10-KPeriod: FY2012

STATE STREET CORP Annual Report, Year Ended Dec 31, 2012

Filed February 22, 2013For Securities:STTSTT-PG

Summary

State Street Corporation's 2013 10-K report details its operations as a leading provider of financial services and products to institutional investors worldwide. The company's core businesses are Investment Servicing and Investment Management, with significant global reach. In 2012, State Street reported total revenue of $9.65 billion, a slight increase from the previous year, driven by growth in servicing and management fees, partially offset by declines in trading services. The report highlights State Street's robust capital position, exceeding regulatory requirements, and its commitment to returning capital to shareholders through dividends and share repurchases. The company also emphasizes its ongoing efforts to transform its operating model through significant investments in technology and process improvements, aimed at enhancing efficiency and service quality. However, State Street faces a complex and evolving regulatory landscape, particularly concerning capital requirements under Dodd-Frank and Basel III, which are expected to impact costs and operations.

Financial Highlights

38 data points
Beta

Revenue

$9.65B

Net Income

$2.06B

21.4% Net Margin

EPS (Diluted)

$4.20

Total Assets

$222.58B

Free Cash Flow

$1.58B

Financial Statements
Beta
Revenue$9.65B
Interest Expense$476.00M
Net Income$2.06B
EPS (Basic)$4.25
EPS (Diluted)$4.20
Shares Outstanding (Basic)474.46M
Shares Outstanding (Diluted)481.13M

Key Highlights

  • 1Total revenue for 2012 was $9.65 billion, a 1% increase from 2011, driven by higher servicing and management fees.
  • 2The company's acquisition of Goldman Sachs Administration Services (GSAS) in October 2012 aimed to expand hedge fund servicing capabilities.
  • 3State Street returned approximately $456 million to shareholders through dividends and $1.44 billion through common stock repurchases in 2012.
  • 4The Business Operations and Information Technology Transformation program generated $112 million in pre-tax expense savings in 2012, with cumulative savings of $198 million since 2010.
  • 5State Street's regulatory capital ratios (Tier 1 risk-based capital at 19.1%, Total risk-based capital at 20.6%) exceeded minimum requirements.
  • 6Significant legal proceedings related to foreign exchange services were ongoing, with potential impacts on revenue and reputation.
  • 7The company continued to navigate evolving regulatory requirements, including Basel III and Dodd-Frank Act implications, which are expected to influence capital and operational strategies.

Frequently Asked Questions

State Street's main lines of business are Investment Servicing, which provides custody, fund accounting, and related services to institutional investors, and Investment Management, primarily through State Street Global Advisors (SSgA), offering asset management strategies and services.

In 2012, State Street reported total revenue of $9.65 billion, a slight increase of 1% compared to $9.59 billion in 2011. This growth was primarily driven by an increase in servicing fees and management fees, while trading services revenue declined.

In October 2012, State Street completed its acquisition of Goldman Sachs Administration Services (GSAS), a global hedge-fund administrator, for approximately $550 million. This acquisition was intended to expand the company's hedge fund servicing capabilities.

State Street demonstrated a commitment to returning capital to shareholders in 2012 by declaring $0.96 per share in common stock dividends ($456 million total) and repurchasing approximately $1.44 billion of its common stock under an approved share repurchase program.

State Street highlighted significant risks including extensive and changing government regulation (especially related to Basel III and Dodd-Frank), counterparty credit risk (particularly with financial institutions and sovereign entities), market risk affecting its investment portfolio, interest rate risk, operational risks, and litigation risks, notably those concerning its foreign exchange services.