EXPENSE SAVINGS PROGRAM TARGET INCREASED TO $400 MILLION, EXCEEDING INITIAL COST-SAVINGS GOAL FOR 2019; $175 MILLION OF SAVINGS ALREADY REALIZED YEAR-TO-DATE
NEW INVESTMENT SERVICING WINS OF $390 BILLION DURING QUARTER
FRONT-TO-BACK INVESTMENT SERVICING DEMAND INCREASING WITH FIRST MAJOR ANNOUNCEMENT AND STRONG PIPELINE
2019 CCAR CAPITAL PLAN INCLUDED INCREASE IN QUARTERLY DIVIDEND TO $0.52 PER SHARE AND COMMON STOCK REPURCHASES OF UP TO $2 BILLION
BOSTON–(BUSINESS WIRE)–Ron O’Hanley, President and Chief Executive Officer : “State Street is acting with urgency to adjust to a challenging external environment. We remain laser focused on steps we can immediately take both to improve financial performance and strengthen client service, including enhanced productivity, process re-engineering and greater resource discipline. Our 2019 expense program has delivered $175 million in savings year-to-date and we now expect to achieve a total of $400 million by year-end. On the revenue side, gross client wins were strong with almost $400 billion of new assets. I am encouraged by the continued momentum with Charles River Development, both in terms of new business on its platform but also due to the depth of the discussions we are having with a range of clients on adopting our leading front-to-back platform. We saw some moderation in industry headwinds and more stable fee revenues as we actively and systematically engage with clients. Moreover, our CCAR results were encouraging, confirming the effectiveness of our balance sheet repositioning last year and allowing us to increase capital return to shareholders.”
FINANCIAL HIGHLIGHTS
|
(Table presents summary results, dollars in millions, except per share amounts, or where otherwise noted) |
2Q19 |
1Q19 |
2Q18 |
|
% QoQ |
|
% YoY |
|
||||||||
|
Total fee revenue |
$ |
2,260 |
|
$ |
2,260 |
|
$ |
2,395 |
|
|
— |
% |
|
(5.6 |
)% |
|
|
Net interest income |
613 |
|
673 |
|
659 |
|
|
(8.9 |
) |
|
(7.0 |
) |
|
|||
|
Total revenue |
2,873 |
|
2,932 |
|
3,063 |
|
|
(2.0 |
) |
|
(6.2 |
) |
|
|||
|
Total expenses |
2,154 |
|
2,293 |
|
2,170 |
|
|
(6.1 |
) |
|
(0.7 |
) |
|
|||
|
Net income |
587 |
|
508 |
|
733 |
|
|
15.6 |
|
|
(19.9 |
) |
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Earnings per common share: |
|
|
|
|
|
|
|
|
||||||||
|
Diluted earnings per share |
$ |
1.42 |
|
$ |
1.18 |
|
$ |
1.88 |
|
|
20.3 |
% |
|
(24.5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Financial ratios and other metrics: |
|
|
|
|
|
|
|
|
||||||||
|
Return on average common equity |
10.1 |
% |
8.7 |
% |
14.7 |
% |
|
140 |
|
bps |
(460 |
) |
bps |
|||
|
Pre-tax margin |
25.0 |
|
21.7 |
|
29.1 |
|
|
330 |
|
|
(410 |
) |
|
|||
|
Average total assets ($ in billions) |
$ |
222 |
|
$ |
220 |
|
$ |
224 |
|
|
0.9 |
% |
|
(1.1 |
)% |
|
|
Average total deposits ($ in billions) |
157 |
|
155 |
|
163 |
|
|
0.8 |
|
|
(3.8 |
) |
|
|||
|
|
|
|
|
|
|
|
|
|
||||||||
(a) See 2Q19 Highlights in this News Release for a listing of notable items. Results excluding notable items are a non-GAAP presentation. Please refer to the Addendum included with this News Release for an explanation and reconciliation of non-GAAP measures.
2Q19 HIGHLIGHTS
(all comparisons are to 2Q18, unless otherwise noted)
AUC/A and AUM
• Investment Servicing AUC/A as of quarter-end decreased 3% primarily due to the near-completion of a previously announced client transition, partially offset by higher market levels.
• Investment Management AUM as of quarter-end increased 7% driven by higher equity markets and growth from institutional and ETF inflows, partially offset by cash outflows.
