We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Share Name | Share Symbol | Market | Type |
---|---|---|---|
State Street Corporation | NYSE:STT | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.62 | 0.85% | 73.82 | 74.235 | 73.48 | 73.91 | 294,933 | 15:16:19 |
1Q18 Revenue of $3.0 Billion, up 13% Compared to 1Q17, Reflecting Strength in Servicing Fees and Net Interest Income
Assets under Custody and Administration of $33.3 Trillion and Assets under Management of $2.7 Trillion, up 12% and 7%, Respectively, Compared to 1Q17, Driven by Strength in Equity Markets and New Business
Record $1.3 Trillion of Newly Announced Servicing Mandates
In announcing today’s financial results, Joseph L. Hooley, State Street’s Chairman and Chief Executive Officer, said, "First-quarter 2018 results reflect strong growth in both fee revenue and net interest income. Servicing fees increased 10% from 1Q17, reflecting strength in equity markets and continued strong business momentum."
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20180420005150/en/
Hooley added, "We continue to execute on State Street Beacon, enhancing the client experience by providing new solutions and insights, while driving efficiencies across the organization. As a result of our multi-year investment in technology, we have been able to win new mandates and expand existing relationships as demonstrated by the record level of new servicing commitments of $1.3 trillion in 1Q18."
Hooley concluded, "We are well positioned to achieve the financial objectives for 2018 we announced in January, while remaining focused on servicing our clients and investing in new products and offerings."
1Q18 Highlights
AUCA/AUM
Revenue
Expenses(2)
(1) We expect that for the remainder of the year newly announced asset servicing mandates will return to levels more commonly reflected historically. See “Additional Information” below in this news release for a description of our calculation methodology for newly announced asset servicing mandates.(2) Effects of the new Revenue Recognition Standard (ASU 2014-09): The newly effective revenue recognition standard increased 1Q18 total fee revenue and total expenses by approximately $65 million each. Relative to 1Q17, the new revenue recognition standard contributed 3% to both fee revenue growth and expense growth. The revenue impact was approximately $45 million in management fees, $15 million in trading services, and $5 million across other revenue line items. The expense impact was approximately $15 million in transaction processing, $45 million in other expenses, and $5 million across other expense line items.
Capital
Financial Results
(Table presents summary results,dollars in millions, except per share amounts,or where otherwise noted)
1Q18 4Q17Increase(Decrease)
1Q17Increase(Decrease)
Total fee revenue(1) $ 2,363 $ 2,230 6.0 % $ 2,198 7.5 % Net interest income 658 616 6.8 510 29.0 Total revenue 3,019 2,846 6.1 2,668 13.2 Provision for loan losses — (2 ) nm (2 ) nm Total expenses(1) 2,256 2,131 5.9 2,086 8.1 Net income available to common shareholders 605 334 81.1 446 35.7 Earnings per common share: Diluted earnings per share 1.62 0.89 82.0 1.15 40.9 Financial ratios: Quarterly average total assets 226,870 216,348 4.9 219,209 3.5 Fee operating leverage(2) 9 bps (64 ) bps Operating leverage(2) 21 501 Return on average common equity 12.8 % 6.9 % 590 9.9 % 290 Return on tangible common equity(3) 20.1 16.7 340 16.0 410 Pre-tax margin (GAAP-basis) 25.3 25.2 10 21.9 340 Pre-tax margin (historical Operating-basis) 27.4 33.1 (570 ) 26.1 130 Effective tax rate(4) 13.5 48.4 (3,490 ) 14.0 (50 )(1) Effects of the new Revenue Recognition Standard (ASU 2014-09): The newly effective revenue recognition standard increased 1Q18 total fee revenue and total expenses by approximately $65 million each. Relative to 1Q17, the new revenue recognition standard contributed 3% to both fee revenue growth and expense growth. The revenue impact was approximately $45 million in management fees, $15 million in trading services, and $5 million across other revenue line items. The expense impact was approximately $15 million in transaction processing, $45 million in other expenses, and $5 million across other expense line items.