State Street Corp at Goldman Sachs U.S. Financial Services Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Alexander Blostein - Goldman Sachs & Co - Analyst : So let's start with a bit of a kind of high-level priorities question. Ron, I'll start with you on to 2025. We've seen clearly another eventful year for financial markets and hopefully ending on a good note here. But looking back, what do you view as kind of key achievements for '24? And more importantly, what are some of the key strategic priorities for State Street into next year?

Question: Alexander Blostein - Goldman Sachs & Co - Analyst : Great. Well, thank you. It's a great overview, and it's a nice setup for all the things we'll talk about in the next half hour or so. So why don't we start with your largest business servicing business. It is probably the number one question you get from investors in terms of turning the business around, starting to maybe see some growth there. No doubt there are some structural headwinds in the business. There are some cyclical ones as well. And then State Street also have some idiosyncratic issues to deal with like the BlackRock deconsolidation, et cetera. So as you think about everything you just highlighted in terms of what you have in place, is that enough to outrun some of the structural challenges that the end customer base is facing? And maybe you can just remind us again, what do you think is a reasonable organic growth algo in the services business over time?

Question: Alexander Blostein - Goldman Sachs & Co - Analyst : I got you. I got you. Let's spend a couple of minutes on private markets. It's an important area for the firm, but it really is an important area for financial services. It's one of the fastest-growing parts of the market as you pointed out. You have a couple of targets on that, so about $500 million of revenues today. You hope to double that. So you're getting that to $1 billion, call, over the next five years or so. What gives you guys the right to win in that space? What is the competitive landscape there look like relative to more traditional business? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 8:40PM, STT.N - State Street Corp at Goldman Sachs U.S. Financial Services Conference

Question: Alexander Blostein - Goldman Sachs & Co - Analyst : Got it. Okay. You mentioned Alpha is an important component of the growth story for you guys. And you've given a lot of KPIs around and so we do appreciate that. So I guess following the onboarding of some of the larger asset managers, I'm curious to hear sort of what is the key lessons learned about the process? What are some of the specific improvements are you planning to do to sort of enhance the onboarding experience for end clients? And maybe talk to us a little bit about the pipeline of both the clients and the revenues that are likely to be installed here over the next kind of 12 to 18 months?

Question: Alexander Blostein - Goldman Sachs & Co - Analyst : Right. A little more piecing, I guess, on the pipeline what you're ultimately taking on. Okay. Let's shift gears. Let's talk about Global Advisors. You mentioned a couple of really interesting stats in terms of the progress that they're making, whether it's the low-cost ETFs with retail. I wanted to take a slightly different direction, talk about some of the innovation you guys are doing in that channel, particularly with respect to alternatives. The Apollo partnership grabbed a lot of headlines. I think a few weeks ago, there was also announcement about you guys partnering with Bridgewater. I guess, comment on both of those. Why do those kind of make sense, especially the Apollo I and private credit, but also what else are you sort of thinking about as the next leg of growth within particularly the ETF franchise and SSGA?

Question: Alexander Blostein - Goldman Sachs & Co - Analyst : Great. Okay. That makes sense. Okay. Let's shift gears a bit away from some of the strategic topics, talk about some of the financial dynamics. Starting with the fourth quarter update where kind of approaching middle of the month kind of later innings of the quarter. Lots of moving pieces since the earnings call in October clearly. So the US equity markets are much stronger than non-US less so. There's the dollar dynamic, right? US dollar got a bit stronger, which tends to be a bit of a headwind to a part of your business on the top line. Currency markets have been generally pretty volatile, so that's probably a good thing. So unpack this for us, and let's kind of walk through what it means for fees and NII and expenses relative to the guidance you talked about on the last quarter's call?

Question: Alexander Blostein - Goldman Sachs & Co - Analyst : Great. Any key drivers behind that? So either on NII is at the size of the balance sheet, deposit dynamics. I know the repo markets have been sort of active as well, so maybe that's contributing. And same thing on fees, maybe you break down like servicing versus trading. Any other color?

Question: Alexander Blostein - Goldman Sachs & Co - Analyst : Yes. Well, that's great. So maybe with that, let's talk about next year to some extent as while I know this is not typically the time when you give out guidance for the following year. You usually do it on the fourth quarter earnings call, but maybe you can give us a couple of building blocks at least to start thinking about next year. So with respect to 2025 NII, how are you thinking about the trajectory of deposits? The rate curve, obviously, is maybe a little bit healthier than it was a few months ago. I mean, slightly fewer rate cuts, at least in the US. But any early thoughts into '25 NII? And how we should be thinking about it? It goes to Eric.

Question: Alexander Blostein - Goldman Sachs & Co - Analyst : Yes. Well, higher jumping off point always helps. So we'll take it. So let's shift gears and talk about expenses a little bit. It's one of the kind of achievement points, Ron, that you highlighted in your earlier comments today. And clearly a nice finish to the year with a 200 basis points of operating leverage as you just highlighted. Can we talk a little bit about how you think about sort of durability of the progress you made there? So as you look out into 2025, I know early days still, but how are you thinking about sustaining this degree of operating leverage and expense control and especially with Eric moving on and the new CFO search is underway. Does that play a role into how the expense trajectory for the firm could evolve? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 8:40PM, STT.N - State Street Corp at Goldman Sachs U.S. Financial Services Conference

Question: Alexander Blostein - Goldman Sachs & Co - Analyst : I got it. Well, speaking on capital return, let's hit on that in the last couple of minutes here. So on the last call, you talked about Q4 repurchases, surpassing third quarter level of $450 million, I think you guys did. What are your latest expectations? And again, more importantly, as you look -- kind of think a little bit further out into 2025, how much of a benefit do you guys think you can get from pull to par any kind of other dynamics as we start to pencil out our capital return expectations for next year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 8:40PM, STT.N - State Street Corp at Goldman Sachs U.S. Financial Services Conference

Question: Alexander Blostein - Goldman Sachs & Co - Analyst : All right. We have less than a minute left, so I try to squeeze this one quickly. I did want to hit on acquisitions. I think you talked about on the last call as well. But just flesh out for us a little bit, where are acquisitions on your priority list? Are there any really notable gaps in your offering that you guys are trying to fill in still inorganically?

Question: Alexander Blostein - Goldman Sachs & Co - Analyst : Got it. Okay. Well, we're out of time. Before we wrap up, Eric, this is your last time presenting as the CFO of State Street at our conference after many, many years. So I just want to thank you for all your support over the years. We'll miss talking to you at least in this capacity. Maybe you'll be here next year or so in your new role. But thank you, best of luck, and thank you for doing the conference again. I always appreciate you have staged here. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 8:40PM, STT.N - State Street Corp at Goldman Sachs U.S. Financial Services Conference