State Street Witnesses 2% Quarterly Decrease in Total Revenue for Q1 2023

Boston-headquartered State Street Corporation (State Street) released its financial results for the first quarter of 2023 (Q1 2023), seeing a decrease of 2% on a quarterly basis.

Revenue

• The total revenue for Q1 2023 amounted to $3,101 million, a slight increase of 1% compared to $3,081 million in Q1 2022, but a decrease of 2% compared to $3,155 million in Q4 2022.

• Fee revenue came in at $2,335 million for the quarter, 9% lower than $2,573 million in Q1 2022 and 1% lower than $2,364 million in Q4 2022. Comparing to Q1 2022, servicing fees decreased 11%; management fess decreased 12%; FX trading services decreased 5%; securities finance increased 14%; and software and processing fees decreased 18%.

• Net interest income (NII) jumped 50% from $509 million to $ 766 million on a YoY basis, but dropping 3% compared to $791 million in the prior quarter.

Expenses

• Total expenses rose 2%, among which, the compensation and employee benefits increased 5% and the non-compensation expense decreased 2%.

AUC/A and AUM

• Investment Servicing AUC/A as of quarter-end decreased 10% to $37.6 trillion, primarily driven by lower quarter-end market levels.

• Investment Management AUM as of quarter-end decreased 10% to $3.6 trillion, mainly reflecting lower quarter-end market levels and net outflows.

Capital and Liquidity

• Standardized common equity tier 1 (CET1) ratio at quarter-end of 12.1%, increased 0.2% points compared to Q1 2022 and decreased 1.5% points compared to Q4 2022.

• Liquidity coverage ratio (LCR) increased 2% points compared to approximately 108% for State Street Corporation. LCR for State Street Bank and Trust Company Increased 4% points compared to Q4 2022 to approximately 124%.

• In Q1 2023, the corporation returned a total of $1.5 billion of capital, consisting of $1.25 billion in common stock repurchases and declared common dividends of $0.63 per share.

Ron O'Hanley, Chairman and Chief Executive Officer: "Our first-quarter results reflect the resiliency of our business model, notwithstanding continued interest rate increases and subsequent significant market movements, volatility and disruption within other parts of the banking industry. Through this, our total revenue was durable and grew as we delivered strong year-over-year net interest income growth, which enabled us to offset fee revenue headwinds from significantly lower average market levels. In addition, operating costs were well-controlled and our strong balance sheet position enabled us to return capital to shareholders while joining other leading institutions in contributing to efforts to stabilize the U.S. banking system in the first quarter."