New Business
• Investment Servicing mandates announced in 2Q19 totaled $390 billion with quarter-end servicing assets remaining to be installed in future periods of $575 billion.
◦ Front-to-back investment servicing demand increasing with first major announcement and strong pipeline.
• Investment Management net inflows in 2Q19 of $20 billion driven by institutional and cash.
• Charles River Development (CRD) mandates in 2Q19 included annual contract value bookings of $31 million, including SSGA bookings.
Revenues
• Fee revenue decreased 6% reflecting lower servicing, management and markets revenues, partially offset by CRD:
◦ Compared to 1Q19, fee revenue was flat reflecting primarily stable servicing fees, higher management fees and lower processing fees.
◦ CRD generated $91 million in 2Q19 fee revenues and $45 million in pre-tax operating income before associated amortization expense and acquisition costs.
• Net interest income (NII) decreased 7% primarily due to lower noninterest-bearing deposit balances and accelerated mortgage backed securities (MBS) premium amortization from falling long rates.
Notable Items
|
(Dollars in millions, except EPS amounts) |
2Q19 |
1Q19 |
2Q18 |
||||||
|
Acquisition and restructuring costs (net) |
$ |
12 |
|
$ |
9 |
|
$ |
— |
|
|
Legal and related |
— |
|
14 |
|
— |
|
|||
|
Compensation and employee benefits |
— |
|
— |
|
61 |
|
|||
|
Occupancy |
— |
|
— |
|
16 |
|
|||
|
Repositioning costs |
— |
|
— |
|
77 |
|
|||
|
Total notable items (pre-tax) |
$ |
12 |
|
$ |
23 |
|
$ |
77 |
|
|
|
|
|
|
||||||
|
EPS impact |
$ |
(0.03 |
) |
$ |
(0.06 |
) |
$ |
(0.16 |
) |
Expenses
• Total expenses were down 1%, primarily reflecting the absence of prior year repositioning costs as well as savings from process re-engineering and resource discipline related to our expense savings program, partially offset by the impact of CRD expenses and increased technology investments;
◦ Excluding notable items, seasonal and CRD-related expenses, total expenses were down 1% compared to 2Q18 and were largely flat compared to 1Q19.
◦ Expense savings program announced in January 2019 achieved $175 million total savings year-to-date through resource discipline, process re-engineering and automation benefits.
• Total headcount increased 4% compared to 2Q18 driven by the impact of CRD and shift to low cost locations.
◦ Compared to 1Q19, total headcount was down 1%, the second sequential quarter decline, while strengthening client service.
◦ Year-to-date high cost location headcount reductions totaled over 1,800, exceeding initial 1,500 target, with new aggregate goal of 2,300 established for FY 2019.
Capital
• Returned $475 million to shareholders in 2Q19, consisting of $300 million common share repurchases and $175 million in common dividends.
• Estimated standardized Common Equity Tier 1 (CET1) of 11.4%, Tier 1 Leverage ratio of 7.6% and Supplementary Leverage Ratio (SLR) of 6.7% at quarter-end.
• Announced 2019 CCAR capital plan, including dividend increase to $0.52 per share and new common stock purchase program of up to $2.0 billion through 2Q20.
MARKET DATA, AUC/A AND AUM
The tables below provide a summary of selected financial information, key ratios, AUC/A, AUM, market indices and foreign exchange rates for the periods indicated as well as industry flow data for the indicated time periods.
