Company Overview - State Street Corporation (STT) is based in Boston and operates in the Finance sector, with shares experiencing a price change of -8.46% this year [2] - The company currently pays a dividend of $0.69 per share, resulting in a dividend yield of 3.89%, which is higher than the Banks - Major Regional industry's yield of 3.69% and the S&P 500's yield of 1.59% [2] Dividend Performance - State Street's annualized dividend of $2.76 has increased by 4.5% from the previous year [2] - Over the past five years, the company has raised its dividend four times, achieving an average annual increase of 7.73% [2] - The current payout ratio is 35%, indicating that the company distributes 35% of its trailing 12-month earnings per share as dividends [2] Earnings Growth - The Zacks Consensus Estimate for State Street's earnings per share for 2024 is $7.94, reflecting a year-over-year growth rate of 3.66% [3] Investment Considerations - Dividends are favored by investors for various reasons, including improving stock investing profits and providing tax advantages [4] - Established firms with secure profits are typically viewed as the best dividend options, while high-growth businesses and tech start-ups rarely offer dividends [4] - State Street is considered a compelling investment opportunity due to its strong dividend profile and a Zacks Rank of 3 (Hold) [4]

Core Viewpoint - State Street (STT) is positioned for growth due to business servicing wins, strategic buyouts, a global presence, and high interest rates, but faces challenges from elevated expenses and a tough operating environment that may hinder fee income growth [1][4]. Group 1: Financial Performance - State Street has experienced a compound annual growth rate (CAGR) of 7.8% in net interest revenues (NIR) over the past three years, with NIR projected to decline by 4.9% in both 2024 and 2025, before rebounding with a growth rate of 3.9% in 2026 [1]. - The net interest margin (NIM) increased to 1.20% in 2023 from 1.03% in 2022, with previous years showing 0.74% in 2021 and 0.97% in 2020 [1]. - Total fee revenues saw a four-year CAGR of 1% from 2019 to 2023, driven by increased client activity and market volatility, with expectations for a CAGR of 3.3% by 2026 [2]. Group 2: Strategic Initiatives - State Street is enhancing its scale through strategic acquisitions, including the acquisition of CF Global Trading, which will improve its outsourced trading capabilities [3]. - The company has taken full ownership of its two joint ventures in India as part of its operational consolidation, aiming for revenue and cost synergies from these initiatives [3]. - The servicing assets yet to be installed were valued at $2.3 trillion in 2023, indicating potential for future revenue growth [2]. Group 3: Expense Management - Total non-interest expenses have shown a three-year CAGR of 3.2% (ended 2023), with expectations for a CAGR of 1.3% by 2026, driven by higher information systems and communications expenses [4]. - The company's largest revenue source, fee income, constituted almost 77% of total revenues in the first quarter of 2024, indicating a concentration risk that could impact financial stability [4].

Economic Outlook - The economy is likely to enter a downturn if the Federal Reserve delays cutting interest rates, as warned by Marija Veitmane, head of equity research at State Street Global Markets [1][2] - Delaying interest rate cuts can lead to significant economic problems, with a predicted scenario of "no landing then a crash" [2][3] Interest Rates and Corporate Impact - Higher interest rates are already affecting economic strength, with AAA long-term corporate bond yields rising to 5.28% in April, leading to increased debt refinancing costs for companies [2][3] - Companies in consumer sectors, such as Starbucks, are reporting weak quarterly performances, indicating strain from elevated borrowing costs [3] Consumer Behavior - Higher borrowing costs are impacting consumers, with commercial bank rates on credit cards reaching 21.6% in February, the highest in at least 30 years [3] - Retail spending is declining as consumers are "pinching pennies," reflecting a shift in consumer behavior due to economic pressures [3] Market Expectations - Markets are anticipating the Federal Reserve to maintain current interest rates in the upcoming policy meeting, with investors now expecting only one or two rate cuts for the year, down from six at the beginning of the year [4]

