State Street : 2Q 2024 Earnings Presentation

NYSE: STT

July 16, 2024

All comparisons are to corresponding prior year period unless otherwise noted

Financial performance

• EPS of $2.15, as compared to $2.17 in 2Q23
• Total revenue of $3.2B, up 3%
• • Fee revenue up 2%, primarily reflecting higher Management fees and FX trading services revenue, partially offset by lower Servicing fees, Other fee revenue, Securities finance revenue and Software and processing fees
  • NII up 6%, largely due to higher investment securities yields and loan growth, partially offset by deposit mix shift
• Total expenses of $2.3B, up 3%, as continued business investments and revenue-related costs were partially offset by productivity savings
• Pre-taxmargin of 28.6%; ROE of 11.9%

	Investment Servicing
	• New servicing fee revenue wins of $72M primarily related to Back office wins1
	• Record AUC/A of $44.3T at quarter-end; AUC/A wins of $291B and AUC/A yet to be installed of $2.4T2
Business	• Reported 1 new State Street Alpha® mandate, resulting in 3 YTD Alpha wins2
Investment Management
momentum
• Record AUM of $4.4T at quarter-end
	• Continued market share gains in U.S. Low Cost and EMEA ETFs, driven by strong net inflows2
	Transformation
	• Advanced transformation of operating model with consolidation of the final operations joint venture in India

Balance sheet and capital

• CET1 ratio of 11.2% and State Street Bank and Trust LCR of 134% at quarter end3,4
• Strong performance under Federal Reserve supervisory stress test, preliminary SCB maintained at 2.5% floor5
• Capital return of $407M in 2Q24; $200M of common share repurchases; $207M of declared common stock dividends
• Announced a planned 10% increase to 3Q24 quarterly common stock dividend to $0.76 per share, subject to Board approval6

Refer to the Appendix included with this presentation for endnotes 1 to 26.

2

Financial results

																																																																																													Quarters																																					%∆
(GAAP; $M, except EPS data, or where otherwise noted)							2Q23						1Q24					2Q24									1Q24			2Q23
Revenue:
				Back office servicing fees	$1,164		$1,136		$1,146	1%							(2)%
				Middle office services	95		92		93	1								(2)
			Servicing fees	1,259		1,228		1,239	1								(2)
			Management fees	461		510	511	0								11
			Foreign exchange trading services	303		331	336	2								11
			Securities finance	117		96	108	13								(8)
				Front office software and data	162		144	152	6								(6)
				Lending related and other fees	59		63	62			(2)								5
			Software and processing fees	221		207	214	3								(3)
			Other fee revenue	58		50	48			(4)								(17)
		Total fee revenue	2,419			2,422		2,456	1								2
		Net interest income	691			716		735			3								6
Total revenue	$3,110			$3,138		$3,191	2%						3%
Provision for credit losses	(18)	27		10	(63)%															nm
Total expenses	$2,212		$2,513		$2,269			(10)%						3%
Net income before income taxes	$916			$598		$912			53%						(0)%
Net income	$763			$463		$711	54%						(7)%
Diluted earnings per share	$2.17			$1.37		$2.15	57%						(1)%
Return on average common equity	13.0%			7.7%		11.9%									4.2%pts			(1.1)%pts
Pre-tax margin	29.5%			19.1%		28.6%									9.5%pts		(0.9)%pts
Tax rate	16.7%			22.5%		22.1%								(0.4)%pts				5.4%pts
Ex-notable items, non-GAAPA:
		Total revenue	$3,110		$3,138		$3,191	2%						3%
		Total expenses	$2,212		$2,383	$2,269	(5)%						3%
		EPS	$2.17		$1.69		$2.15	27%						(1)%
		Return on average common equity	13.0%		9.5%		11.9%										2.4%pts				(1.1)%pts
		Pre-tax margin	29.5%		23.2%		28.6%										5.4%pts			(0.9)%pts
		Tax Rate	16.7%		22.8%		22.1%									(0.7)%pts				5.4%pts