|
(Dollars in billions, except market indices and foreign exchange rates) |
2Q19 |
1Q19 |
2Q18 |
|
% QoQ |
% YoY |
||||||||
|
|
|
|
|
|
|
|
||||||||
|
Assets under custody and administration (AUC/A)(1) (2) |
$ |
32,754 |
|
$ |
32,643 |
|
$ |
33,867 |
|
|
0.3 |
% |
(3.3 |
)% |
|
Assets under management (AUM)(2) |
2,918 |
|
2,805 |
|
2,723 |
|
|
4.0 |
|
7.2 |
|
|||
|
|
|
|
|
|
|
|
||||||||
|
Market Indices:(3) |
|
|
|
|
|
|
||||||||
|
S&P 500 daily average |
2,882 |
|
2,721 |
|
2,703 |
|
|
5.9 |
|
6.6 |
|
|||
|
S&P 500 EOP |
2,942 |
|
2,834 |
|
2,718 |
|
|
3.8 |
|
8.2 |
|
|||
|
MSCI EAFE daily average |
1,888 |
|
1,833 |
|
2,018 |
|
|
3.0 |
|
(6.4 |
) |
|||
|
MSCI EAFE EOP |
1,922 |
|
1,875 |
|
1,959 |
|
|
2.5 |
|
(1.9 |
) |
|||
|
MSCI Emerging Markets daily average |
1,045 |
|
1,033 |
|
1,138 |
|
|
1.2 |
|
(8.2 |
) |
|||
|
MSCI Emerging Markets EOP |
1,055 |
|
1,058 |
|
1,070 |
|
|
(0.3 |
) |
(1.4 |
) |
|||
|
Barclays Capital Global Aggregate Bond Index EOP |
506 |
|
489 |
|
478 |
|
|
3.5 |
|
5.9 |
|
|||
|
Foreign Exchange Volatility Indices:(3) |
|
|
|
|
|
|
||||||||
|
JPM G7 Volatility Index daily average |
6.1 |
|
7.4 |
|
7.3 |
|
|
(17.6 |
) |
(16.4 |
) |
|||
|
JPM Emerging Market Volatility Index daily average |
8.4 |
|
8.8 |
|
8.9 |
|
|
(4.5 |
) |
(5.6 |
) |
|||
|
|
|
|
|
|
|
|
||||||||
|
Average Foreign Exchange Rate: |
|
|
|
|
|
|
||||||||
|
Euro vs. USD |
1.123 |
|
1.136 |
|
1.192 |
|
|
(1.1 |
) |
(5.8 |
) |
|||
|
GBP vs. USD |
1.285 |
|
1.302 |
|
1.360 |
|
|
(1.3 |
) |
(5.5 |
) |
|||
(1) Includes assets under custody of $24,771 billion, $24,569 billion, and $25,415 billion, as of 2Q19, 1Q19, and 2Q18, respectively.
(2) As of period-end.
(3) The index names listed in the table are service marks of their respective owners.
INDUSTRY FLOW DATA
|
(Dollars in billions) |
2Q19 |
1Q19 |
4Q18 |
3Q18 |
2Q18 |
1Q18 |
||||||||||||
|
North America – ICI Market Data:(1) |
|
|
||||||||||||||||
|
Long Term Funds |
$ |
(35.7 |
) |
$ |
41.7 |
|
$ |
(308.8 |
) |
$ |
(50.4 |
) |
$ |
(28.3 |
) |
$ |
38.0 |
|
|
Money Market |
137.0 |
|
54.0 |
|
187.9 |
|
35.8 |
|
(51.7 |
) |
(52.2 |
) |
||||||
|
ETF |
73.5 |
|
45.8 |
|
105.0 |
|
87.2 |
|
55.8 |
|
62.8 |
|
||||||
|
Total ICI Flows |
$ |
174.8 |
|
$ |
141.5 |
|
$ |
(15.9 |
) |
$ |
72.6 |
|
$ |
(24.2 |
) |
$ |
48.6 |
|
|
|
|
|
|
|
|
|
||||||||||||
|
Europe – Broadridge Market Data:(2) |
|
|
||||||||||||||||
|
Long Term Funds |
$ |
(8.8 |
) |
$ |
5.7 |
|
$ |
(171.4 |
) |
$ |
(16.2 |
) |
$ |
(24.9 |
) |
$ |
160.5 |
|
|
Money Market |
21.3 |
|
(9.0 |
) |
62.4 |
|
(21.9 |
) |
(17.8 |
) |
(10.3 |
) |
||||||
|
Total Broadridge Flows |
$ |
12.5 |
|
$ |
(3.3 |
) |
$ |
(109.0 |
) |
$ |
(38.1 |
) |
$ |
(42.7 |
) |
$ |
150.2 |
|
(1) Industry data is provided for illustrative purposes only and is not intended to reflect the Company’s or its clients’ activity.
(2) 2Q19 data is on a rolling 3 month basis and includes March through May 2019 for EMEA (Copyright 2018 Broadridge Financial Solutions, Inc.)