Financial Performance - Total fee revenue for Q1 2024 was $2,422 million, a 4% increase from $2,335 million in Q1 2023[32]. - Net interest income decreased by 7% to $716 million in Q1 2024 from $766 million in Q1 2023[32]. - Total revenue increased by 1% to $3,138 million in Q1 2024 compared to $3,101 million in Q1 2023[32]. - Net income available to common shareholders decreased by 20% to $418 million in Q1 2024 from $525 million in Q1 2023[32]. - Earnings per share (EPS) for Q1 2024 was $1.37, a 10% decrease from $1.54 in Q1 2023[34]. - Total expenses increased by 6% to $2,513 million in Q1 2024, with approximately 5% of the increase attributed to the FDIC special assessment[34]. - Provision for credit losses was $27 million in Q1 2024, down from $44 million in Q1 2023[36]. - Return on average common equity was 7.7% in Q1 2024, down from 9.3% in Q1 2023[34]. - The company returned approximately $308 million to shareholders through common share repurchases and dividends in Q1 2024[34]. Assets and Management - As of March 31, 2024, State Street Corporation reported total assets of $338.00 billion and total deposits of $251.88 billion[11]. - The company has $43.91 trillion in assets under custody/administration (AUC/A) and $4.34 trillion in assets under management (AUM) as of March 31, 2024[10]. - Consolidated total shareholders' equity stood at $24.43 billion, with approximately 46,000 employees[11]. - Total assets under custody and/or administration (AUC/A) reached $43.912 billion as of March 31, 2024, up from $41.810 billion at the end of 2023 and $37.635 billion a year earlier[68]. - As of March 31, 2024, total assets under management (AUM) were $4.336 billion, an increase from $4.128 billion at the end of 2023 and $3.618 billion a year earlier[81]. - Assets under management (AUM) increased by 20% to $4.3 trillion as of March 31, 2024, driven by higher market levels and net inflows[45]. - The geographic distribution of AUC/A as of March 31, 2024, was $31.610 billion in the Americas, $9.207 billion in Europe/Middle East/Africa, and $3.095 billion in Asia/Pacific[70]. Revenue Sources - Management fee revenue rose by 12% in Q1 2024 to $510 million, driven by higher average market levels[45]. - Software and processing fees revenue surged by 25% in Q1 2024 to $207 million, primarily due to higher front office software and data revenue[45]. - Servicing fees rose by 1% to $1,228 million in Q1 2024, influenced by higher average market levels, despite pricing headwinds and lower client activity[150][151]. - Total revenue for Investment Management grew by 9% to $551 million in Q1 2024, compared to $505 million in Q1 2023[154]. - Total revenue for Investment Servicing was stable at $2,587 million in Q1 2024, slightly down from $2,596 million in Q1 2023[150]. Competition and Risks - State Street faces intense competition and pricing pressure, which could negatively impact profitability and financial results[25]. - The company is subject to various strategic risks, including the integration and retention of benefits from acquisitions and joint ventures[25]. - Management's forward-looking statements indicate expectations regarding business growth and market conditions, which are subject to various risks and uncertainties[23]. Regulatory and Compliance - The company emphasizes the importance of regulatory capital and conducts annual stress tests under the Dodd-Frank Act[19]. - State Street's financial statements are prepared in conformity with U.S. GAAP, with certain non-GAAP measures used for internal evaluation[17]. - The standardized CET1 capital ratio decreased to 11.1% as of March 31, 2024, from 11.6% at the end of 2023[46]. Employee and Operational Metrics - Total headcount increased by 7% to 45,871 employees as of March 31, 2024, reflecting the consolidation of operations in India[135]. - Operating leverage was negative 4.9% in Q1 2024, primarily due to the increase in the FDIC special assessment[34]. Investment Securities and Loans - The total carrying value of available-for-sale securities increased to $48.64 billion from $44.53 billion as of December 31, 2023, representing an increase of approximately 9.5%[163]. - The total fair value of held-to-maturity securities decreased to $52.91 billion as of March 31, 2024, down from $57.12 billion as of December 31, 2023, a decline of about 7.7%[163]. - As of March 31, 2024, total loans increased to $38.635 billion from $36.631 billion as of December 31, 2023, representing a growth of approximately 5.5%[176]. - Domestic loans rose to $23.527 billion, up from $23.065 billion, driven by increases in fund finance loans, leveraged loans, and overdrafts[176]. - Foreign loans increased to $15.108 billion from $13.566 billion, primarily due to growth in fund finance loans, overdrafts, and collateralized loan obligations[176].

