10-QPeriod: Q1 FY2021

STATE STREET CORP Quarterly Report for Q1 Ended Mar 31, 2021

Filed April 23, 2021For Securities:STTSTT-PG

Summary

State Street Corporation's (STT) Q1 2021 filing shows a mixed financial performance. Total revenue saw a modest decline of 4% year-over-year, primarily due to a significant 30% drop in net interest income, driven by lower global interest rates. However, this was partially offset by a 4% increase in total fee revenue, boosted by strong growth in servicing fees (up 7%) and management fees (up 6%), reflecting higher average equity market levels. Diluted Earnings Per Share (EPS) decreased by 15% to $1.37, impacted by lower net interest income and higher expenses. The company continued to manage its capital effectively, returning approximately $659 million to shareholders through dividends and share repurchases. AUC/A and AUM experienced substantial growth, increasing by 26% and 34% respectively, year-over-year, indicating a healthy pipeline of new business and positive market performance. Despite a decrease in capital ratios (CET1 and Tier 1 leverage), State Street remains well-capitalized and focused on strategic initiatives like State Street Alpha.

Financial Highlights

38 data points
Beta

Revenue

$2.95B

Net Income

$519.00M

17.6% Net Margin

EPS (Diluted)

$1.37

Total Assets

$316.88B

Cash & Equivalents

$4.55B

Free Cash Flow

-$3.89B

Financial Statements
Beta
Revenue$2.95B
Interest Expense$4.00M
Net Income$519.00M
EPS (Basic)$1.39
EPS (Diluted)$1.37
Shares Outstanding (Basic)350.74M
Shares Outstanding (Diluted)355.69M

Key Highlights

  • 1Total revenue decreased by 4% to $2.95 billion, primarily driven by a 30% decline in Net Interest Income (NII).
  • 2Total fee revenue increased by 4% to $2.48 billion, led by a 7% rise in servicing fees and a 6% rise in management fees, benefiting from higher market valuations.
  • 3Diluted Earnings Per Share (EPS) declined by 15% to $1.37, impacted by lower NII and increased expenses.
  • 4Assets Under Custody/Administration (AUC/A) grew 26% year-over-year to $40.26 trillion, and Assets Under Management (AUM) increased by 34% to $3.59 trillion.
  • 5The company returned $659 million to shareholders via dividends ($182 million) and share repurchases ($475 million).
  • 6CET1 capital ratio decreased to 10.8% and Tier 1 leverage ratio decreased to 5.4%, primarily due to increased risk-weighted assets and capital distributions.
  • 7A provision for credit losses of $9 million was released, a favorable change from the $36 million provision in the prior year, reflecting an improved economic outlook.

Frequently Asked Questions

The 30% decrease in NII was primarily attributed to lower global interest rates and the absence of episodic market-related benefits that were present in the first quarter of 2020. This was partially offset by higher deposits reflecting the Federal Reserve’s expansionary monetary policy and growth in the investment portfolio.

The increase in servicing fees was primarily driven by higher average equity market levels. Management fees also benefited from higher average equity market levels, along with net inflows from ETFs and cash. These positive trends were partially offset by factors such as client asset reallocation away from higher-fee products and higher money market fee waivers.

State Street returned approximately $659 million to shareholders in the form of common stock dividends ($182 million) and share repurchases ($475 million). The company also completed the redemption of $500 million of its Series F preferred stock. Despite a decrease in capital ratios, the company's capital position remains strong and above regulatory requirements.

AUC/A increased by 26% year-over-year to $40.26 trillion, driven by higher market levels and net new business. AUM increased by 34% to $3.59 trillion, driven by higher market levels and net inflows from ETFs and cash. These figures indicate continued growth and strong client engagement in State Street's core businesses.