INVESTMENT SERVICING AUC/A
|
(Dollars in billions) |
2Q19 |
1Q19 |
2Q18 |
% QoQ |
% YoY |
||||||||
|
Assets Under Custody and/or Administration |
|
|
|
|
|
||||||||
|
By Product Classification: |
|
|
|
|
|
||||||||
|
Mutual funds |
$ |
8,645 |
|
$ |
8,586 |
|
$ |
8,548 |
|
0.7 |
% |
1.1 |
% |
|
Collective funds, including ETFs |
9,272 |
|
9,436 |
|
9,615 |
|
(1.7 |
) |
(3.6 |
) |
|||
|
Pension products |
6,542 |
|
6,513 |
|
6,808 |
|
0.4 |
|
(3.9 |
) |
|||
|
Insurance and other products |
8,295 |
|
8,108 |
|
8,896 |
|
2.3 |
|
(6.8 |
) |
|||
|
Total Assets Under Custody and/or Administration |
$ |
32,754 |
|
$ |
32,643 |
|
$ |
33,867 |
|
0.3 |
|
(3.3 |
) |
|
By Financial Instrument: |
|
|
|
|
|
||||||||
|
Equities |
$ |
18,504 |
|
$ |
18,924 |
|
$ |
19,475 |
|
(2.2 |
) |
(5.0 |
) |
|
Fixed-income |
10,089 |
|
9,831 |
|
10,189 |
|
2.6 |
|
(1.0 |
) |
|||
|
Short-term and other investments |
4,161 |
|
3,888 |
|
4,203 |
|
7.0 |
|
(1.0 |
) |
|||
|
Total Assets Under Custody and/or Administration |
$ |
32,754 |
|
$ |
32,643 |
|
$ |
33,867 |
|
0.3 |
|
(3.3 |
) |
INVESTMENT MANAGEMENT AUM
The following table presents 2Q19 activity in AUM by product category.
|
(Dollars in billions) |
Equity |
Fixed- Income |
Cash |
Multi-Asset Class Solutions |
Alternative Investments(1) |
|
Total |
|||||||||||||
|
Beginning balance as of March 31, 2019 |
$ |
1,781 |
|
$ |
429 |
|
$ |
314 |
|
$ |
147 |
|
$ |
134 |
|
|
$ |
2,805 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Long-term institutional flows, net(2) |
13 |
|
1 |
|
(1 |
) |
3 |
|
— |
|
|
16 |
|
|||||||
|
ETF flows, net |
(5 |
) |
4 |
|
1 |
|
— |
|
— |
|
|
— |
|
|||||||
|
Cash fund flows, net |
— |
|
— |
|
4 |
|
— |
|
— |
|
|
4 |
|
|||||||
|
Total flows, net |
$ |
8 |
|
$ |
5 |
|
$ |
4 |
|
$ |
3 |
|
$ |
— |
|
|
$ |
20 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Market appreciation/(depreciation) |
61 |
|
14 |
|
1 |
|
5 |
|
5 |
|
|
86 |
|
|||||||
|
Foreign exchange impact |
5 |
|
2 |
|
— |
|
— |
|
— |
|
|
7 |
|
|||||||
|
Total market/foreign exchange impact |
$ |
66 |
|
$ |
16 |
|
$ |
1 |
|
$ |
5 |
|
$ |
5 |
|
|
$ |
93 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Ending balance as of June 30, 2019 |
$ |
1,855 |
|
$ |
450 |
|
$ |
319 |
|
$ |
155 |
|
$ |
139 |
|
|
$ |
2,918 |
|
|
(1) Includes real estate investment trusts, currency and commodities, including SPDR® Gold Shares ETF and SPDR® Long Dollar Gold Trust ETF. State Street is not the investment manager for the SPDR® Gold Shares ETF and the SPDR® Long Dollar Gold Trust ETF, but acts as the marketing agent.
(2) Amounts represent long-term portfolios, excluding ETFs.
