Line of Business Information

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Line of Business Information

Line of Business Information

Our operations are organized into two lines of business: Investment Servicing and Investment Management, which are defined based on products and services provided. The results of operations for these lines of business are not necessarily comparable with those of other companies, including companies in the financial services industry.

Investment Servicing provides services for U.S. mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, foundations and endowments worldwide. Products include custody; product- and participant-level accounting; daily pricing and administration; master trust and master custody; record-keeping; cash management; foreign exchange, brokerage and other trading services; securities finance; our enhanced custody product, which integrates principal securities lending and custody; deposit and short-term investment facilities; loans and lease financing; investment manager and alternative investment manager operations outsourcing; and performance, risk and compliance analytics to support institutional investors.

We provide shareholder services, which include mutual fund and collective investment fund shareholder accounting, through 50%-owned affiliates, Boston Financial Data Services, Inc. and the International Financial Data Services group of companies.

Investment Management,through SSGA, provides a broad array of investment management, investment research and investment advisory services to corporations, public funds and other sophisticated investors. SSGA offers passive and active asset management strategies across equity, fixed-income, alternative, multi-asset solutions (including OCIO) and cash asset classes. Products are distributed directly and through intermediaries using a variety of investment vehicles, including ETFs, such as the SPDR^® ETF brand.

Our investment servicing strategy is to focus on total client relationships and the full integration of our products and services across our client base through cross-selling opportunities. In general, our clients will use a combination of services, depending on their needs, rather than one product or service. For instance, a custody client may purchase securities finance and cash management services from different business units. Products and services that we provide to our clients are parts of an integrated offering to these clients. We price our products and services on the basis of overall client relationships and other factors; as a result, revenue may not necessarily reflect the stand-alone market price of these products and services within the business lines in the same way it would for separate business entities.

Our servicing and management fee revenue from the investment servicing and investment management business lines, including trading services and securities finance activities, represents approximately 75% to 80% of our consolidated total revenue. The remaining 20% to 25% is composed of processing fees and other revenue as well as net interest revenue, which is largely generated by our investment of client deposits, short-term borrowings and long-term debt in a variety of assets, and net gains (losses) related to investment securities. These other revenue types are generally fully allocated to, or reside in, Investment Servicing and Investment Management.

Revenue and expenses are directly charged or allocated to our lines of business through management information systems. Assets and liabilities are allocated according to policies that support management’s strategic and tactical goals. Capital is allocated based on the relative risks and capital requirements inherent in each business line, along with management judgment. Capital allocations may not be representative of the capital that might be required if these lines of business were separate business entities.

The following is a summary of our line-of-business results for the periods indicated.

The “Other” column for the year ended December 31, 2016 included net costs of $199 million composed of the following -

• Net acquisition and restructuring costs of $209 million; and

• Net severance cost adjustments associated with staffing realignment of $(10) million.

The “Other” column for the year ended December 31, 2015 included net costs of $98 million composed of the following -

• Net acquisition and restructuring costs of $25 million; and

• Net severance costs associated with staffing realignment of $73 million.

The “Other” column for the year ended December 31, 2014 included net costs of $219 million composed of the following -

• Net acquisition and restructuring costs of $133 million;

• Net severance costs associated with staffing realignment of $84 million; and

• Net provisions for litigation exposure and other costs of $2 million.

The amounts in the “Other” columns were not allocated to State Street's business lines. Prior reported results reflect reclassifications, for comparative purposes, related to management changes in methodologies associated with allocations of revenue and expenses to lines-of-business in 2016.

	Years Ended December 31,
	Investment Servicing									Investment Management									Other									Total
(Dollars in millions, except where otherwise noted)	2016			2015			2014			2016			2015			2014			2016			2015			2014			2016			2015			2014
Servicing fees	$	5,073		$	5,153		$	5,108		$	—		$	—		$	—		$	—		$	—		$	—		$	5,073		$	5,153		$	5,108
Management fees	—			—			—			1,292			1,174			1,207			—			—			—			1,292			1,174			1,207
Trading services	1,052			1,108			1,039			47			38			45			—			—			—			1,099			1,146			1,084
Securities finance	562			496			437			—			—			—			—			—			—			562			496			437
Processing fees and other	105			325			179			(15		)	(16		)	(5		)	—			—			—			90			309			174
Total fee revenue	6,792			7,082			6,763			1,324			1,196			1,247			—			—			—			8,116			8,278			8,010
Net interest revenue	2,081			2,086			2,245			3			2			15			—			—			—			2,084			2,088			2,260
Gains (losses) related to investment securities, net	7			(6		)	4			—			—			—			—			—			—			7			(6		)	4
Total revenue	8,880			9,162			9,012			1,327			1,198			1,262			—			—			—			10,207			10,360			10,274
Provision for loan losses	10			12			10			—			—			—			—			—			—			10			12			10
Total expenses	6,660			6,990			6,648			1,218			962			960			199			98			219			8,077			8,050			7,827
Income before income tax expense	$	2,210		$	2,160		$	2,354		$	109		$	236		$	302		$	(199	)	$	(98	)	$	(219	)	$	2,120		$	2,298		$	2,437
Pre-tax margin	25		%	24		%	26		%	8		%	20		%	24		%										21		%	22		%	24		%
Average assets (in billions)	$	225.3		$	246.6		$	234.2		$	4.4		$	3.9		$	3.9											$	229.7		$	250.5		$	238.1