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Line of Business Information
 12 Months Ended
Dec. 31, 2019
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, through State Street Global Services, State Street Global Markets, State Street Global Exchange and CRD, 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; depotbank services (a fund oversight role created by non-U.S. regulation); record-keeping; cash management; foreign exchange, brokerage and other trading services; securities finance and enhanced custody products; deposit and short-term investment facilities; loans and lease financing; investment manager and alternative investment manager operations outsourcing; performance, risk and compliance analytics; and financial data management to support institutional investors. Our CRD business also falls within our Investment Servicing line of business and includes products and services, such as: portfolio modeling and construction; trade order management; investment risk and compliance; and wealth management solutions.
Investment Management, through State Street Global Advisors, provides a broad range of investment management strategies and products for our clients. Our investment management strategies and products span the risk/reward spectrum, including core and enhanced indexing, multi-asset strategies, active quantitative and fundamental active capabilities and alternative investment strategies. Our AUM is currently primarily weighted to indexed strategies. In addition, we provide a breadth of services and solutions, including environmental, social and governance investing, defined benefit and defined contribution and Global Fiduciary Solutions (formerly Outsourced Chief Investment Officer). State Street Global Advisors is also a provider of ETFs, including the SPDR® ETF brand. While management fees are primarily determined by the values of AUM and the investment strategies employed, management fees reflect other factors as well, including the benchmarks specified in the respective management agreements related to performance fees.
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 foreign exchange trading services and securities finance activities, represents approximately 70% to 80% of our consolidated total revenue. The remaining 20% to 30% is composed of software and processing fees, including CRD, as well as NII, 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, 2019 included net costs of $359 million composed of the following:
•
Net acquisition and restructuring costs of $77 million;
•
Net repositioning charges of $110 million; and
•
Legal and related expenses of $172 million.
The “Other” column for the year ended December 31, 2018 included net costs of $398 million composed of the following:
•
Net repositioning charges related to organizational changes and management streamlining of $300 million;
•
Business exit costs of $24 million;
•
Legal and related expenses of $50 million; and
•
Net acquisition and restructuring costs of $24 million.
The "Other" column for the year ended December 31, 2017 included net acquisition and restructuring costs of $266 million.
The following is a summary of our line of business results for the periods indicated. The amounts in the “Other” columns were not allocated to our 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 2019.
 
Years Ended December 31,
 
Investment
Servicing
 
Investment
Management
 
Other
 
Total
(Dollars in millions)
2019

2018

2017
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Servicing fees
$
5,074

 
$
5,429

 
$
5,365

 
$
—

 
$
—

 
$
—

 
$
—

 
$
(8
)
 
$
—

 
$
5,074

 
$
5,421

 
$
5,365

Management fees
—

 
—

 
—

 
1,771

 
1,851

 
1,616

 
—

 
—

 
—

 
1,771

 
1,851

 
1,616

Foreign exchange trading services
974

 
1,071

 
999

 
137

 
130

 
72

 
—

 
—

 
—

 
1,111

 
1,201

 
1,071

Securities finance
462

 
543

 
606

 
9

 
—

 
—

 
—

 
—

 
—

 
471

 
543

 
606

Software and processing fees(1)(2)
691

 
443

 
336

 
29

 
(5
)
 
7

 
—

 
—

 
—

 
720

 
438

 
343

Total fee revenue(1)
7,201

 
7,486

 
7,306

 
1,946

 
1,976

 
1,695

 
—

 
(8
)
 
—

 
9,147

 
9,454

 
9,001

Net interest income
2,590

 
2,691

 
2,309

 
(24
)
 
(20
)
 
(5
)
 
—

 
—

 
—

 
2,566

 
2,671

 
2,304

Total other income
43

 
6

 
(39
)
 
—

 
—

 
—

 
—

 
—

 
—

 
43

 
6

 
(39
)
Total revenue(1)
9,834

 
10,183

 
9,576

 
1,922

 
1,956

 
1,690

 
—

 
(8
)
 
—

 
11,756

 
12,131

 
11,266

Provision for loan losses
10

 
15

 
2

 
—

 
—

 
—

 
—

 
—

 
—

 
10

 
15

 
2

Total expenses(1)
7,140

 
7,081

 
6,717

 
1,535

 
1,544

 
1,286

 
359

 
390

 
266

 
9,034

 
9,015

 
8,269

Income before income tax expense
$
2,684

 
$
3,087

 
$
2,857

 
$
387

 
$
412

 
$
404

 
$
(359
)
 
$
(398
)
 
$
(266
)
 
$
2,712

 
$
3,101

 
$
2,995

Pre-tax margin
27
%
 
30
%
 
30
%
 
20
%
 
21
%
 
24
%
 
 
 
 
 
 
 
23
%
 
26
%
 
27
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average assets (in billions)
$
220.3

 
$
220.2

 
$
214.0

 
$
3.0

 
$
3.2

 
$
5.4

 
 
 
 
 
 
 
$
223.3

 
$
223.4

 
$
219.4


 
 
 
 
(1) Investment Servicing includes results from our acquisition of CRD on October 1, 2018.
(2) Investment Management includes other revenue items that are primarily driven by equity market movements.