10-QPeriod: Q1 FY2022

STATE STREET CORP Quarterly Report for Q1 Ended Mar 31, 2022

Filed April 27, 2022For Securities:STTSTT-PG

Summary

State Street Corporation reported a solid first quarter of 2022, with diluted earnings per share (EPS) of $1.57, a 15% increase year-over-year. Total revenue grew 4% to $3.08 billion, primarily driven by a 4% increase in fee revenue and a 9% rise in net interest income. This performance was supported by higher average equity market levels and net inflows into ETFs, contributing to a 5% increase in management fees. The company also saw growth in foreign exchange trading services and software/processing fees. Despite a challenging global market environment influenced by the war in Ukraine, State Street maintained a low direct financial exposure to Russia. The company's Assets Under Custody/Administration (AUC/A) increased by 4% to $41.72 trillion, and Assets Under Management (AUM) grew by 12% to $4.02 trillion, reflecting higher market levels and positive client flows. However, the company has paused its common share repurchase program due to net unrealized losses on available-for-sale securities, impacting its capital ratios. State Street's Common Equity Tier 1 (CET1) capital ratio decreased to 11.9% from 14.3% at the end of 2021, largely due to market-driven impacts on its investment portfolio.

Financial Highlights

38 data points
Beta

Revenue

$3.08B

Net Income

$604.00M

19.6% Net Margin

EPS (Diluted)

$1.57

Total Assets

$322.35B

Cash & Equivalents

$2.98B

Free Cash Flow

$4.45B

Financial Statements
Beta
Revenue$3.08B
Interest Expense$12.00M
Net Income$604.00M
EPS (Basic)$1.59
EPS (Diluted)$1.57
Shares Outstanding (Basic)366.54M
Shares Outstanding (Diluted)372.04M

Key Highlights

  • 1Diluted EPS increased 15% year-over-year to $1.57.
  • 2Total revenue grew 4% to $3.08 billion, driven by fee revenue and net interest income.
  • 3AUC/A increased 4% to $41.72 trillion, and AUM grew 12% to $4.02 trillion.
  • 4Management fees rose 5% due to higher equity market levels and ETF inflows.
  • 5The company has suspended its common share repurchase program.
  • 6CET1 capital ratio decreased to 11.9% from 14.3% due to market conditions impacting AFS securities.
  • 7State Street maintained a very low direct financial exposure to Russia.

Frequently Asked Questions

State Street's total revenue increased by 4% to $3.08 billion, primarily driven by a 4% increase in total fee revenue and a 9% increase in net interest income. Growth in management fees, foreign exchange trading services, and software/processing fees contributed significantly to the increase in fee revenue.

While the war in Ukraine created global market challenges, State Street's direct financial exposure to Russia was minimal. The company's AUC/A and AUM benefited from higher equity market levels, contributing positively to revenue streams like management fees. However, rising interest rates led to net unrealized losses on available-for-sale securities, impacting Accumulated Other Comprehensive Income (AOCI) and the CET1 capital ratio.

State Street has paused its common share repurchase program, which was authorized for up to $3.0 billion through the end of 2022. This pause is primarily due to the net unrealized losses on available-for-sale securities resulting from higher interest rates in the first quarter of 2022.

State Street's Common Equity Tier 1 (CET1) capital ratio decreased to 11.9% as of March 31, 2022, from 14.3% as of December 31, 2021. This decrease was mainly due to unrealized losses on available-for-sale securities within AOCI, driven by the significant increase in interest rates. The company expects its CET1 and Tier 1 leverage capital ratios to be at or near the lower end of its target ranges upon the closing of its proposed acquisition of the BBH Investor Services business.