Financial Data and Key Metrics - Q1 2024 EPS was $1.37, or $1.69 excluding a notable item related to the FDIC special assessment [11] - Total fee revenue growth was achieved, with underlying expenses increasing just 1% year-over-year, excluding notable items [11] - Total capital return amounted to $308 million in Q1, consisting of common share dividends and share repurchases [17] - NII decreased 7% year-over-year but increased 6% sequentially to $716 million [28] - CET1 ratio was 11.1% at quarter-end, down 50 basis points quarter-on-quarter [33] Business Line Performance - Asset servicing AUC/A increased to a record $43.9 trillion, with $474 billion in AUC/A wins in Q1 [12] - FX trading services revenue was down 3% year-over-year but up 8% sequentially [25] - Securities finance revenues were down 12% year-over-year, mainly due to lower agency balances and spreads [26] - Front office software and data revenue increased 32% year-over-year, driven by SAS implementations [27] - Global Advisors management fees reached $510 million, the highest since Q1 2022 [14] Market Performance - Global equity markets performed strongly in Q1, with many indices setting records [10] - ETF AUM reached a record $1.4 trillion at quarter-end, with continued net inflows and market share gains in U.S. low-cost ETFs [15] - FX client volumes increased both sequentially and year-over-year, despite low FX volatility [14] Strategic Priorities and Industry Competition - The company's 2024 strategic priorities include growing fee revenue, extending leadership in markets and financing, optimizing the operating model, and differentiating through innovative client solutions [9] - The company is focusing on productivity improvements, including consolidating operations in India to unlock savings [16][31] - The company is leveraging its State Street Alpha platform to gain competitive advantage, with two new Alpha mandate wins in Q1 [13] Management Commentary on Operating Environment and Future Outlook - The company expects total fee revenue for the full year to be at the higher end of the prior guide of up 3% to 4% year-on-year [35] - Full-year NII is expected to be down approximately 5% year-on-year, better than the previous guide of down 11% [36] - The company expects full-year expenses, excluding notable items, to be up about 2.5% [36] - The company anticipates delivering additional positive fee operating leverage for the full year, excluding notable items [36] Other Important Information - The company completed the consolidation of its second operations joint venture in India on April 1, which is expected to drive productivity savings [16][31] - The company expects to return approximately 100% of earnings in 2024 in the form of common share dividends and share repurchases [17] Q&A Session Summary Question: NII Performance and Outlook - The strong NII performance in Q1 was driven by higher-than-expected deposit balances, particularly in March [81] - The company revised its full-year NII guidance to down 5% from the previous expectation of down 10%, due to higher deposit levels and fewer expected rate cuts [81] Question: Expense Management and Productivity - The consolidation of operations in India is expected to unlock significant productivity savings and improve operational efficiency [58][59] - The company is focusing on technology investments to replace repetitive tasks with AI and machine learning, reducing labor costs [60] Question: Servicing Fee Growth - The company expects servicing fee growth to improve as headwinds from client transitions and activity levels abate, and as new sales are installed [94][95] - The pipeline for new business remains strong, with a significant increase in sales targets for 2024 [98] Question: Capital Return and Tax Rate - The company reaffirmed its commitment to return approximately 100% of earnings to shareholders in 2024, with buyback activity expected to increase in the coming quarters [74] - The tax rate for the full year is expected to be in the range of 21% to 22% [76] Question: Pricing Environment for Servicing Business - The company has seen pricing headwinds of around 2% in the servicing business over the last four years, with no significant impact from inflation [89] - Fee schedules are negotiated as a package, with asset-based fees accounting for about half of the total [90]

Key Insights - State Street reported first-quarter revenue of $3.14 billion, a 1.2% increase, exceeding forecasts [1] - Fee revenue rose by 3.7% to $2.42 billion, contributing to the overall revenue growth [1] - Earnings per share (EPS) was $1.37, slightly below expectations [1] Asset Management Performance - Assets under custody/administration (AUC/A) increased by 16.7% to $43.9 trillion, setting a record high [1] - Assets under management (AUM) rose by 19.8% to $4.3 trillion, also a record high [1] Fee Revenue Breakdown - Fee revenues increased for servicing (+1%), management (+12%), and software and processing (+25%) [2] - Fee revenues declined for currency trading (-3%) and securities finance (-12%) [2] Management Commentary - CEO Ron O'Hanley noted that fee revenue growth was driven by strong performance in Global Advisors and Front office solutions, offsetting lower trading revenues [2] - The company aims to continue focusing on positive fee operating leverage through fee revenue growth [2] Stock Performance - State Street shares rose by 2.4% to $75.64 during intraday trading but are nearly 3% lower year-to-date in 2024 [2]

Core Insights - State Street Corporation (STT) reported $3.14 billion in revenue for Q1 2024, a year-over-year increase of 1.2% [1] - The EPS for the same period was $1.69, compared to $1.52 a year ago, reflecting a significant increase [1] - The revenue exceeded the Zacks Consensus Estimate by 2.54%, while the EPS surprised by 14.19% [1] Financial Performance Metrics - Net interest margin (FTE) was 1.1%, slightly below the estimated 1.2% [2] - Average balance of total interest-earning assets reached $254.33 billion, surpassing the estimated $232.96 billion [2] - Basel III Advanced Approaches - Tier 1 Leverage Ratio stood at 5.4%, matching the average estimate [2] - Basel III Standardized Approach - Tier 1 capital ratio was 13.8%, exceeding the estimated 12.8% [2] - Assets under Management (AUM) totaled $4,336 billion, above the estimated $4,267.34 billion [2] - Basel III Standardized Approach - Total capital ratio was 14.9%, higher than the estimated 13.9% [2] - Assets under Custody and/or Administration (AUC/A) reached $43,912 billion, significantly above the estimated $36,298.53 billion [2] - Net Interest Income was $716 million, exceeding the estimated $667.49 million [2] - Total fee revenue was $2.42 billion, slightly below the estimated $2.45 billion [2] - Net Interest Income on a fully taxable-equivalent basis was $717 million, above the estimated $668.54 million [2] - Software and processing fees were $207 million, slightly above the estimated $205.62 million [2] - Other fee revenue reached $50 million, exceeding the estimated $37.81 million [2] Stock Performance - Shares of State Street have returned +2.9% over the past month, outperforming the Zacks S&P 500 composite's +1.6% change [2] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market [2]

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 togeth ...