(2) The financial ratio represents the rate of growth of total revenue (or fee revenue) less the rate of growth of expenses relative to the preceding or prior year period, as applicable.(3) Return on tangible common equity is calculated by dividing year-to-date annualized net income available to common shareholders (GAAP-basis) by tangible common equity. For additional information on the Reconciliation of Tangible Common Equity Ratio refer to the addendum included with this News Release.(4) As a result of the enactment of the Tax Cuts and Jobs Act, the fourth-quarter of 2017 included a one-time estimated net cost of $250 million. The impact of this item on the GAAP-basis effective tax rate for the fourth-quarter of 2017 was 13.2%.nm Not meaningful
Summary of Notable Items
Pre-tax impact(Dollars in millions, except per share data) 1Q18 4Q17 1Q17 Revenue: Gains on sales of businesses $ — $ — $ 30 Investment portfolio repositioning — — (40 ) Tax Cuts & Jobs Act (TCJA) impact(1) (20 ) — Expense: Acquisition & restructuring costs —(133
)
29 Tax: Tax Cuts & Jobs Act (TCJA) impact(1) —(250
)
— Total EPS Impact $ — $ (0.94 ) $ (0.06 )(1) The effects of the TCJA described in this presentation are estimates. Actual effects of the TCJA may differ from these estimates, among other things, due to additional tax and regulatory guidance and changes in State Street assumptions and interpretations.
Selected Financial Information and Metrics
The tables below provide a summary of selected financial information and key ratios for the indicated periods.
The following table presents AUCA, AUM, market indices and average foreign exchange rates for the periods indicated.
(Dollars in billions, except marketindices and foreign exchange rates)
1Q18 4Q17Increase(Decrease)
1Q17Increase(Decrease)
Assets under custody and administration(1)(2) $ 33,284 $ 33,119 0.5 % $ 29,833 11.6 % Assets under management(2) 2,729 2,782 (1.9 ) 2,561 6.6 Market Indices(3):S&P 500® daily average
2,733 2,603 5.0 2,326 17.5 MSCI EAFE® daily average 2,072 2,005 3.3 1,749 18.5 MSCI® Emerging Markets daily average 1,204 1,125 7.0 927 29.9 HFRI Asset Weighted Composite® monthly average 1,406 1,386 1.4 1,323 6.3 Barclays Capital U.S. Aggregate Bond Index® period-end 2,016 2,046 (1.5 ) 1,993 1.2 Barclays Capital Global Aggregate Bond Index® period-end 491 485 1.2 459 7.0 Average Foreign Exchange Rate (Euro vs. USD) 1.229 1.178 4.3 1.065 15.4 Average Foreign Exchange Rate (GBP vs. USD) 1.391 1.328 4.7 1.239 12.3(1) Includes assets under custody of $25,046 billion, $25,020 billion and $22,505 billion, as of 1Q18, 4Q17, and 1Q17, respectively.(2) As of period-end.(3) The index names listed in the table are service marks of their respective owners.
Assets Under ManagementThe following table presents 1Q18 activity in AUM by product category.
(Dollars in billions) EquityFixed-Income
Cash(2)Multi-Asset-ClassSolutions
AlternativeInvestments(3)
Total Balance as of December 31, 2017 $ 1,745 $ 414 $ 330 $ 147 $ 146 $ 2,782 Long-term institutional inflows(1) 62 47 — 19 6 134 Long-term institutional outflows(1) (109 ) (29 ) — (18 ) (5 ) (161 ) Long-term institutional flows, net (47 ) 18 — 1 1 (27 ) ETF flows, net (8 ) 2 1 — — (5 ) Cash fund flows, net — — 6 — — 6 Total flows, net (55 ) 20 7 1 1 (26 ) Market appreciation (28 ) (5 ) (2 ) (3 ) (2 ) (40 ) Foreign exchange impact 8 4 1 1 (1 ) 13 Total market/foreign exchange impact (20 ) (1 ) (1 ) (2 ) (3 ) (27 ) Balance as of March 31, 2018 $ 1,670 $ 433 $ 336 $ 146 $ 144 $ 2,729(1) Amounts represent long-term portfolios, excluding ETFs.(2) Includes both floating and constant-net-asset-value portfolios held in commingled structures or separate accounts.(3) 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.
