State Street Corporation (NYSE: STT) today announced its
preliminary stress capital buffer (SCB) requirement, to be
maintained at 2.5%, effective October 1, 2023, and the intention to
increase its per share common stock dividend by 10% to $0.69 in the
third quarter, subject to consideration and approval by its Board
of Directors. It remains the Company’s intention to continue common
share repurchases under its existing authorization for up to a
total of $4.5 billion in 2023, subject to market conditions and
other factors.
State Street’s well-positioned balance sheet and strong capital
position were highly resilient under the severely adverse economic
conditions of the 2023 CCAR exam. State Street’s calculated SCB
under this year’s supervisory stress test was well below the 2.5%
minimum, preliminarily resulting in a continued SCB at that floor,
which maintains our common equity tier 1 (CET1) ratio requirement
at 8%1.
“The latest CCAR results reinforce our strategy and confirm the
resiliency and strength of our franchise, which enable us to
support our clients and deliver for our shareholders,” said
Chairman and Chief Executive Officer Ron O’Hanley. “As we continue
to repurchase our stock this year, we are pleased to announce
another planned increase to our quarterly common dividend, in line
with our goal of returning meaningful capital to our shareholders,”
O’Hanley added.
State Street’s Board of Directors will consider the common stock
dividend at a regularly scheduled board meeting in the third
quarter of 2023. State Street’s third quarter 2023 common stock and
other stock dividends, including the declaration, timing and
amount, remain subject to consideration and approval by State
Street’s Board of Directors at the relevant times.
Stock purchases under State Street’s common share repurchase
program may be made using various types of transactions, including
open-market purchases, accelerated share repurchases or other
transactions off the market, and may be made under Rule 10b5-1
trading programs. The timing and amount of any stock purchases and
the type of transaction may not be ratable over the duration of the
program, may vary from reporting period to reporting period and
will depend on several factors, including State Street’s capital
position and financial performance, investment opportunities,
market conditions, the nature and timing of implementation of
revisions to the Basel III framework and the amount of common stock
issued as part of employee compensation programs. The common share
repurchase program does not have specific price targets and may be
suspended at any time.
The Company also announced today the results of its 2023 annual
stress test, with its disclosure available on the Investor
Relations section of its website at
http://investors.statestreet.com.
Consistent with section 165 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act, the results of State Street’s 2023
annual stress test released today are based on the supervisory
severely adverse scenario and incorporate prescribed Dodd-Frank
capital actions. State Street, like other institutions covered by
the provisions of section 165 of the Dodd-Frank Act, is required to
conduct company-run stress tests annually under its own methodology
and to disclose summary results of those company-run stress tests
under the severely adverse scenario.
This release follows the earlier announcement of the Federal
Reserve’s supervisory stress test results for covered institutions,
including State Street, based on its own methodology. Those results
can be found at https://www.federalreserve.gov.
About State Street
State Street Corporation (NYSE: STT) is one of the world's
leading providers of financial services to institutional investors
including investment servicing, investment management and
investment research and trading. With $37.6 trillion in assets
under custody and/or administration and $3.6 trillion* in assets
under management as of March 31, 2023, State Street operates
globally in more than 100 geographic markets and employs
approximately 43,000 worldwide. For more information, visit State
Street's website at www.statestreet.com.
*Assets under management as of March 31, 2023 includes
approximately $59 billion of assets with respect to SPDR® products
for which State Street Global Advisors Funds Distributors, LLC
(SSGA FD) acts solely as the marketing agent. SSGA FD and State
Street Global Advisors are affiliated.
Forward Looking Statements
This News Release contains forward-looking statements within the
meaning of United States securities laws, including statements
about our goals and expectations regarding in particular our plans
to return capital to shareholders, including intentions for common
stock dividends and share repurchases, as well as regarding our
business, financial and capital condition, results of operations,
the financial and market outlook and the business environment.
Forward-looking statements are often, but not always, identified by
such forward-looking terminology as “intend,” “plan,” “goal,”
“will,” "outlook," “expect,” "aim," "outcome," "future,"
“strategy,” “trajectory,” "target," “guidance,” “objective,”
“priority,” “forecast,” “believe,” “anticipate,” “estimate,”
“seek,” “may,” and “trend,” or similar statements or variations of
such terms. These statements are not guarantees of future
performance, are inherently uncertain, are based on current
assumptions that are difficult to predict and involve a number of
risks and uncertainties. Therefore, actual outcomes and results may
differ materially from what is expressed in those statements, and
those statements should not be relied upon as representing our
expectations or beliefs as of any time subsequent to the time this
News Release is first issued.