REVENUE
|
(Dollars in millions) |
2Q19 |
1Q19 |
2Q18 |
|
% QoQ |
% YoY |
||||||||
|
Servicing fees |
$ |
1,252 |
|
$ |
1,251 |
|
$ |
1,381 |
|
|
0.1 |
% |
(9.3 |
)% |
|
Management fees |
441 |
|
420 |
|
465 |
|
|
5.0 |
|
(5.2 |
) |
|||
|
Foreign exchange trading services |
273 |
|
280 |
|
315 |
|
|
(2.5 |
) |
(13.3 |
) |
|||
|
Securities finance revenue |
126 |
|
118 |
|
154 |
|
|
6.8 |
|
(18.2 |
) |
|||
|
Processing fees and other revenue |
168 |
|
191 |
|
80 |
|
|
(12.0 |
) |
nm |
||||
|
Total fee revenue |
$ |
2,260 |
|
$ |
2,260 |
|
$ |
2,395 |
|
|
— |
|
(5.6 |
) |
|
|
|
|
|
|
|
|
||||||||
|
Net interest income |
613 |
|
673 |
|
659 |
|
|
(8.9 |
) |
(7.0 |
) |
|||
|
Gains (losses) related to investment securities, net |
— |
|
(1 |
) |
9 |
|
|
nm |
nm |
|||||
|
Total Revenue |
$ |
2,873 |
|
$ |
2,932 |
|
$ |
3,063 |
|
|
(2.0 |
) |
(6.2 |
) |
|
|
|
|
|
|
|
|
||||||||
|
Net interest margin (FTE) |
1.38 |
% |
1.54 |
% |
1.46 |
% |
|
(16) bps |
(8) bps |
|||||
Servicing fees decreased 9% compared to 2Q18 driven by challenging industry conditions including fee pressure, lower client activity and a previously announced client transition, partially offset by new business. Servicing fees were flat compared to 1Q19 due to higher average equity market levels and higher client flows and activity, offset by fee pressure.
Management fees decreased 5% compared to 2Q18 primarily reflecting the run rate impact of late 2018 outflows and mix changes away from higher fee products, partially offset by higher average equity market levels. Management fees were up 5% compared to 1Q19 primarily driven by higher average equity market levels and day count.
Foreign exchange trading services decreased 13% compared to 2Q18 and 3% compared to 1Q19 primarily due to lower market volatility and spreads.
Securities finance decreased 18% compared to 2Q18 reflecting the 2H18 balance sheet optimization efforts, and increased 7% compared to 1Q19 primarily due to seasonal activity.
Processing fees and other increased compared to 2Q18 reflecting CRD revenue contribution, which was acquired in 4Q18. Processing fees were down 12% compared to 1Q19 driven by lower market-related adjustments and tax advantaged investment income, as well as lower CRD revenue due to the timing of revenue recognition standards for certain contracts under the new accounting standards.
- In 2Q19, CRD contributed $86 million of revenue.
Net interest income decreased 7% compared to 2Q18 and 9% compared to 1Q19 primarily due to lower noninterest-bearing deposit balances and accelerated MBS premium amortization from falling long rates. Net interest margin (NIM) on a fully taxable-equivalent basis decreased 8 basis points compared to 2Q18 and 16 basis points compared to 1Q19 primarily due to the same factors and a stable balance sheet.
EXPENSES
|
(Dollars in millions) |
2Q19 |
1Q19 |
2Q18 |
|
% QoQ |
% YoY |
||||||||
|
Compensation and employee benefits |
$ |
1,084 |
|
$ |
1,229 |
|
$ |
1,125 |
|
|
(11.8 |
)% |
(3.6 |
)% |
|
Information systems and communications |
365 |
|
362 |
|
321 |
|
|
0.8 |
|
13.7 |
|
|||
|
Transaction processing services |
245 |
|
242 |
|
257 |
|
|
1.2 |
|
(4.7 |
) |
|||
|
Occupancy |
115 |
|
116 |
|
124 |
|
|
(0.9 |
) |
(7.3 |
) |
|||
|
Acquisition and restructuring costs |
12 |
|
9 |
|
— |
|
|
33.3 |
|
nm |
||||
|
Amortization of other intangible assets |
59 |
|
60 |
|
48 |
|
|
(1.7 |
) |
22.9 |
|
|||
|
Other |
274 |
|
275 |
|
295 |
|
|
(0.4 |
) |
(7.1 |
) |
|||
|
Total Expenses |
$ |
2,154 |
|
$ |
2,293 |
|
$ |
2,170 |
|
|
(6.1 |
) |
(0.7 |
) |
|
|
|
|
|
|
|
|
||||||||
|
Total expenses, excluding notable items and seasonal expense items |
$ |
2,142 |
|
$ |
2,133 |
|
$ |
2,093 |
|
|
0.4 |
|
2.3 |
|
|
|
|
|
|
|
|
|
||||||||
|
Effective tax rate |
18.1 |
% |
20.1 |
% |
17.7 |
% |
|
(200) bps |
40 bps |
|||||
Total expenses were down 1% from 2Q18, primarily reflecting the absence of prior year repositioning costs as well as savings from process re-engineering and resource discipline related to our expense savings program, partially offset by the impact of CRD expenses and increased technology investments. Total expenses decreased 6% compared to 1Q19 driven by the absence of seasonal compensation expenses. Adjusted for notable items, seasonal expenses, and $63 million of CRD-related costs, total expenses were down 1% compared to 2Q18 and largely flat to 1Q19.