Notable items

		Quarters	A
($M, except EPS data)
2Q23	1Q24	2Q24
FDIC special assessment	-	($130)	-
Total notable items (pre-tax)	-	($130)	-
Income tax impact from notable items	-	(31)	-
EPS impact	-	($0.32)	-

A These are non-GAAP presentations; refer to the Appendix for a reconciliation of ex-notable items and further explanations of non-GAAP measures.	3

AUC/A ($T, as of period-end)2

		+12%	+1%		•	Up 12% YoY largely driven by higher
					$44.3	quarter-end market levels, client flows
		$43.9
$39.6		and net new business

• Up 1% QoQ primarily due to higher quarter-end market levels and client flows

2Q23 1Q24 2Q24

AUM ($B, as of period-end)2

Market indices7

(% change)		2Q24 vs
	1Q24	2Q23
Equity & Bond Indices:
S&P 500	EOP	4%	23%
Daily Avg	5	25
MSCI EAFE	EOP	(1)	9
Daily Avg	3	10
MSCI EM	EOP	4	10
Daily Avg	5	8
MSCI ACWI	EOP	2	17
Daily Avg	4	19
Bloomberg Global Agg	EOP	(1)	1
Daily Avg	(1)	(0)
Volatility Indices:
VIX	Daily Avg	2%	(15)%
JPM G7 FX	Daily Avg	(1)	(16)
JPM EM FX	Daily Avg	3	(28)
Specials Volumes:
S&P Global Industry Specials Avg Volume	8%	(24)%

$3,797

+16%

+2%

$4,336 $4,415

• Up 16% YoY reflecting higher quarter- end market levels and net inflows
• Up 2% QoQ mainly driven by higher quarter-end market levels

S&P U.S. Industry Specials Avg Volume	(6)%	(33)%
Select industry flows8
($B)		Total flowsA
2Q23	1Q24	2Q24
Long Term Funds	$(113)	$(3)	$(111)
Money Market	175	31	66
ETF	136	191	206
North America Total	198	219	161
EMEA Total	27	83	100

2Q23 1Q24 2Q24

A Line items may not sum to total due to rounding.	4
Refer to the Appendix included with this presentation for endnotes 1 to 26.

Servicing fees ($M)

2Q24 performance

Servicing fees of $1,239M down (2)% YoY and up 1% QoQA

$1,259

Back office	1,164
servicing
fees
Middle
office
services		95
		2Q23

$1,234

1,138

96

3Q23

-2%

$1,212

1,128

84

4Q23

+1%

$1,228

$1,239 YoY %

1,136

1,146

(2)%

		(2)%
92		93

1Q24 2Q24

• Down (2)% YoY as higher average equity market levels and net new business, excluding a previously disclosed client transition, were more than offset by pricing headwinds, a previously disclosed client transition and lower client activity/adjustments, including asset mix shift
• Up 1% QoQ mainly due to higher client activity/adjustments, including asset mix shift, and higher average equity market levels

Asset Services business momentum

• New 2Q24 servicing fee revenue wins of $72M, up from $39M in

Performance indicators

AUC/A	$141	$149	$501	$474	$291
2
wins ($B)
AUC/A to be	2,365	2,255	2,302	2,576	2,390
installed2 ($B)
Servicing fee	39	91	103	67	72
rev. wins1 ($M)

1. Servicing fees were negatively impacted by currency translation both YoY and QoQ by $(4)M and $(3)M, respectively. Refer to the Appendix included with this presentation for endnotes 1 to 26.