Important factors that may affect future results and outcomes
include, but are not limited to:
- We are subject to intense competition, which could negatively
affect our profitability;
- We are subject to significant pricing pressure and variability
in our financial results and our AUC/A and AUM;
- Our development and completion of new products and services,
including State Street Digital and State Street AlphaSM, and the
enhancement of our infrastructure required to meet increased
regulatory and client expectations for resiliency and the systems
and process re-engineering necessary to achieve improved
productivity and reduced operating risk, may take an extended
period to implement, involve costs and expose us to increased
risk;
- Our business may be negatively affected by our failure to
update and maintain our technology infrastructure;
- The COVID-19 pandemic continues to exacerbate certain risks and
uncertainties for our business;
- Acquisitions, strategic alliances, joint ventures and
divestitures, and the integration, retention and development of the
benefits of our acquisitions, pose risks for our business;
- Competition for qualified members of our workforce is intense,
and we may not be able to attract and retain the highly skilled
people we need to support our business;
- We could be adversely affected by geopolitical, economic and
market conditions, including, for example, as a result of the
ongoing war in Ukraine, actions taken by central banks to address
inflationary pressures, challenging conditions in global equity
markets, and disruptions in fixed income markets such as those
impacting the UK gilts in the fourth quarter of 2022;
- We have significant International operations, and disruptions
in European and Asian economies could have an adverse effect on our
consolidated results of operations or financial condition;
- Our investment securities portfolio, consolidated financial
condition and consolidated results of operations could be adversely
affected by changes in the financial markets;
- Our business activities expose us to interest rate risk;
- We assume significant credit risk to counterparties, who may
also have substantial financial dependencies with other financial
institutions, and these credit exposures and concentrations could
expose us to financial loss;
- Our fee revenue represents a significant portion of our
consolidated revenue and is subject to decline based on, among
other factors, market conditions, competition, currency valuation
and investment activities of our clients and their business
mix;
- If we are unable to effectively manage our capital and
liquidity, our consolidated financial condition, capital ratios,
results of operations and business prospects could be adversely
affected;
- We may need to raise additional capital or debt in the future,
which may not be available to us or may only be available on
unfavorable terms;
- If we experience a downgrade in our credit ratings, or an
actual or perceived reduction in our financial strength, our
borrowing and capital costs, liquidity and reputation could be
adversely affected;
- Our business and capital-related activities, including common
share repurchases, may be adversely affected by regulatory capital,
credit (counterparty and otherwise) and liquidity standards and
considerations;
- We face extensive and changing government regulation in the
jurisdictions in which we operate, which may increase our costs and
compliance risks;
- We are subject to enhanced external oversight as a result of
the resolution of prior regulatory or governmental matters;
- Our businesses may be adversely affected by government
enforcement and litigation;
- Any misappropriation of the confidential information we possess
could have an adverse impact on our business and could subject us
to regulatory actions, litigation and other adverse effects;
- Our calculations of risk exposures, total RWA and capital
ratios depend on data inputs, formulae, models, correlations and
assumptions that are subject to change, which could materially
impact our risk exposures, our total RWA and our capital ratios
from period to period;
- Changes in accounting standards may adversely affect our
consolidated financial statements;
- Changes in tax laws, rules or regulations, challenges to our
tax positions and changes in the composition of our pre-tax
earnings may increase our effective tax rate;
- In addition to income tax, we are subject to audit or other
examination, and litigation or other dispute resolution
proceedings, with U.S. and non-U.S. tax authorities regarding
non-income-based tax matters. Our interpretations or application of
tax laws and regulations, including with respect to withholding,
transfer, wage, use, stamp, service and other non-income taxes,
could differ from that of the relevant governmental taxing
authority, or we may experience timing or other compliance
deficiencies in connection with our efforts to comply with
applicable tax laws and regulations, which could result in the
requirement to pay additional taxes, penalties and/or interest,
which could be material;
- The transition away from LIBOR may result in additional
unanticipated costs and increased risk exposure;
- Our control environment may be inadequate, fail or be
circumvented, and operational risks could adversely affect our
consolidated results of operations;
- Cost shifting to non-U.S. jurisdictions and outsourcing may
expose us to increased operational risk, geopolitical risk and
reputational harm and may not result in expected cost savings;
- Attacks or unauthorized access to our information technology
systems or facilities, or those of the third parties with which we
do business, or disruptions to our or their continuous operations,
could result in significant costs, reputational damage and impacts
on our business activities;
- Long-term contracts expose us to pricing and performance
risk;
- Our businesses may be negatively affected by adverse publicity
or other reputational harm;
- We may not be able to protect our intellectual property;
- The quantitative models we use to manage our business may
contain errors that could result in material harm;
- Our reputation and business prospects may be damaged if our
clients incur substantial losses or are restricted in redeeming
their interests in investment pools that we sponsor or manage;
- The impacts of climate change, and regulatory responses to such
risks, could adversely affect us; and
- We may incur losses as a result of unforeseen events including
terrorist attacks, natural disasters, the emergence of a new
pandemic or acts of embezzlement.
Other important factors that could cause actual results to
differ materially from those indicated by any forward-looking
statements are set forth in our 2022 Annual Report on Form 10-K and
our subsequent SEC filings. We encourage investors to read these
filings, particularly the sections on risk factors, for additional
information with respect to any forward-looking statements and
prior to making any investment decision. The forward-looking
statements contained in this News Release should not by relied on
as representing our expectations or beliefs as of any time
subsequent to the time this News Release is first issued, and we do
not undertake efforts to revise those forward-looking statements to
reflect events after that time.
1 8.0% CET1 requirement effective as of October 1, 2023 is
comprised of the 4.5% minimum regulatory requirement, 2.5% SCB, and
the current 1% G-SIB surcharge.
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version on businesswire.com: https://www.businesswire.com/news/home/20230630269640/en/
Media: Carolyn Cichon +1 617 664 8672
Investor: Ilene Fiszel Bieler +1 617 664-3477
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