Revenue
(Dollars in millions) 1Q18 4Q17Increase(Decrease)
1Q17Increase(Decrease)
Servicing fees $ 1,421 $ 1,379 3.0 % $ 1,296 9.6 % Management fees 472 418 12.9 382 23.6 Trading services revenue 304 248 22.6 275 10.5 Securities finance revenue 141 147 (4.1 ) 133 6.0 Processing fees and other revenue 25 38 (34.2 ) 112 (77.7 ) Total fee revenue(1) 2,363 2,230 6.0 2,198 7.5 Net interest income 658 616 6.8 510 29.0 Gains (losses) related to investment securities, net (2 ) —nm
(40 ) (95.0 ) Total Revenue $ 3,019 $ 2,846 6.1 $ 2,668 13.2 Net interest margin 1.43 % 1.38 % 5 bps 1.17 % 26 bps(1) Effects of the new Revenue Recognition Standard (ASU 2014-09): The newly effective revenue recognition standard increased 1Q18 total fee revenue by approximately $65 million. Relative to 1Q17, the new revenue recognition standard contributed 3% to fee revenue growth. The revenue impact was approximately $45 million in management fees, $15 million in trading services, and $5 million across other revenue line items.nm Not meaningful
Servicing fees increased from 1Q17, primarily due to higher global equity markets, new business, client activity, and the favorable impact of currency translation, partially offset by modest hedge fund outflows. Compared to 4Q17, servicing fees increased, primarily due to new business, increased client activity, and stronger global equity markets.
Management fees increased from 1Q17, primarily due to higher global equity markets, the favorable impact of currency translation, and the adoption of the new revenue recognition accounting standard. Compared to 4Q17, management fees increased, primary due to higher global equity markets and the adoption of the new revenue recognition accounting standard.
Trading Services revenue increased from 1Q17, primarily due to stronger client FX volumes and higher electronic trading activity. Compared to 4Q17, trading services revenue increased due primarily to higher FX volatility, client volumes, and higher electronic trading activity.
Securities finance revenue increased from 1Q17, reflecting higher lending activity from the agency business. Compared to 4Q17, securities finance revenue decreased due to modestly lower revenue related to enhanced custody on lower balances.
Processing fees and other revenue decreased from 1Q17, largely reflecting the absence of a $30 million one-time gain in 1Q17 from the sale of a business and the episodic impact of $22 million in higher FX swap costs not included in the net interest income deposit hedging program. Compared to 4Q17, processing fees and other revenue decreased, reflecting seasonally lower software fees.
Net interest income increased from 1Q17, primarily due to higher U.S. market interest rates, disciplined liability pricing, higher client balances, and a continued shift away from wholesale CDs. Net interest margin increased 26 basis points compared to 1Q17, driven by higher U.S. market interest rates, disciplined liability pricing, higher client balances, and a continued shift away from wholesale CDs. Compared to 4Q17, NII increased primarily due to higher U.S. market interest rates, partially offset by lower day count. Compared to 4Q17, net interest margin increased 5 basis points, reflecting higher U.S. market interest rates, partially offset by a lower tax equivalent adjustment on municipal bonds and a larger balance sheet.
Expenses
(Dollars in millions) 1Q18 4Q17Increase(Decrease)
1Q17Increase(Decrease)
Compensation and employee benefits $ 1,249 $ 1,067 17.1 % $ 1,166 7.1 % Information systems and communications 315 301 4.7 287 9.8 Transaction processing services 242 219 10.5 197 22.8 Occupancy 120 117 2.6 110 9.1 Acquisition and restructuring costs(1) — 133 (100.0 ) 29 (100.0 ) Other 330 294 12.2 297 11.1 Total Expenses(2) $ 2,256 $ 2,131 5.9 $ 2,086 8.1(1) In 4Q17 and 1Q17, the restructuring costs associated with Beacon were $133 million and $16 million, respectively.(2) Effects of the new Revenue Recognition Standard (ASU 2014-09): The newly effective revenue recognition standard increased 1Q18 total expenses by approximately $65 million. Relative to 1Q17, the new revenue recognition standard contributed 3% to expense growth. The expense impact was approximately $15 million in transaction processing, $45 million in other expenses, and $5 million across other expense line items.
