01—Abstract
Summary
Summary of the 10-K filed February 15, 2024. Cited figures are marked; the original filing is the authoritative source.
State Street Corporation (STT) reported a net income of $1.94 billiona for the year ended December 31, 2023, a decrease from $2.77 billion in 2022.
This decline was primarily attributed to a $294 millionb loss on the sale of investment securities, a $387 million FDIC special assessment, and $203 million in net repositioning charges, which collectively reduced EPS by $2.08. Total revenue saw a slight decrease of 2% year-over-year, mainly due to lower fee revenue, though this was partially offset by higher net interest income driven by increased interest rates. The company returned approximately $4.6 billion to shareholders through share repurchases and dividends in 2023, a significant increase from $2.4 billion in 2022.
State Street's Assets Under Custody/Administration (AUC/A) grew by 14% to $41.81 trillionc, and Assets Under Management (AUM) increased by 19% to $4.13 trillion, both primarily benefiting from higher market valuations. Despite the decline in net income due to one-time charges, State Street maintained strong capital ratios, with its Common Equity Tier 1 (CET1) capital ratio at 11.6% and Tier 1 leverage ratio at 5.5% as of year-end 2023.
The company also announced a new $5.0 billiond share repurchase program. Management is focused on navigating a challenging operating environment marked by competition and regulatory evolution, while continuing to invest in technology and operational efficiency, as evidenced by the consolidation of joint ventures in India.
02—Key points
Key Highlights
- Net income decreased by 22% year-over-year to $1.94 billion, impacted by significant one-time charges including an FDIC special assessment ($387 million) and loss on sale of securities ($294 million).
- Total revenue decreased by 2% to $11.95 billion, with fee revenue down 1% and net interest income up 8%, reflecting higher interest rates.
- Assets Under Custody/Administration (AUC/A) increased 14% to $41.81 trillion, and Assets Under Management (AUM) increased 19% to $4.13 trillion, driven by higher market levels and net new business.
- Returned $4.6 billion to shareholders in 2023 through share repurchases ($3.8 billion) and dividends ($0.8 billion), up from $2.4 billion in 2022.
- Announced a new $5.0 billion share repurchase program, superseding prior programs.
- Maintained strong regulatory capital ratios, with CET1 at 11.6% and Tier 1 leverage ratio at 5.5% as of December 31, 2023.
- Continued strategic investments in technology and operational efficiency, including the consolidation of joint ventures in India.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 15, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $11.95B$12.15B | −1.7% |
| Interest Expense | $6.42B$1.54B | +315.9% |
| Net Income | $1.94B$2.77B | −29.9% |
| EPS (Basic) | $5.65$7.28 | −22.4% |
| EPS (Diluted) | $5.58$7.19 | −22.4% |
| Shares Outstanding (Basic) | 322.34M365.21M | −11.7% |
| Shares Outstanding (Diluted) | 326.57M370.11M | −11.8% |
05—Questions
Frequently Asked Questions
What were the main drivers of State Street's financial performance in 2023?
State Street's 2023 financial performance was impacted by a combination of factors. While higher interest rates boosted net interest income, fee revenue experienced a decline due to lower client activity, pricing pressures, and a client transition. Significant one-time charges, including a $387 million FDIC special assessment and a $294 million loss on investment securities sale, notably reduced net income and earnings per share.
How did State Street manage its capital and return value to shareholders in 2023?
State Street maintained robust capital levels, with its CET1 ratio at 11.6% and Tier 1 leverage ratio at 5.5% as of year-end 2023. The company demonstrated a commitment to returning capital to shareholders by repurchasing $3.8 billion of its common stock and paying $0.8 billion in dividends, totaling approximately $4.6 billion, a significant increase from the previous year. Furthermore, a new $5.0 billion share repurchase program was announced for 2024.
What is the outlook for State Street's Assets Under Custody/Administration (AUC/A) and Assets Under Management (AUM)?
State Street's AUC/A grew by 14% to $41.81 trillion, and AUM increased by 19% to $4.13 trillion as of December 31, 2023. This growth was primarily driven by favorable market valuations and positive net new business. The company has approximately $2.30 trillion in servicing assets yet to be installed, which are expected to contribute to AUC/A and servicing fee revenue in the coming years.
06—Continue