State Street Corp (NYSE:STT) Q3 2019 Earnings Conference Call - Final Transcript

Oct 18, 2019 • 10:00 am ET

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State Street Corp (NYSE:STT) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Analyst
Operator

[Operator Instructions] Your first question comes from Alex Blostein from Goldman Sachs. Your line is open.

Analyst
Alex Blostein

Thanks. Hey, good morning, everybody. So maybe starting with the question around servicing fees, obviously nice to see commentary around moderating pricing pressure again here. Maybe give us an update where that stands. I think 4% down is kind of how we're thinking about 2019. As you look into 2020, how do you expect these pricing pressures to evolve?

Executive
Eric Aboaf

Alex, it's Eric. It's early to take a full-year look at 2020. But I think we've started to see a couple of quarters here some moderation in 2019. So, in second quarter, we began to see some of those early signs. They continued this quarter as well. And as we have reviewed the book of some of the larger than historical pricing concessions, you recall we were tracking the Top 100 clients, we are now through 75%, 80% of that book. And then, that gives us an ability to begin to look forward into fourth quarter and even into the first quarter of next year. And as we look forward into those time periods, we continue to expect the moderation to continue. That's the kind of the indicators.

I think if we step back and ask the broader question for what's driving some of those changes, I think there are really two things. I think on one hand, we're beginning to see the effects of our coverage teams and how we have upgraded our coverage force to better client cover -- better cover clients and bring together the full set of discussions in one place. And then with our executive review pricing committee, we've actually brought up the pricing decisioning to literally just a handful of senior executives. And that's given us the ability to influence the amount and the direction of that -- those pricing adjustments, and at the same time actually work collaboratively with our clients around where there is incremental business to be brought on. And I think what we're starting to see is the effect of that senior control and engagement have its effect on the revenues in these quarters.

Analyst
Alex Blostein

Got it. Thanks for that. And then my second question is around servicing fees, again, but maybe a little bit more specifically related to the quarter. It's obviously $1 trillion in wins is a big number, $1.2 trillion pipeline is a big number. Definitely appreciate the effort to sort of communicate the drivers of servicing fees in a more transparent fashion. But in the past we've seen big AUM, AUC numbers, but the translations in the fees have been sort of underwhelming. So can we talk through maybe the impact of these wins on the revenues and ultimately the timing of when that's going to hit. Thank you.

Executive
Eric Aboaf

Alex, it's Eric again. I think, as you'd expect, in our business, our business is lumpy and it also comes with a range of different wins and new business engagements. I think it's hard