Workflow
State Street(STT) - 2025 FY - Earnings Call Transcript
STTState Street(STT)2025-05-14 14:00

Financial Data and Key Metrics Changes - Full year fee and total revenue increased by 79% from 2023, with notable items excluded, fee revenue, net interest income, and total revenue each increased by 6% year over year in 2024 [13][14] - Earnings per share (EPS) was 8.21comparedto8.21 compared to 5.58 in 2023, with a year-over-year EPS growth of 13% excluding notable items [14] - Pre-tax margin expanded by more than 100 basis points, and return on average tangible common equity was 19% [14] Business Line Data and Key Metrics Changes - Investment Services generated strong assets under custody and administration (AUCA) wins of over 2.3trillionin2024,withsignificantyear−over−yearincreasesinnewservicingfeerevenuewins[14][15]−StateStreetAlphasolutionaccountedforapproximately502.3 trillion in 2024, with significant year-over-year increases in new servicing fee revenue wins [14][15] - State Street Alpha solution accounted for approximately 50% of the new AUCA wins, with seven new Alpha mandates achieved [15] - Investment Management franchise achieved record levels of management fees, generating 146 billion of net new assets in 2024 [17] Market Data and Key Metrics Changes - Despite lower average FX volatility in 2024, FX trading services generated double-digit revenue growth supported by strong client volumes [18] - The cash business generated 32billionofinflows,whiletheinstitutionalbusinessalsohadpositiveinflowsdrivenbyU.S.definedcontributions[17]CompanyStrategyandDevelopmentDirection−Thecompanyfocusedondrivingrevenuegrowth,improvingsalesperformance,andenhancingitsoperatingmodel,whichledtostrongfinancialperformanceandbusinessmomentum[12]−Strategicinvestmentsincapabilitiesandclientvaluepropositionhavepositionedthecompanytocompetebetterandwin[12][22]−Thecompanyaimstoreturnabout8032 billion of inflows, while the institutional business also had positive inflows driven by U.S. defined contributions [17] Company Strategy and Development Direction - The company focused on driving revenue growth, improving sales performance, and enhancing its operating model, which led to strong financial performance and business momentum [12] - Strategic investments in capabilities and client value proposition have positioned the company to compete better and win [12][22] - The company aims to return about 80% of earnings to shareholders in 2025, subject to market conditions [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the rapidly evolving operating environment and emphasized the importance of creating better outcomes for investors [11] - The company expressed strong conviction in its strategy and ability to serve clients well, despite current operating environment challenges [22] Other Important Information - The State Street Foundation invested nearly 22 million in 2024, focusing on education and workforce readiness initiatives [20] - The company announced the appointment of John F. Woods as the new Chief Financial Officer, expected to join in late August [21] Q&A Session Summary Question: Experience in the level of trust between first line managers and their teams - The board regularly reviews employee engagement scores, which include trust metrics, and has seen year-on-year improvement in these scores [48][50] Question: Why has State Street rebranded its ESG committee instead of eliminating it? - The company clarified that it does not have an ESG committee at either the board or management level, focusing instead on attracting and retaining talent through various management committees [53]