01—Abstract
Summary
Summary of the 10-K filed February 17, 2022. Cited figures are marked; the original filing is the authoritative source.
State Street Corporation (STT) reported its 2021 annual results, highlighting growth in Assets Under Custody/Administration (AUC/A) and Assets Under Management (AUM), alongside increased earnings per share (EPS).
The company's core businesses, Investment Servicing and Investment Management, demonstrated resilience, with servicing fees and management fees showing positive year-over-year growth. This growth was primarily driven by higher market levels, client activity, and net new business wins, although State Street also noted ongoing pricing pressures in its core markets. The company is actively investing in technology and innovation, notably with its "State Street Alpha" platform and the establishment of "State Street Digital" to focus on digital assets.
Financially, STT saw a 14% increase in diluted EPS to $7.19a and a 3% increase in total revenue to $12.03 billion. Net income attributable to common shareholders rose to $2.57 billion.
The company also announced a significant strategic move with the planned acquisition of BBH Investor Services for $3.5 billionb, which is pending regulatory approval. State Street maintained a strong capital position, with its Common Equity Tier 1 (CET1) capital ratio increasing to 14.3% under Basel III advanced approaches.
02—Key points
Key Highlights
- Total revenue increased by 3% to $12.03 billion in 2021.
- Diluted EPS increased by 14% to $7.19 in 2021, compared to $6.32 in 2020.
- Assets Under Custody/Administration (AUC/A) grew by 13% to $43.68 trillion, and Assets Under Management (AUM) grew by 19% to $4.14 trillion by year-end 2021.
- Servicing fees increased by 7% and management fees increased by 9% in 2021, driven by higher market levels and net inflows.
- State Street announced a definitive agreement to acquire BBH Investor Services for $3.5 billion, subject to regulatory approvals.
- The Common Equity Tier 1 (CET1) capital ratio improved to 14.3% as of December 31, 2021, from 12.3% as of December 31, 2020.
- The company returned approximately $1.7 billion to shareholders in 2021 through common stock dividends and share repurchases.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 17, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $12.03B$11.70B | +2.8% |
| Interest Expense | $3.00M$375.00M | −99.2% |
| Net Income | $2.69B$2.42B | +11.3% |
| EPS (Basic) | $7.30$6.40 | +14.1% |
| EPS (Diluted) | $7.19$6.32 | +13.8% |
| Shares Outstanding (Basic) | 352.56M352.87M | −0.1% |
| Shares Outstanding (Diluted) | 357.96M357.11M | +0.2% |
05—Questions
Frequently Asked Questions
What were State Street's main financial highlights for 2021?
State Street reported a 14% increase in diluted EPS to $7.19, a 3% increase in total revenue to $12.03 billion, and a 13% rise in AUC/A to $43.68 trillion. Management fees also saw a significant 9% increase. The company maintained strong capital ratios with a CET1 ratio of 14.3% and returned $1.7 billion to shareholders through dividends and share repurchases.
What are the key drivers for State Street's revenue growth in 2021?
Revenue growth was primarily driven by increases in servicing fees (up 7%) and management fees (up 9%). These increases were attributed to higher average equity market levels, client activity and flows, and net new business wins. Growth in AUC/A and AUM also contributed positively.
What is the significance of the planned acquisition of BBH Investor Services?
The acquisition of BBH Investor Services for $3.5 billion is a significant strategic move for State Street. It is expected to enhance its capabilities in custody, fund administration, and technology services, aligning with the company's strategy to build its front-to-back platform and expand its offerings. The transaction is subject to regulatory approvals.
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