2Q23, with the majority driven by Back office wins1

• $276M of servicing fee revenue to be installed as of quarter-end, up

$79M YoY and down $(15)M QoQ1,2

• $291B in new servicing AUC/A wins, with the majority from the Asset

Managers and Asset Owners segments, which were well distributed

regionally2

- ~$80B of new servicing AUC/A wins driven by Alpha2

5

Management fees ($M)

+11%

$461 $479 $479

Flat

$510 $511

2Q24 performance

Management fees of $511M up 11% YoY and flat QoQA

• Up 11% YoY primarily due to higher average market levels and net inflows from prior periods, partially offset by the impacts of a strategic ETF repricing initiative
• Flat QoQ mainly driven by higher average market levels offset by net outflows and lower performance fees
• 2Q24 AUM: ETF inflows of $6B were more than offset by Institutional and Cash outflows of $(8)B and $(4)B, respectively
• Investment Management business 2Q24 pre-tax margin of 32%

Investment Management business momentum2

	2Q23	3Q23	4Q23	1Q24	2Q24
Performance indicators ($B)2
AUM	$3,797	$3,687	$4,128	$4,336	$4,415
Net flows	38	10	103	(9)	(6)
(QoQ)

• Increased SPDR® ETF market share across U.S. Low Cost and EMEA; continued sales strength and momentum in U.S. Retirement
• Launched new and diversified solutions, across a range of exposures and geographies in 1H24, increasing the breadth of our offering
• Announced a planned strategic investment in Envestnet, enhancing access to independent wealth advisory and high-net-worth channels9

A Management fees were negatively impacted by currency translation YoY and QoQ by $(2)M and $(1)M, respectively.	6
Refer to the Appendix included with this presentation for endnotes 1 to 26.

Markets, Software & processing, and Other fees ($M)

2Q24 performance

FX trading

Securities finance

Software & processing

Other fees10

$699

303

117

221

58

$648

313

103

188

44

$674

307

97

237

33

$684

331

96

207

50

$706

336

108

214

48

YoY %

11%

(8)%

(3)%

(17)%

• FX trading services of $336M
• • Up 11% YoY primarily due to higher volumes, partially offset by lower spreads associated with subdued FX volatility
  • Up 2% QoQ supported by higher Indirect FX revenues from increased volumes, partially offset by lower spreads associated with subdued FX volatility
• Securities finance of $108M
• • Down (8)% YoY mainly due to lower spreads primarily resulting from muted industry specials activity, partially offset by higher balances
  • Up 13% QoQ primarily driven by both higher Agency and Prime Services balances and higher Prime Services spreads
• Software and processing fees of $214M
• • Down (3)% YoY primarily due to lower On-premises renewals in Front office software and data
  • Up 3% QoQ mainly driven by higher Front office software and data revenue associated with CRD
• Other fee revenue of $48M10

2Q23

3Q23

4Q23

1Q24

2Q24

Refer to the Appendix included with this presentation for endnotes 1 to 26.

7

Front office software and data ($M)11

Future growth driven by Front, Middle and Alpha

($M)

2Q23

1Q24

2Q24

On-premises12

Professional services

Software- enabled

(incl. SaaS)12

$162

47

29

82

$130

14

27

85

-6%

$179

52

33

89

		+6%
		$152
$144
18
15
31	29

94 101

17% YoY

Growth

Front office metrics

New bookings13	$4	$10	$3
ARR14	281	326	345
Uninstalled revenue backlog15	88	102	99
Middle office metric
Uninstalled revenue backlog16	82	106	109
Alpha metrics
# of mandate wins2	-	2	1

2Q23

3Q23

4Q23

1Q24

2Q24

2Q24 performance

• Down (6)% YoY primarily due to lower On-premises renewals, partially offset by continued strong software-enabled revenue growth
• Up 6% QoQ primarily driven by continued software-enabled revenue growth

Refer to the Appendix included with this presentation for endnotes 1 to 26.