Compensation and employee benefits decreased 4% compared to 2Q18 driven by the absence of prior year repositioning costs as well as savings from the process re-engineering and resource discipline savings initiatives, partially offset by the impact of CRD. Compensation and employee benefits decreased 12% compared to 1Q19 primarily due to the absence of seasonal compensation expenses and lower performance based incentives.
Information systems and communications increased 14% compared to 2Q18 largely reflecting higher development costs, technology infrastructure enhancements and investments to support business growth. Compared to 1Q19, information systems and communications increased 1% largely reflecting higher development costs and investments to support business growth.
Transaction processing services decreased 5% compared to 2Q18 due to lower sub-custodian costs and increased 1% versus 1Q19 due to higher brokerage volumes.
Occupancy decreased 7% compared to 2Q18 primarily driven by the absence of prior year costs related to real estate footprint right-sizing. Occupancy expense was largely flat compared to 1Q19.
Amortization of other intangible assets increased 23% compared to 2Q18 primarily due to the CRD acquisition. Amortization of intangible assets decreased 2% compared to 1Q19.
Other expenses decreased 7% compared to 2Q18 primarily reflecting lower insurance, professional services and travel costs. Compared to 1Q19, other expenses were largely flat.
The effective tax rate in 2Q19 was 18.1% compared to 17.7% in 2Q18 and 20.1% in 1Q19. Compared to 2Q18, the effective tax rate increased due to lower stock-based compensation benefit, partially offset by tax advantaged investments. Compared to 1Q19, the effective tax rate decreased due to tax advantaged investments.
CAPITAL AND LIQUIDITY
The following table presents preliminary estimates of regulatory capital ratios for State Street Corporation.
|
June 30, 2019(1) |
2Q19 |
1Q19 |
2Q18 |
|||
|
Basel III Standardized Estimated Fully Phased-In: |
|
|
|
|||
|
Common Equity Tier 1 ratio |
11.4 |
% |
11.5 |
% |
11.3 |
% |
|
Tier 1 capital ratio |
14.9 |
|
15.0 |
|
14.3 |
|
|
Total capital ratio |
15.5 |
|
15.9 |
|
15.1 |
|
|
|
|
|
|
|||
|
Tier 1 leverage ratio |
7.6 |
|
7.4 |
|
7.1 |
|
|
Supplementary leverage ratio |
6.7 |
|
6.6 |
|
6.2 |
|
(1) Estimated pro-forma fully phased-in ratios as of June 30, 2019 reflect capital and total risk-weighted assets calculated under the Basel III final rule.
Standardized CET1, Tier 1, Total Capital ratios and Tier 1 Leverage ratio and SLR were largely flat compared to 2Q18 and 1Q19.
Returned $475 million to shareholders in 2Q19 consisting of $300 million common share repurchases and $175 million in common dividends. Repurchased 4.6 million common shares in 2Q19 and declared 2Q19 quarterly common share dividend of $0.47 per share.
Announced 2019 CCAR capital plan, including dividend increase to $0.52 per share and new common stock purchase program of up to $2.0 billion through 2Q20.
Preliminary estimated average liquidity coverage ratio (LCR) for State Street Corporation of approximately 111% at quarter-end.
INVESTOR CONFERENCE CALL AND QUARTERLY WEBSITE DISCLOSURE
State Street will webcast an investor conference call today, Friday, July 19th, 2019, at 10:00 a.m. EDT, available at http://investors.statestreet.com/. The conference call will also be available via telephone, at (866) 211-3118 inside the U.S. or at (647) 689-6605 outside of the U.S. The Conference ID# is 7279177.
Recorded replays of the conference call will be available on the website and by telephone at (800) 585-8367 or (416) 621-4642 beginning approximately two hours after the call’s completion. The Conference ID# is 7279177.
