State Street Corp (NYSE:STT) Q4 2019 Earnings Conference Call - Final Transcript

Jan 17, 2020 • 10:00 am ET

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State Street Corp (NYSE:STT) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning, and welcome to State Street Corporation's Fourth Quarter 2019 Earnings Conference Call and Webcast. Today's discussion is being broadcasted live on State Street's website at investors.statestreet.com. This conference call is also being recorded for replay. State Street's conference call is copyrighted and all rights are reserved. This call may not be recorded for rebroadcast or distribution in whole or in part without the expressed written authorization from State Street Corporation. The only authorized broadcast of this call will be housed on the State Street website.

Now I would like to introduce Ilene Fiszel Bieler, Global Head of Investor Relations at State Street.

Executive
Ilene Fiszel Bieler

Good morning, and thank you all for joining us. On our call today, our CEO, Ron O'Hanley, will speak first; then Eric Aboaf, our CFO, will take you through our fourth quarter and full-year 2019 earnings slide presentation, which is available for download in the Investor Relations section of our website, investors.statestreet.com.

Afterwards, we'll be happy to take questions. During the Q&A, please limit yourself two questions and then re-queue.

Before we get started, I would like to remind you that today's presentation will include results presented on a basis that excludes or adjusts one or more items from GAAP. Reconciliations of these non-GAAP measures to the most directly comparable GAAP or regulatory measure are available in the appendix to our slide presentation.

In addition, today's presentation will contain forward-looking statements. Actual results may differ materially from those statements due to a variety of important factors such as those factors referenced in our discussion today and in our SEC filings, including the risk factors in our Form 10-K. Our forward-looking statements speak only as of today, and we disclaim any obligation to update them, even if our views change.

Now let me turn it over to Ron.

Executive
Ronald P. O'Hanley

Thanks, Ilene, and good morning, everyone. Turning to Slide 3, we announced our fourth quarter and full-year 2019 financial results this morning. Fourth quarter EPS and ROE were $1.73 and 11.6%, respectively, while full-year 2919 EPS was $5.75 cents and ROE was 10.0%. Ex notables, fourth quarter EPS was $1.98 and ROE was 13.3%. Relative to both the prior-year period and third quarter of 2019, I am pleased to report that our fourth quarter pre-tax margin improved, reaching 29.1% excluding notable items. We also saw an improvement in pre-tax margin at Global Advisors relative to the third quarter of 2019.

Before reviewing our performance further, let me touch on some of the macro factors that had an effect in 2019. Following the dramatic global equity market sell off in late 2018, our results over the course of 2019 benefited from the steady recovery of the U.S. equity market during the year. While international equity markets improved somewhat, average levels in 2019 were still down relative to the full year of 2018.

Total industry fund flows were favorable to 2018, primarily driven by broad base flows in Europe and strong money market flows. However, in North America, industry flows into long-term