Compensation and employee benefits expenses increased from 1Q17, primarily due to increased costs to support new business, annual merit and performance-based incentives, and the unfavorable impact of currency translation, partially offset by Beacon savings. Compared to 4Q17, compensation and employee benefits expenses increased primarily due to higher expenses associated with the seasonal deferred incentive compensation for retirement-eligible employees, as well as seasonal payroll taxes, and increased costs to support new business.
Information systems and communications expenses increased from both 1Q17 and 4Q17. The increase from both periods is due to higher technology costs.
Transaction processing services expenses increased from both 1Q17 and 4Q17. The increase from both periods reflects higher client volumes and higher market levels.
Occupancy expenses increased from 1Q17, primarily reflecting Beacon-related global footprint investments.
Acquisition and restructuring expenses decreased from 1Q17, primarily related to lower acquisition costs and Beacon restructuring charges. Compared to 4Q17, acquisition and restructuring expenses decreased due to lower Beacon-related restructuring charges.
Other expenses increased from 1Q17 and 4Q17. The increase from both periods primarily reflects the adoption of the new revenue recognition accounting standard.
The 1Q18 GAAP-basis effective tax rate was 13.5% compared to 14.0% in 1Q17 and 48.4% in 4Q17. The 4Q17 tax rate included a one-time estimated net tax cost of $250 million as a result of the enactment of the Tax Cuts and Jobs Act (TCJA). The decrease in 1Q18 tax rate compared to 1Q17 reflects the impact of the lower U.S. tax rate under the TCJA partially offset by a reduction in tax advantaged investments and fewer discrete items.
The following table presents regulatory capital ratios as of March 31, 2018 and December 31, 2017. The lower of capital ratios calculated under the Basel III advanced approaches and under the Basel III standardized approach are applied in the assessment of our capital adequacy for regulatory purposes. Also presented is the calculation of State Street's supplementary leverage ratio (SLR). Unless otherwise noted, all capital ratios presented in the table and elsewhere in this News Release refer to State Street Corporation.
March 31, 2018(1)TransitionalBasel IIIAdvancedApproaches(2)
TransitionalBasel IIIStandardizedApproach
Basel III FullyPhased-InAdvancedApproaches(Estimated)Pro-Forma(2)(3)
Basel III FullyPhased-InStandardizedApproach (Estimated)Pro-Forma(3)
Common equity tier 1 ratio N/A N/A12.1
%
10.8
%
Tier 1 capital ratio N/A N/A 15.4 13.7 Total capital ratio N/A N/A 16.3 14.6 Tier 1 leverage ratio N/A N/A 6.9 6.9 December 31, 2017 Common equity tier 1 ratio 12.3 % 11.9 %12.0
%
11.6
%
Tier 1 capital ratio 15.5 15.0 15.2 14.7 Total capital ratio 16.5 16.0 16.2 15.7 Tier 1 leverage ratio 7.3 7.3 7.2 7.2As of March 31, 2018(Dollars in millions)(1)
Transitional SLR
Fully Phased-In SLR(4) Tier 1 Capital
N/A
$ 15,143 Total assets for SLR
N/A
252,360 Supplementary Leverage Ratio
N/A
6.0
%
As of December 31, 2017(Dollars in millions)
Tier 1 Capital
$
15,382
$ 15,080 Total assets for SLR
236,986
236,708 Supplementary Leverage Ratio
6.5
%
6.4
%
(1) March 31, 2018 capital ratios are preliminary estimates.(2) The advanced approaches-based ratios (actual and estimated) included in this presentation reflect calculations and determinations with respect to our capital and related matters, based on State Street and external data, quantitative formulae, statistical models, historical correlations and assumptions, collectively referred to as “advanced systems.” Refer to the addendum included with this News Release for a description of the advanced approaches and a discussion of related risks. Effective January 1, 2018, the applicable final rules are in effect and the ratios presented are calculated based on fully phased-in CET1, tier 1 and total capital numbers.(3) Estimated pro-forma fully phased-in ratios as of December 31, 2017 reflect capital and total risk-weighted assets calculated under the Basel III final rule. Refer to the addendum included with this News Release for reconciliations of these estimated pro-forma fully phased-in ratios to our capital ratios calculated under the then applicable regulatory requirements. Effective January 1, 2018, the applicable final rules are in effect and the ratios presented are calculated based on fully phased-in CET1, tier 1 and total capital numbers.