XML 51 R34.htm IDEA: XBRL DOCUMENT v3.22.4
Line of Business Information
 12 Months Ended
Dec. 31, 2022
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 Investment Services, State Street Global MarketsSM, State Street Alpha, and State Street Digital, we provide investment services for institutional clients, including mutual funds, collective investment funds and other investment pools, corporate and public retirement plans, insurance companies, investment managers, foundations and endowments worldwide. Products include: back office products such as custody, accounting, regulatory reporting, investor services, performance and analytics; middle office products such as IBOR, transaction management, loans, cash, derivatives and collateral services, record keeping, client reporting and investment analytics; 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.
Included within our Investment Servicing line of business is the Charles River Investment Management Solution, a technology offering which is designed to automate and simplify the institutional investment process across asset classes, from portfolio management and risk analytics through trading and post-trade settlement, with integrated compliance and managed data throughout. With the acquisition of CRD in 2018, we took the first step in building our front-to-back platform, State Street Alpha. In 2021, we further expanded State Street Alpha's technology offering with the acquisition of Mercatus, Inc., enabling the launch of Alpha for Private Markets. Today our State Street Alpha platform combines portfolio management, trading and execution, analytics and compliance tools, and advanced data aggregation and integration with other industry platforms and providers.
In 2021, we established State Street Digital to focus on the development of services related to digital assets and related technologies, such as blockchain, tokenization, cryptocurrency, and central bank digital currency, including the evolution of a new integrated business and digital operating model designed to support primarily our institutional clients' digital investment cycle.
Investment Management provides a broad range of investment management strategies and products for our clients through State Street Global Advisors. Our investment management strategies and products for equity, fixed income and cash assets, including core and enhanced indexing, multi-asset strategies, active quantitative and fundamental active capabilities and alternative investment strategies span the risk/reward spectrum of these investment products. Our AUM is currently primarily weighted to indexed strategies. In addition, we provide a breadth of services and solutions, including ESG investing, defined benefit and defined contribution products, and Global Fiduciary Solutions. State Street Global Advisors is also a provider of ETFs, including 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 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 front office software and data and lending related and other fees, 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 "Other" column for the periods indicated.
Years Ended December 31,
Other
(Dollars in millions)202220212020
Fee revenue$23 $— $— 
Other Income— 111 — 
Net repositioning charges(70)3 (133)
Net acquisition and restructuring costs
(65)(65)(50)
Legal and related expenses— (18)9 
Deferred incentive compensation expense acceleration— (147)— 
Other expenses(10)(35)— 
Total$(122)$(151)$(174)
The following is a summary of our line of business results for the periods indicated. The "Other" columns represent amounts that are not allocated to our two lines of business, including repositioning charges, employee costs, acquisition costs, revenue-related recoveries and certain legal accruals. In addition, the acceleration of deferred compensation of $147 million in 2021 was not allocated to our two lines of business. 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 2022.
Years Ended December 31,
Investment
Servicing		Investment
Management		OtherTotal
(Dollars in millions)202220212020202220212020202220212020202220212020
Servicing fees$5,087 $5,531 $5,157 $— $— $— $— $— $— $5,087 $5,531 $5,157 
Management fees— — — 1,939 2,053 1,880 — — — 1,939 2,053 1,880 
Foreign exchange trading services1,271 1,149 1,299 82 62 64 23 — — 1,376 1,211 1,363 
Securities finance397 402 342 19 14 14 — — — 416 416 356 
Software and processing fees789 738 685 — — — — — — 789 738 685 
Other fee revenue(1)
46 59 31 (47)4 27 — — (1)63 58 
Total fee revenue7,590 7,879 7,514 1,993 2,133 1,985 23 — — 9,606 10,012 9,499 
Net interest income2,551 1,919 2,211 (7)(14)(11)— — — 2,544 1,905 2,200 
Total other income(2)(1)4 — — — — 111 — (2)110 4 
Total revenue10,139 9,797 9,729 1,986 2,119 1,974 23 111 — 12,148 12,027 11,703 
Provision for credit losses20 (33)88 — — — — — — 20 (33)88 
Total expenses7,260 7,182 7,071 1,396 1,445 1,471 145 262 174 8,801 8,889 8,716 
Income before income tax expense$2,859 $2,648 $2,570 $590 $674 $503 $(122)$(151)$(174)$3,327 $3,171 $2,899 
Pre-tax margin28 %27 %26 %30 %32 %25 %27 %26 %25 %
Average assets (in billions)$283.2 $296.5 $266.4 $3.2 $3.2 $2.9 $286.4 $299.7 $269.3 
(1) Investment Management includes other revenue items that are primarily driven by equity market movements.