01—Abstract
Summary
Summary of the 10-K filed February 20, 2020. Cited figures are marked; the original filing is the authoritative source.
State Street Corporation's (STT) 2019 Form 10-K highlights a strong year for assets under custody and/or administration (AUC/A) and assets under management (AUM), which saw significant growth in 2019.
AUC/A increased by 9% to $34.4 trilliona, and AUM grew by 24% to $3.1 trillion, driven by higher market valuations and net inflows. Despite revenue and diluted EPS declining slightly in 2019 compared to 2018, the company managed expenses effectively through various initiatives, exceeding its savings goals. The company also returned substantial capital to shareholders through dividends and share repurchases, demonstrating a commitment to shareholder returns while maintaining strong regulatory capital ratios.
02—Key points
Key Highlights
- AUC/A increased 9% to $34.4 trillion and AUM grew 24% to $3.1 trillion in 2019, indicating strong market performance and client asset growth.
- Total revenue decreased by 3% to $11.8 billion, and diluted EPS fell 16% to $5.38 in 2019 compared to 2018, reflecting market pressures and notable items.
- State Street successfully executed its expense savings program, achieving $415 million in gross savings in 2019, exceeding its revised goal.
- The company returned $2.33 billion to shareholders in 2019 through common stock dividends ($728 million) and share repurchases ($1.6 billion).
- Regulatory capital ratios, including Common Equity Tier 1 (CET1) at 11.7%, remained robust and above minimum requirements.
- The acquisition of Charles River Development (CRD) contributed $385 million in revenue and $201 million in expenses in 2019, enhancing front-office solutions.
- State Street proactively addressed a $140 million increase in its legal accrual for government investigations and civil litigation related to its invoicing matter.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 20, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $11.76B$12.13B | −3.1% |
| Interest Expense | $1.38B$991.00M | +38.7% |
| Net Income | $2.24B$2.59B | −13.5% |
| EPS (Basic) | $5.43$6.46 | −15.9% |
| EPS (Diluted) | $5.38$6.39 | −15.8% |
| Shares Outstanding (Basic) | 369.91M371.98M | −0.6% |
| Shares Outstanding (Diluted) | 373.67M376.48M | −0.7% |
05—Questions
Frequently Asked Questions
How did State Street's AUC/A and AUM perform in 2019?
In 2019, State Street's AUC/A increased by 9% to $34.4 trillion, and AUM grew by 24% to $3.1 trillion. This growth was primarily driven by higher end-of-period market levels and positive client flows.
What was the impact of the CRD acquisition on State Street's financial results?
The acquisition of Charles River Development (CRD) in October 2018 contributed approximately $385 million in total revenue and $201 million in total expenses in 2019. This acquisition strengthened State Street's Investment Servicing line of business by enhancing its front-office capabilities.
How did State Street manage its expenses in 2019?
State Street successfully executed its expense savings program, achieving approximately $415 million in gross savings in 2019 through resource discipline initiatives and process re-engineering and automation. This exceeded the company's revised savings goal of $400 million.
What is State Street's approach to returning capital to shareholders?
In 2019, State Street returned a total of approximately $2.33 billion to shareholders through common stock dividends, totaling $728 million, and common stock repurchases, totaling $1.6 billion. The company has an ongoing authorization to repurchase up to $2.0 billion of its common stock.
06—Continue