01—Abstract
Summary
Summary of the 10-K filed February 16, 2023. Cited figures are marked; the original filing is the authoritative source.
State Street Corporation (STT) reported solid financial results for the fiscal year ending December 31, 2022, demonstrating resilience in a challenging economic environment.
The company maintained its position as a leading provider of financial services to institutional investors, managing $36.74 trilliona in assets under custody/administration (AUC/A) and $3.48 trillion in assets under management (AUM). Total revenue saw a slight increase of 1% year-over-year, driven by a significant 34% rise in net interest income (NII) due to higher interest rates, which helped offset a 4% decrease in total fee revenue. This decline in fee revenue was primarily attributed to lower servicing and management fees, impacted by market valuations and client-specific adjustments, although foreign exchange trading services revenue showed a notable 14% increase.
Expenses were managed effectively, decreasing by 1% year-over-year due to productivity savings and the benefit of currency translation, despite ongoing business investments. State Street returned approximately $2.4 billionb to shareholders through dividends and share repurchases, reflecting a commitment to capital return.
The company's capital ratios remained strong, with a Common Equity Tier 1 (CET1) capital ratio of 13.6%c and a Tier 1 leverage ratio of 6.0% as of December 31, 2022, both comfortably exceeding regulatory minimums. Management's focus remains on navigating market volatility, investing in technology and growth initiatives like State Street Alpha, and maintaining operational efficiency.
02—Key points
Key Highlights
- Total revenue increased by 1% to $12.15 billion in 2022, driven by a 34% increase in Net Interest Income (NII) to $2.54 billion, primarily due to higher interest rates.
- Fee revenue decreased by 4% to $9.61 billion, mainly due to lower servicing fees (-8%) and management fees (-6%), partially offset by a 14% increase in foreign exchange trading services revenue.
- Total expenses decreased by 1% to $8.80 billion, benefiting from productivity savings and currency translation, despite ongoing business investments.
- Earnings Per Share (EPS) remained flat at $7.19 compared to 2021.
- Assets under custody and/or administration (AUC/A) decreased by 16% to $36.74 trillion as of December 31, 2022, primarily due to lower market levels and a client transition.
- Assets under management (AUM) decreased by 16% to $3.48 trillion as of December 31, 2022, also impacted by lower market levels and net outflows.
- The company returned approximately $2.4 billion to shareholders through common stock dividends and share repurchases, up from $1.7 billion in 2021.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 16, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $12.15B$12.03B | +1.0% |
| Interest Expense | $1.54B$3.00M | +51366.7% |
| Net Income | $2.77B$2.69B | +3.0% |
| EPS (Basic) | $7.28$7.30 | −0.3% |
| EPS (Diluted) | $7.19$7.19 | 0.0% |
| Shares Outstanding (Basic) | 365.21M352.56M | +3.6% |
| Shares Outstanding (Diluted) | 370.11M357.96M | +3.4% |
05—Questions
Frequently Asked Questions
What was State Street's Net Interest Income (NII) performance in 2022, and what drove it?
State Street's NII increased significantly by 34% to $2.54 billion in 2022. This growth was primarily driven by higher interest rates resulting from central bank rate hikes, which boosted interest income. This increase helped to offset a decrease in fee revenue.
How did market conditions and client activity impact State Street's fee revenue?
Fee revenue decreased by 4% to $9.61 billion in 2022. This was primarily due to lower servicing fees (down 8%) and management fees (down 6%). These declines were attributed to lower average market valuations, normal pricing pressures, and client-specific adjustments. However, foreign exchange trading services revenue increased by 14%, partially offsetting the overall decline in fee revenue.
What is State Street's capital position, and how is it being managed?
State Street maintained a strong capital position in 2022. As of December 31, 2022, its Common Equity Tier 1 (CET1) capital ratio was 13.6% and its Tier 1 leverage ratio was 6.0%. Both ratios comfortably exceed regulatory requirements. The company returned approximately $2.4 billion to shareholders through dividends and share repurchases, demonstrating a commitment to capital return while investing in business growth and operational improvements.
What are the key lines of business for State Street, and how did they perform?
State Street operates through two main lines of business: Investment Servicing and Investment Management. Investment Servicing, which includes custody, accounting, and transaction processing, saw its fees decline by 8%, impacted by market conditions and client activity. Investment Management, which encompasses asset management through State Street Global Advisors, experienced a 6% decrease in management fees, also influenced by market levels and client outflows. The company is actively investing in its State Street Alpha platform to enhance its technology offerings across both segments.
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