(4) Estimated pro-forma fully phased-in SLRs as of December 31, 2017 (fully phased-in as of January 1, 2018, as per the phase-in requirements of the SLR final rule) are preliminary estimates as calculated under the SLR final rule. Refer to the addendum included with this News Release for reconciliations of these estimated pro-forma fully phased-in SLRs to our SLRs under the then applicable regulatory requirements. Effective January 1, 2018, the applicable final rules are in effect and the ratios presented are calculated based on fully phased-in CET1, tier 1 and total capital numbers.
Investor Conference Call and Quarterly Website Disclosures
State Street will webcast an investor conference call today, Friday, April 20, 2018, at 9:30 a.m. EDT, available at http://investors.statestreet.com/. The conference call will also be available via telephone, at +1 877-423-4013 inside the U.S. or at +1 706-679-5594 outside of the U.S. The Conference ID is # 6679436.
Recorded replays of the conference call will be available on the website, and by telephone at +1 855-859-2056 inside the U.S. or at +1 404-537-3406 outside the U.S. beginning approximately two hours after the call's completion. The Conference ID is # 6679436.
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 1Q18, State Street expects to publish its updates during the period beginning today and ending on or about May 3, 2018.
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 $33.3 trillion in assets under custody and administration and $2.7 trillion* in assets under management as of March 31, 2018, State Street operates globally in more than 100 geographic markets and employs 37,192 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 March 31, 2018), for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) serves as marketing agent; SSGA FD and State Street Global Advisors are affiliated.
Additional Information
In this News Release:
Forward-Looking Statements
This News Release (and the conference call referenced herein) contains forward-looking statements within the meaning of United States securities laws, including statements about our goals and expectations regarding our business, financial and capital condition, results of operations, strategies, the financial and market outlook, dividend and stock purchase programs, governmental and regulatory initiatives and developments, and the business environment. Forward-looking statements are often, but not always, identified by such forward-looking terminology as “outlook,” “expect,” "priority," “objective,” “intend,” “plan,” “forecast,” “believe,” “anticipate,” “estimate,” “seek,” “may,” “will,” “trend,” “target,” “strategy” and “goal,” or similar statements or variations of such terms. These statements are not guarantees of future performance, are inherently uncertain, are based on current assumptions that are difficult to predict and involve a number of risks and uncertainties. Therefore, actual outcomes and results may differ materially from what is expressed in those statements, and those statements should not be relied upon as representing our expectations or beliefs as of any date subsequent to April 20, 2018.
Important factors that may affect future results and outcomes include, but are not limited to:
Other important factors that could cause actual results to differ materially from those indicated by any forward-looking statements are set forth in our 2017 Annual Report on Form 10-K and our subsequent SEC filings. We encourage investors to read these filings, particularly the sections on risk factors, for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this News Release should not by relied on as representing our expectations or beliefs as of any time subsequent to the time this News Release is first issued, and we do not undertake efforts to revise those forward-looking statements to reflect events after that time.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180420005150/en/
State Street CorporationInvestor Contact:Ilene Fiszel Bieler, +1 617-664-3477orMedia Contact:Marc Hazelton, +1 617-513-9439
1 Year State Street Chart |
1 Month State Street Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions