Letter from Chairman and CEO Ronald P. O’Hanley

Leveraging our strengths for the future

I often reflect on State Street’s role in the global financial system. First, it is responsibility, centered on trust and reliability, with our clients coming first. Our scale and innovation go hand in hand, and we make substantial investments in innovative technology, new processes, and invent new ways of working — always with reference to our partnership with clients.

We have an obligation to effectively support our employees and communities, and large banks also must operate in and promote the stability of our financial system. Our obligations as a Global Systemically Important Financial Institution go well beyond a regulatory responsibility. Trillions of dollars pass through us each day. This money is not ours. It is the hard-earned savings of teachers, nurses, first responders, and all of those around the world and in our communities who trust us as custodians or managers of their capital. These are serious responsibilities that I think about every day. For if we execute against these responsibilities well, we will deliver against our responsibility to you, our shareholders — who have entrusted management with this obligation.

Over our nearly 232-year history, our responsibilities have evolved and increased. We define these responsibilities by a steadfast focus on our purpose: to help create better outcomes for the world’s investors and the people they serve. The requirements to fulfill this purpose have changed as investors’ needs have changed, requiring constant innovation, speed, and efficiency on the part of State Street.

“I have an unshakable sense of pride in and admiration for our people, who understand our responsibility to our clients and shareholders — and what is at stake.”

I have an unshakable sense of pride in and admiration for our people, who understand our responsibility to our clients and shareholders — and what is at stake. Because of this, we are confident in our strategy and laser-focused on execution and accountability for results, underpinned by our multiyear strategic growth agenda to drive long-term shareholder value.

To fulfill our role, we operate through two main business segments: Investment Servicing, which includes our Asset Services and Markets and Financing businesses, and Investment Management through State Street Global Advisors. In our Investment Servicing businesses, we are an essential partner to investors such as global asset managers, asset owners, official institutions, central banks, and wealth managers, providing services, infrastructure, and expertise that promote overall market efficiency and integrity.

Our ambition in this segment is to be the world’s leading investment servicer and provider of liquidity, financing, and research products, shaping the future of the industry and driving new levels of technology-led innovation, resiliency, efficiency, and growth for investors and the people they serve. Our clients depend on us to provide an array of enterprise outsource services that are essential to their operations, allowing them to focus on investing well on behalf of their clients and unlocking growth, gaining efficiencies, and seizing new market opportunities.

As the fourth-largest investment manager in the world by assets under management (AUM), we efficiently allocate capital on behalf of our clients, manage risk, and facilitate long-term wealth creation. Our vision in this space is to be the world’s leading partner and provider of investment exposures and tailored solutions.

A dynamic year

2023 was dynamic, underscored by a complex set of macroeconomic forces and significant market events that emerged throughout the year. We entered the year challenged by persistent inflation, ongoing policy tightening in most developed economies, and widespread expectations of recession. We ended the year with signs of stabilizing inflation and the absence of recession in most of the world, but continued uncertainty on interest rates.

In the first quarter of 2023, turmoil in the banking sector ultimately led to the resolution of several banks, which was a catalyst for large fixed-income market moves. Our strong capital and liquidity positions, size and scale, and our sophisticated risk management enable us to help safeguard investors and assist in providing market stability during uncertain times.

In the second quarter, investor sentiment turned positive, with a focus on growth from areas such as artificial intelligence (AI), helping to drive equity markets higher. Yet, as we progressed into the third quarter, continued rate uncertainty and rising geopolitical concerns caused equities to decline. The Federal Reserve in July raised interest rates to the highest level in 22 years as it continued to confront inflationary pressures; the prospect of higher-for-longer rates led to a substantial sell-off in bond markets, with the U.S. 10-year Treasury yield exceeding 5 percent in October for the first time since the global financial crisis. In the fourth quarter, equity markets rallied vigorously as the Federal Reserve signaled a potential pivot to lower rates, and investors grew increasingly optimistic about a soft landing.

While our full-year overall financial results benefited from higher interest rates globally last year, and despite the strong market appreciation in the fourth quarter, daily average global equity markets only increased by low single digits in 2023, providing just a modest tailwind to fee revenue, while client activity and associated fees were muted as investors stayed on the sidelines. And even in such an eventful year, equity and foreign exchange (FX) market volatility contracted, creating revenue headwinds for our trading businesses.

In 2023, we focused on and delivered in three key areas: (1) achieving strong sales wins across our business; (2) continuing the transformation of our operations resulting in marked improvements in quality, client satisfaction, and overall execution; and (3) remaining disciplined in delivering on our multiyear productivity and efficiency efforts and overall cost management.


“We remain focused on strengthening our market position and growing revenue, enhancing productivity by further advancing service and operational excellence, and advancing our technology to support growth.”

Despite not meeting our expected revenue goals for 2023, I am pleased with how we managed through various industry headwinds while continuing to execute against our long-term strategic agenda for the benefit of our clients and our shareholders.

We remain focused on strengthening our market position and growing revenue, enhancing productivity by further advancing service and operational excellence, and advancing our technology to support growth.

Uncertainty will remain in the year ahead as inflation, employment and wage growth, consumer spending, and monetary policy seek to find balance. It is a reminder that we must navigate vigilantly through what we cannot control and execute superbly well against what we can control.

2023 financial performance1

Full-year earnings per share (EPS) for 2023 was $5.58, or $7.66 excluding notable items. Year over year, excluding notable items, EPS growth was supported by $3.8 billion of common share repurchases, a record level of net interest income (NII), continued growth of our front-office software and data business, and higher securities finance revenues. This combination of which more than offset the impact of lower servicing and management fees and underlying expense growth, which remained well controlled.

Our assets under custody and/or administration (AUC/A) were $41.8 trillion at year-end, an increase of 14 percent year over year, largely driven by higher year-end market levels and net new business.

At State Street Global Advisors, our total 2023 year-end AUM was $4.1 trillion, an increase of 19 percent year over year, reflecting higher year-end market levels and overall net inflows, including record full-year 2023 exchange-traded fund (ETF) and cash AUM net inflows.

Total fee revenue decreased in 2023 by 1 percent year over year from $9.61 billion to $9.48 billion. Slight market appreciation notwithstanding, the effects of muted volatility, central bank pivots, and geopolitical concerns pushed investors to the sidelines, depressing transaction activity. NII increased 8 percent year over year from $2.54 billion in 2022 to $2.76 billion, primarily driven by the impact of interest rates.

Total revenue decreased in 2023 by 2 percent from $12.15 billion to $11.94 billion, while total expenses increased 9 percent year over year from $8.80 billion to $9.58 billion (total expenses increased 3 percent excluding notable items, which included an FDIC special assessment related to the Silicon Valley Bank resolution). We actively managed expenses and continued our productivity and optimization savings efforts, realizing approximately $300 million in structural savings in 2023, all while carefully investing in strategic elements of the company, including State Street Alpha®, Private Markets, and technology and operations process improvements.

Strong business momentum

Our Investment Servicing business represented 85 percent of our revenue in 2023, services approximately 10 percent of the world’s financial assets, and plays an integral role in supporting the functionality of the global financial system. In 2023, we unveiled a sharpened Asset Services execution plan, underpinned by a number of measurable actions aimed at driving servicing fee revenue across key regions and product areas, helping us realize the full potential of our State Street Alpha value proposition, and accelerating overall sales and revenue growth, particularly in our core back-office custody business. This plan yielded quick successes, including the strongest quarterly servicing sales results in the fourth quarter that we have seen in many years. We also further advanced our growth in the Middle East, Asia-Pacific, and Europe.


“Clients continue to see the benefits of our truly differentiated strategy in which State Street Alpha provides a configurable, open-architecture platform across data and front-to-back investment activities.”

State Street Alpha continues to broaden and deepen our client relationships, positioning us as our clients’ essential partner. Clients continue to see the benefits of our truly differentiated strategy, in which State Street Alpha provides a configurable, open-architecture platform across data and front-to-back investment activities. Integrating front-, middle-, and back-office processes creates efficiencies by eliminating manual touchpoints and enabling automation to reduce costs and mitigate risks inherent in the investment process. We won 7 new mandates in 2023, and at year-end we had 18 clients live with our Alpha solution. In addition, we have leveraged standardized methodologies and tools to enhance our operation, enabling an acceleration of onboarding larger and more complex programs, which brings the value and benefits of the platform to our clients sooner.

2023 was also an important year for State Street Alpha software delivery, including a new fixed-income portfolio management module, propelling Charles River Development and State Street Alpha capabilities and competitiveness forward. We recorded our first State Street Alpha for Private Markets client, and we continued State Street Alpha’s momentum by deepening relationships with a number of key existing mandates.

“Any business is only as good as the service it provides to its clients, and those who prioritize service are more likely to succeed. In our business, service quality as measured by platform reliability and innovation, cycle times, and unit cost is the key factor for success.”

