First Quarter 2017 Financial Highlights April 26, 2017 (STT: NYSE) - PowerPoint PPT Presentation

First Quarter 2017 Financial Highlights April 26, 2017 (STT: NYSE)

Preface and forward-looking statements This presentation includes certain highlights of, and also material supplemental to, State Street Corporation’s news release announcing its first quarter 2017 financial results. That news release contains a more detailed discussion of many of the matters described in this presentation and is accompanied by detailed financial tables. This presentation is designed to be reviewed together with that news release, which is available on State Street’s website, at www.statestreet.com/stockholder, and is incorporated herein by reference. This presentation contains forward-looking statements as defined by United States securities laws. These statements are not guarantees of future performance, are inherently uncertain, are based on assumptions that are difficult to predict and have a number of risks and uncertainties. The forward-looking statements in this presentation speak only as of April 26, 2017, and State Street does not undertake efforts to revise forward-looking statements. See “Forward-Looking Statements” in the Appendix for more information, including a description of certain factors that could affect future results and outcomes. Financial information in this presentation is presented on an operating-basis, a non-GAAP presentation, unless stated otherwise. Refer to the Appendix for explanations of our non- GAAP financial measures, including changes made to our operating-basis presentation in 1Q17, and to the Addendum for reconciliations of our operating-basis financial information. 1

Summary of GAAP & Operating-basis Results GAAP-basis % Change Operating-basis % Change $ in millions, except per share data 1Q16 4Q16 1Q17 4Q16 1Q16 1Q16 4Q16 1Q17 4Q16 1Q16 Revenue: Servicing fees $ 1,242 $ 1,289 $ 1,296 1% 4% $ 1,242 $ 1,289 $ 1,296 1% 4% Management fees 270 361 382 6 41 270 361 382 6 41 FX Trading 156 182 164 (10) 5 156 182 164 (10) 5 Brokerage & Other Trading 116 111 111 - (4) 116 111 111 - (4) Trading services 272 293 275 (6) 1 272 293 275 (6) 1 Securities finance revenue 134 136 133 (2) (1) 134 136 133 (2) (1) Processing fee and other 1 52 (65) 112 nm 115 115 121 182 50 58 Total fee revenue 1 1,970 2,014 2,198 9 12 2,033 2,200 2,268 3 12 Net Interest Income (NII) 2 512 514 510 (1) (0) 539 547 553 1 3 Net gain/(loss) related to investment securities 2 2 (40) nm nm 2 2 (40) nm nm Total revenue 2,484 2,530 2,668 5 7 2,574 2,749 2,781 1 8 Provision for Loan Losses 4 2 (2) nm nm 4 2 (2) nm nm Expenses: Compensation and employee benefits 1,107 1,244 1,166 (6) 5 1,104 1,246 1,166 (6) 6 Information systems and communications 272 278 287 3 6 272 278 287 3 6 Transaction processing services 200 199 197 (1) (2) 200 199 197 (1) (2) Occupancy 113 109 110 1 (3) 113 109 110 1 (3) Acquisition and restructuring costs 104 43 29 (33) (72) - - - nm nm Other 254 310 297 (4) 17 254 311 297 (5) 17 Total expenses 2,050 2,183 2,086 (4) 2 1,943 2,143 2,057 (4) 6 Income before income tax expenses 430 345 584 69 36 627 604 726 20 16 Income tax expense (benefit) 62 (248) 82 nm 32 182 (9) 202 nm 11 Net income $ 368 $ 593 $ 502 (15) 36 $ 445 $ 613 $ 524 (15) 18 Diluted Earnings per share (EPS) $ 0.79 $ 1.43 $ 1.15 (20) 46 $ 0.98 $ 1.48 $ 1.21 (18) 23 Return on average common equity (ROE) 6.8% 12.1% 9.9% 8.4% 12.5% 10.4% Pre-tax operating margin 17.3% 13.6% 21.9% 24.4% 22.0% 26.1% Effective tax rate 14.4% (72.3%) 14.0% 29.1% (1.5%) 27.8% nm Not meaningful Refer to the Appendix included with this presentation for footnotes 1 and 2. 2

1Q17 Highlights Operating-Basis (Non-GAAP) Progress on strategic priorities supported strong start to 2017 Results driven by strength in equity markets, installation of new business wins, strong ETF flows and State Street Beacon: Business momentum in asset servicing and asset management continued, driving strong fee revenue Net interest income and net interest margin benefitted from higher U.S. market interest rates and disciplined liability pricing State Street Beacon contributed to continued expense control , enhanced client solutions, reduced operational risks and improved operations Generated strong positive fee operating leverage from 1Q16 Maintained a high quality balance sheet and strong capital ratios and returns Outlook for rest of 2017 improved modestly and is within previously disclosed ranges Strategy for long-term growth fueled by State Street Beacon and The Way Ahead 3

Progress on strategic priorities in 1Q17 Operating-Basis (Non-GAAP) Drive growth from Advance our digital Continue to invest Achieve our the core franchise leadership through in new products financial goals State Street Beacon and solutions • Strong AUCA growth (total • Driving adoption of accounting • Launched the distribution of • EPS increased 23% from 11%) from 1Q16 in the technology: providing quicker the GX Private Equity Index to 1Q16 1 Americas (9%) with particular NAV delivery by 20-30 minutes ~300 global asset • ROE increased 200bps from strength in EMEA (16%) and improved working models management clients 1Q16 1 • New business wins of ~$110B • Investing in client-centric • Launched a new set of • Generated ~570bps of positive in AUCA reflect mandates design, engaging our clients to analytical tools aimed at fee operating leverage and from clients globally innovate, design and prototype helping investors tackle operating leverage of ~220bps solutions Environmental, Social and • Pipeline of AUCA that has from 1Q16 Governance (ESG) exposure been won but not yet installed • Progressing on innovative • Acquired ~$523M of our is ~$375B going into 2Q17 solutions to address client • Piloting new mobile innovation common stock. $227M needs, e.g., SEC for risk managers to stay • AUM growth of 12% from remaining under our June Modernization, Liquidity ahead of risks 1Q16, driven by the acquired 2016 common stock purchase program 2 authorizing the GEAM operations, momentum • Investing to enhance our • Participated in a test of the first in ETF flows and higher DataGX and analytic solutions: working blockchain solution for purchase of up to $1.4B markets syndicated loan servicing as through June 30, 2017 − Example: Enhanced Asset part of R3 consortium Owner Strategy to support • Declared a common stock asset owners’ evolving dividend of $0.38 per share model Refer to the Appendix included with this presentation for footnotes 1 and 2. 4

Results driven by strength in equity markets, strong client flows and State Street Beacon Operating-Basis (Non-GAAP) Diluted Earnings per Share (EPS) Return on Average Common Equity (ROE) ($) (%) +23% +200bps 1.48 1.46 12.5 12.3 1.35 11.1 10.4 1.21 8.4 0.98 1Q16 2Q16 3Q16 4Q16 1Q17 1Q16 2Q16 3Q16 4Q16 1Q17 1Q17 operating-basis (non-GAAP) financial highlights: • EPS growth of 23% compared to 1Q16, driven by strong fee revenue growth from higher equity markets, new business wins, as well as savings associated with State Street Beacon • Generated positive fee operating leverage of ~570bps compared to 1Q16, with 87bps driven by the impact of the acquired GEAM business and 147bps driven by the sale of the BFDS/IFDS UK joint venture interests • Continued to drive ROE through stronger earnings and capital return through stock repurchases and dividend payouts 1Q17 notable items: • After-tax gains related to the sale of the BFDS/IFDS UK joint venture interests of $31M, or +$0.08 per share 1 • After-tax losses related to investment portfolio rebalancing of $32M, or -$0.08 per share • Seasonal deferred incentive compensation expense for retirement-eligible employees and payroll taxes of $154M, or $0.34 per share (up from $122M, or $0.25 per share in 1Q16) Refer to the Appendix included with this presentation for footnote 1. 5

Business momentum continues Assets Under Custody Assets Under and Administration (AUCA) Management (AUM) $ in trillions $ in billions +11% +12% +4% 4% 29.2 29.8 2,561 28.8 2,468 2,446 27.8 26.9 2,296 2,301 1Q16 2Q16 3Q16 4Q16 1Q17 1Q16 2Q16 3Q16 4Q16 1Q17 • Increased 11% from 1Q16 primarily reflecting: • Increased 12% from 1Q16 primarily reflecting: − Growth from market appreciation − 11% growth from market appreciation − Growth in US from asset manager and ETF flows, offset by − 2% growth from the acquired GEAM business and ETF inflows, continued hedge fund redemptions offset by thinner-margin institutional outflows − Growth in Europe new business in both onshore and offshore − (1%) decline from FX translation markets 6