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 2022 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 is designed to be reviewed together with that news release and that Addendum, which are available
on State Street's website, athttp://investors.statestreet.com, and are 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.
1Q22 highlights
All comparisons are to corresponding prior year periods unless noted otherwise
Macro environmentFinancial performanceBusiness momentum
Balance sheet and capital
• Global inflationary environment driven by supply chain disruptions, broad-based pent-up demand, and pandemic related fiscal policies
• Heightened equity market volatility reflecting inflation, interest rates, the war in Ukraine and other macro factors
• Significantly higher interest rates, particularly in the belly of the curve with 5-Year Treasuries up ~120bps QoQ, driven by actual and anticipated central bank actions
• EPS of $1.57, up 15%; $1.59 ex-notable items, up 8%A
• Total revenue of $3.1B, up 4% ‒ Fee revenue up 4%, driven by higher Management fees, FX trading, and Front office software ‒ NII up 9% reflecting growth in investment portfolio and loan balances, as well as rising interest rates across the curve
• Total expenses of $2.3B, flat YoY; up 1% ex-notablesA ‒ Pre-tax margin up 3%pts; 2%pts ex-notablesA ‒ Positive total and fee operating leverage of 5%pts and 4%pts, respectively
• AUC/A of $41.7T at quarter-end; Servicing wins of $302B and business yet to be installed of $2.9T at quarter-end1
• Momentum across Front office software and Middle office services
• AUM of $4.0T at quarter-end, with strong quarterly net inflows of $51B1
• State Street Digital announced a collaboration with Copper.co to develop an institutional grade digital custody offering
• ROE of 9.5% and a CET1 ratio of 11.9% at quarter end2
• Returned $209M to shareholders through declared common dividends of $0.57 per share
• Previously announced BBH Investment Services acquisition regulatory review is ongoing
A Financial metrics ex-notable items are non-GAAP measures; refer to the Appendix for explanations and reconciliations of our non-GAAP measures. Refer to the Appendix included with this presentation for endnotes 1 to 16.
Summary of 1Q22 financial results
Quarters
%∆
(GAAP, $M, except EPS data, or where otherwise noted)
1Q21
4Q21
1Q22
4Q21
1Q21
1Q21 %∆ ex-currency translation A
Revenue:
Back office servicing fees Middle office services
2%
(2)
Servicing fees 1,369 1,377
2
Management fees
6
Foreign exchange trading services Securities finance
4
(3)
Front office software and data Lending related and other fees
45
(2)
Software and processing fees Other fee revenue
26
81
Total fee revenue Net interest income Other income
5 9
Total revenue $2,950 $3,053
5%
Provision for credit lossesTotal expenses $2,332 $2,330
1%
Net incomeDiluted earnings per share $1.37 $1.78
Return on average common equity 8.4% 10.3%
Pre-tax margin 21.3% 23.9%Tax rate
17.2% 4.6%
(12)% (0.8)%pts 0.6%pts 15.3%pts
15% 1.1%pts 3.2%pts 2.7%pts
Ex-notable items, non-GAAP A:
Total revenue $2,950 $2,995
Total expenses $2,293 $2,160
EPS $1.47 $2.00
Pre-tax margin 22.6% 28.1%
3% 7% (21)% (3.3)%pts
5% 2%
$1.57 9.5% 24.5% 19.9%
Acquisition and restructuring costs
($10)
Repositioning release / (charges)B
-
Deferred compensation expense acceleration
-
Preferred securities redemption (after-tax)
(5)
EPS impact
($0.10)
Notable Items | ||
Quarters | ||
1Q21 | 4Q21 | 1Q22 |
($26) | ($9) | |
3 | - | |
(147) | - | |
58 | - | |
- | - | |
($112) | ($9) | |
- | - | |
($0.22) | ($0.02) |
$3,081 $2,318 $1.59 24.8%
4% 1% 8% 2.2%pts
A These are non-GAAP presentations; ex-currency translation percentage changes are in reference to the YoY quarterly comparison between 1Q22 and 1Q21 which excludes the impact of foreign currency translation; refer to the Appendix for a reconciliation of ex-notable items/currency translation and further explanations of non-GAAP measures. B Net repositioning release of $3M in 4Q21 included $32M in Compensation and employee benefits partially offset by Occupancy cost of $(29)M related to real estate footprint rationalization. C Gain on sale of $58M in 4Q21 included in Other income a one-time sale of Libor and Euribor based securities previously classified as HTM. D Legal and other costs of $29M in 1Q21 included $20M in Information systems and communications, $8M in Transaction processing and $1M in Other expenses.
AUC/A and AUM levels, markets and flows performance
AUC/A and AUMA
Market indices3
AUC/A ($T, as of period-end)1
(% change)
+4%
-4%
• 4% increase from 1Q21 largely driven by:
S&P 500
EOP Daily Avg
$40.3
$43.7
$41.7
- Higher equity market levels, client flows, and net new business growth
MSCI EAFE
EOP Daily Avg
• (4)% decrease from 4Q21 primarily due to: - Lower market levels
MSCI EM
EOP Daily Avg
1Q21
4Q21
1Q22
Barclays Global Agg
EOP
AUM ($B, as of period-end)1
+12%
-3%
• 12% increase from 1Q21 mainly reflecting: - Higher market levels and net inflows
$4,138
$4,022
Long Term Funds
$3,591
• (3)% decrease from 4Q21 primarily due to:
Money Market
$165 156
ETF
- Lower market levels partially offset by net inflows of $51B
North America Total
EMEA Total
148 470 200
1Q21
4Q21
1Q22
A Changes to AUC/A and AUM also reflect currency translation. B Line items may not sum to total due to rounding. Refer to the Appendix included with this presentation for endnotes 1 to 16.
1Q22 vs | |
4Q21 | 1Q21 |
(5)% | 14% |
(3) | 15 |
(7) | (1) |
(4) | 1 |
(7) | (13) |
(5) | (13) |
(6) | (6) |
Select industry flows4 | |
($B) | |
$102 | ($66) |
201 | (134) |
157 | 181 |
459 | (18) |
299 | 53 |
Total flowsB | ||
1Q21 | 4Q21 | 1Q22 |
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State Street Corporation published this content on 14 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 April 2022 11:44:10 UTC.