SaaS client implementations and conversions since 1Q23
  • Reported 2 new Alpha mandates, including our second win associated with Alpha for Private Markets2
  • 3 mandates went live in 1Q24, bringing the total to 21 live mandates

9

NII and NIM ($M)14

Total

$3,101

$3,110

$2,691

$3,043

$3,138

YoY +1%

revenue

QoQ +3%

$766

-7%

+6%

$691

$716

$624

$678

1Q23

2Q23

3Q23

4Q23

1Q24

NIM14

1.31%

1.19%

1.12%

1.16%

1.13%

(FTE, %)

1Q24 performance

  • Down (7)% YoY largely due to deposit mix shift and lower average non- interest-bearing deposit balances, partially offset by the impact of higher average interest rates, client lending growth, and investment portfolio positions
  • Up 6% QoQ primarily driven by higher investment securities yields, average interest-bearing deposits and loan growth, partially offset by a decline in average non-interest-bearing deposits

Average balance sheet highlights ($B)A

1Q23

2Q23

3Q23

4Q23

1Q24

Total assets

$277

$275

$268

$279

$299

Cash15

81

73

66

75

95

Investment portfolio

107

108

105

103

101

HTM % (EOP)

60%

60%

60%

56%

52%

Duration (EOP) 16

2.8

2.7

2.7

2.7

2.7

Loans

34

34

35

37

38

Total deposits

$210

$206

$198

$207

$219

% Operational 17

75%

75%

75%

74%

73%

Average assets and liabilities

  • Assets increased 8% YoY and 7% QoQ primarily due to an increase in total deposits and higher balance sheet funding
  • Deposits increased 4% YoY and 6% QoQ mainly driven by growth in client balances, partially offset by a reduction in non-interest-bearing deposits

A Line items are rounded.

10

Refer to the Appendix included with this presentation for endnotes 1 to 23.

Attachments

  • Original Link
  • Original Document
  • Permalink

Disclaimer

State Street Corporation published this content on 12 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 April 2024 11:41:07 UTC.