The telephone replay will be available for approximately two weeks following the conference call. This News Release, presentation materials referred to on the conference call and additional financial information are available on State Street’s website, at http://investors.statestreet.com/ under “Investor Relations–Investor News & Events” and under the title “Events and Presentations.”
State Street intends to publish updates to its public disclosure regarding regulatory capital, as required by the Basel III final rule, and the liquidity coverage ratio, on a quarterly basis on its website at http:// investors.statestreet.com/, under “Filings & Reports.” Those updates will be published each quarter, during the period beginning after State Street’s public announcement of its quarterly results of operations and ending on or prior to the due date under applicable bank regulatory requirements (i.e., ordinarily, ending no later than 60 days following year-end or 45 days following each other quarter-end, as applicable). For 2Q19, State Street expects to publish its updates during the period beginning today and ending on or about August 14, 2019.
State Street Corporation (NYSE: STT) is the world’s leading provider of financial services to institutional investors including investment servicing, investment management and investment research and trading. With $32,754 billion in assets under custody and administration and $2,918 billion* in assets under management as of June 30, 2019, State Street operates globally in more than 100 geographic markets and employs approximately 40,000 worldwide. For more information, visit State Street’s website at www.statestreet.com.
* Assets under management include the assets of the SPDR® Gold ETF and the SPDR® Long Dollar Gold Trust ETF (approximately $36 billion as of June 30, 2019), for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) serves as marketing agent; SSGA FD and State Street Global Advisors are affiliated.
IN THIS NEWS RELEASE:
- In this News Release expenses are sometimes presented excluding notable items, seasonal and CRD expenses (i.e., seasonal deferred incentive compensation expenses for retirement-eligible employees and payroll taxes). This is a non-GAAP presentation. See the Addendum to this News Release for an explanation and reconciliations of our non-GAAP measures and CRD expenses.
- State Street’s common stock and other stock dividends, including the declaration, timing and amount, remain subject to consideration and approval by State Street’s Board of Directors at the relevant times. State Street’s $2 billion common stock repurchase authorization was effective beginning July 1, 2019 and covers the period ending June 30, 2020. Stock purchases may be made using various types of transactions, including open-market purchases, accelerated share repurchases or other transactions off the market, and may be made under Rule 10b5-1 trading programs. The timing of stock purchases, type of transaction and number of shares purchased will depend on several factors, including market conditions and State Street’s capital position, its financial performance, the amount of common stock issued as part of employee compensation programs and investment opportunities. The common stock purchase program does not have specific price targets and may be suspended at any time.
- Process re-engineering and automation savings, as presented in this News Release, can include high-cost location workforce reductions, reducing manual/bespoke activities, reducing redundant activities, streamlining operational centers and moves to common platforms/retiring legacy applications. Resource discipline benefits, as presented in this News Release, can include reducing senior management headcount, rigorous performance management, vendor management and optimization of real estate.
- CRD revenue of $91M includes $86 million in processing fees and other revenue and $5 million in FX trading services. CRD annual contract value bookings represent signed annual recurring revenue contract value. CRD revenue of $86 million in processing fees and other revenue includes project-related fees associated with affiliates, including State Street Global Advisors (SSGA), of approximately $4 million. CRD annual contract value bookings of $31 million includes $25 million of bookings with affiliates, including SSGA. CRD revenue derived from affiliate agreements is eliminated in consolidation for financial reporting purposes.
- New asset servicing mandates, including announced front-to-back investment servicing clients, may be subject to completion of definitive agreements, approval of applicable boards and shareholders and customary regulatory approvals. New asset servicing mandates and servicing assets remaining to be installed in future periods exclude new business which has been contracted, but for which the client has not yet provided permission to publicly disclose and is not yet installed. These excluded assets, which from time to time may be significant, will be included in new asset servicing mandates and reflected in servicing assets remaining to be installed in the period in which the client provides its permission. Servicing mandates and servicing assets remaining to be installed in future periods are presented on a gross basis and therefore also do not include the impact of clients who have notified us during the period of their intent to terminate or reduce their relationship with State Street, which from time to time may be significant. New business in assets to be serviced is reflected in our AUC/A after we begin servicing the assets, and new business in assets to be managed is reflected in our AUM after we begin managing the assets.
Contacts
State Street Corporation
Investor Contact: Ilene Fiszel Bieler +1 617/664-3477
Media Contact: Marc Hazelton +1 617/513-9439