分组1 - State Street Corporation (STT) reported quarterly earnings of $1.69 per share, exceeding the Zacks Consensus Estimate of $1.48 per share, and up from $1.52 per share a year ago, representing an earnings surprise of 14.19% [1] - The company posted revenues of $3.14 billion for the quarter ended March 2024, surpassing the Zacks Consensus Estimate by 2.54%, and compared to year-ago revenues of $3.1 billion [1] - Over the last four quarters, State Street has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [1] 分组2 - State Street shares have declined approximately 4.6% since the beginning of the year, while the S&P 500 has gained 9% [2] - The current consensus EPS estimate for the upcoming quarter is $2.07 on revenues of $3.12 billion, and for the current fiscal year, it is $7.87 on revenues of $12.44 billion [4] - The Zacks Industry Rank for Banks - Major Regional is currently in the top 37% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [4]

Financial Performance - Total revenue for 2023 was $11,945 million, a decrease of 1.7% compared to 2022[4] - Net income available to common shareholders for 2023 was $1,821 million, down 31.6% from $2,660 million in 2022[4] - Total revenue for Q1 2024 was $2,587 million, a decrease of 0.3% year-over-year but an increase of 3.6% compared to Q4 2023[35] - Net income for Q1 2024 was $463 million, down 15.7% from Q1 2023, while net income available to common shareholders was $418 million, a decrease of 20.4% year-over-year[44] - Diluted earnings per share on a GAAP basis for Q1 2024 were $1.37, a decline of 9.9% compared to Q1 2023[44] Revenue and Fee Income - Total fee revenue for 1Q24 was $2,422 million, an increase of 3.7% year-over-year[7] - Total fee revenue increased to $1,876 million in Q1 2024, reflecting a 2.3% increase year-over-year and a 2.7% increase from Q4 2023[35] - Management fees for 1Q24 were $510 million, an increase of 11.6% compared to 1Q23[7] - Total fee revenue for 1Q24 was $2,422 million, representing a 3.7% increase compared to 1Q23 and a 2.4% increase from 4Q23[42] Assets and Liabilities - Assets under custody and/or administration increased to $41.81 trillion in 2023, up from $36.74 trillion in 2022[4] - Total assets increased to $298.57 billion in Q1 2024, reflecting a 7.6% increase from the previous quarter[9] - Total assets increased to $338,003 million as of March 31, 2024, representing a 16.2% increase year-over-year[12] - Total liabilities grew to $313,570 million, a 17.9% increase compared to the same period last year[12] - Total deposits rose to $218.89 billion, marking a 4.1% increase compared to Q4 2023[9] Capital and Equity - The company’s Tier 1 capital ratio was 13.4% for 2023, down from 15.4% in 2022[4] - Shareholders' equity totaled $24,433 million, a 2.7% increase from the previous quarter[12] - Total shareholders' equity increased from $23,621 million in 3Q23 to $24,433 million in 1Q24, reflecting a growth of 3.4%[52] - Common equity tier 1 capital ratio decreased from 12.2% in 3Q23 to 11.7% in 1Q24[54] Income and Expenses - Total expenses for 1Q24 were $2,513 million, a decrease of 10.9% from 4Q23[7] - Total expenses for Q1 2024 were $1,963 million, a decrease of 0.8% year-over-year but an increase of 9.8% from Q4 2023[35] - The company reported a total income before income tax expense of $597 million in Q1 2024, reflecting a decrease of 13.6% from Q4 2023[35] - The allowance for credit losses ending balance was $146 million in Q1 2024, down 9.9% year-over-year and 2.7% from Q4 2023[37] Investment and Securities - The total investment securities amounted to $101.5 billion, with 82% classified as HQLA[20] - The held-to-maturity portfolio was valued at $52.9 billion, with a significant portion in government and agency securities[23] - The fair value of mortgage-backed securities in the available-for-sale category was $5.8 billion, with a 99% rating[20] - The company reported a loss of $294 million on the sale of investment securities related to repositioning efforts[46] Market and Growth - The company is focusing on enhancing its investment management services and expanding its market presence through strategic initiatives[39] - Total Assets Under Management increased to $4.336 billion in 1Q24, reflecting a 19.8% growth year-over-year[28] - North America saw total flows of $212.2 billion in 1Q24, with ETFs contributing $265.2 billion, a significant increase[32]