Live mandates to-date

15

21

23

Business momentum

• 2Q24 annual recurring revenue (ARR) increased 23% YoY, driven by 20+ SaaS client implementations and conversions since 2Q23
• On track to deliver full-year goal of 6-8 new Alpha mandate wins, with 1 reported in 2Q24 and 3 YTD2
• 2 Alpha mandates went live in 2Q24, bringing the total to 23 live mandates

8

NII and NIM ($M)17

+6%

+3%

$691		$678	$716	$735
$624

	2Q23	3Q23	4Q23	1Q24	2Q24
NIM17	1.19%	1.12%	1.16%	1.13%	1.13%
(FTE, %)

2Q24 performanceB

• Up 6% YoY largely due to higher investment securities yields and loan growth, partially offset by deposit mix shift
• Up 3% QoQ primarily driven by higher investment securities yields and balances as well as loan growth, partially offset by a decline in average non-interest-bearing deposits

Average balance sheet highlights ($B)A

	2Q23	3Q23	4Q23	1Q24	2Q24
Total assets	$275	$268	$279	$299	$306
Cash18	73	66	75	95	91
Investment portfolio	108	105	103	101	105
HTM % (EOP)	60%	60%	56%	52%	47%
Duration (EOP) 19	2.7	2.7	2.7	2.7	2.5
Loans	34	35	37	38	39
Total deposits	$206	$198	$207	$219	$221
% Operational 20	75%	75%	74%	73%	75%

Average assets and liabilities

• Assets increased 11% YoY and 3% QoQ primarily due to an increase in total deposits and balance sheet funding
• Deposits increased 7% YoY mainly driven by growth in interest-bearing balances, partially offset by a reduction in non-interest-bearing deposits
• Loan growth of 13% YoY and 3% QoQ

A Line items are rounded. B Net interest income was negatively impacted by currency translation both YoY and QoQ by $(5)M and $(4)M, respectively.	9
Refer to the Appendix included with this presentation for endnotes 1 to 26.

Expenses

(Ex-notable items, non-GAAP, $M)A

							+3%		-5%
							$2,383	$2,269
			$2,212
	Comp.	1,123		1,252		1,099
& benefits
Info. sys.	405		432		454
	Tran.		235			248			250
processing
106
103
Occupancy		103
	Other21		346			348			360
			2Q23		1Q24	2Q24
GAAP		$2,212	$2,513	$2,269	YoY +3%
Expenses		QoQ -10%
Headcount	42,688	45,871	52,568	YoY +23%
QoQ +15%
Pro-forma	22	55,467	53,265						YoY -5%
						QoQ -1%

Headcount reflects the consolidation of two operations JVs in India (1 in 4Q23 and 1 in 2Q24), which increased headcount by ~12,000. The associated headcount costs were previously reflected in the Compensation and employee benefits line.

2Q24 performance

(Ex-notable items, non-GAAP, $M)A

Expenses of $2,269M up 3% YoY and down (5)% QoQA

• Compensation and employee benefits of $1,099M
• • Down (2)% YoY mainly due to lower contractor spend associated with the JV consolidations in India and lower salaries, partially offset by higher incentive compensation and employee benefits costs
  • Down (12)% QoQ largely driven by the absence of seasonal expensesB
• Information systems and communications of $454M
• • Up 12% YoY and 5% QoQ mainly due to higher technology and infrastructure investments
• Transaction processing services of $250M
• • Up 6% YoY primarily reflecting higher revenue-related broker fees and market data costs
• Occupancy of $106M
• • Up 3% YoY primarily related to JV consolidations in India, partially offset by footprint optimization
  • Up 3% QoQ mainly due to a JV consolidation in India
• Other of $360M21,23
• • Up 4% YoY mainly due to higher sales, marketing and other fund expenses
  • Up 3% QoQ primarily reflecting higher marketing spend

1. These are non-GAAP presentations; refer to the Appendix for a reconciliation of ex-notable items and further explanations of non-GAAP measures. Total expenses on both a GAAP and ex-notables basis were positively

impacted by currency translation of $7M and $6M on a YoY and QoQ basis, respectively. B 1Q24 includes $162M of seasonal expenses.	10
Refer to the Appendix included with this presentation for endnotes 1 to 26.