Data is at the center of investment markets and activity. We play a central role in helping clients protect, manage, deploy, and employ data. Our Alpha Data Platform provides new and innovative tooling for clients to access their data, uncovering new levels of interoperability, scale, and flexibility. The platform enables clients to seamlessly aggregate and access investment data spanning internal and third-party services across their investment processes, allowing the delivery of timely insights while simplifying the user experience for both assembling and consuming this information.

Our front-office software and data business had a strong year in 2023, with $580 million in revenue and record new bookings in the fourth quarter, and significant front-office software bookings and revenue growth for the year, including 29 new client implementations or conversions by year-end.

Any business is only as good as the service it provides to its clients, and those who prioritize service are more likely to succeed. In our business, service quality as measured by platform reliability and innovation, cycle times, and unit cost is the key factor for success. Our clients recognize our service quality and productivity focus, and I look forward to continuing to learn from them about how we can even further elevate their experience.

Within our Markets and Financing business, even as low volatility created a headwind, we continued to strengthen our strong market position. Euromoney Magazine named us the winner across four important categories in its 2023 FX awards including “Best FX Bank for Real Money Clients.”

We also continued to innovate and strategically expand our product capabilities and geographical reach, including announcing the acquisition of outsourced trading firm CF Global Trading, which closed in early 2024 and will provide expanded liquidity provision capabilities and offer a complete global trading solution as part of State Street Alpha.

Our Securities Finance business, which includes Agency Lending and Prime Services, continued to support our clients by providing market-leading solutions, with revenues increasing 2 percent year over year. Global Credit Finance expanded its presence in private markets and increased lending by more than 25 percent to private equity, private credit, and other alternative funds.

State Street Global Advisors (SSGA) executed against an ambitious strategic agenda and delivered strong performance. We undertook targeted strategic actions aimed at expanding our capabilities, gaining market share, and driving management fee growth. We continued to strengthen our position as a leader in innovative and cost-effective solutions underpinned by valuable investment insights to help investors navigate challenging environments and achieve desired long-term investment returns.

As a result, SSGA saw encouraging business growth and reached $4.1 trillion in AUM. This growth and strategic innovation positions us well as we look ahead.

In the fourth quarter of 2023, we achieved record aggregate total flows, including record quarterly flows within our SPDR ETF franchise, amounting to a capture of 21 percent of total global ETF flows in the fourth quarter, and ending 2023 with a record level of total ETF AUM.

Our Cash business also had an exceptional year, delivering record annual flows in 2023, with institutional money market fund AUM also reaching a record. Overall, we gained market share in a number of key areas, including institutional money market funds and U.S. low-cost equity and fixed-income ETFs. In Defined Contribution, demand for our target date fund (TDF) retirement suite also continued to rise in 2023, with a total of $21.9 billion in TDF flows into our U.S. Flagship Series, excluding custom strategies.

Resilience and strength in our client operations

Risk excellence and accountability are core to our culture, and we have a meaningful and sustained focus on our risk and control environment. We continue to enhance infrastructure, technology, operating standards, and governance to maintain a control environment that drives trust and reliability with our clients.

Our technology capabilities are a differentiator, allowing us to deliver quality results and service while reducing risk. At State Street, we describe our business as technology-led — a place where technology drives innovation and forward thinking, enabling us to be an essential partner and platform for our clients. As we continue to advance our technology development and enhance our internal applications, we will deliver increased efficiencies and resiliency across the business, improve client experience, and enhance our data capabilities.

Driving productivity and client service

Continuing to build strong and efficient operations to deliver for our clients remains a top priority. As we continue on our journey to be the leading investment service provider and investment manager, we have announced significant steps in advancing service execution while increasing efficiency. We expect these actions will continue to accelerate the transformation of our global operations by enhancing service quality, deepening client relationships, and enabling productivity increases.

These actions include:

  • Simplify our operations. We streamlined our India operations by assuming control of one of our operations joint ventures during 2023, with a second operations joint venture consolidation expected to close in the second quarter of 2024. These actions are both a natural evolution of those longstanding relationships and an enabler to expand our scale, improve client service, and advance our operational excellence.
  • Reengineer and automate our processes, including reducing and eliminating bespoke processes. In 2023, we reduced the number of bespoke processes within our Asset Services operations by 7 percent, and we anticipate that we can reduce such processes even more in 2024, thereby continuing to scale better and reduce risk.
  • Optimize resources to reduce management spans of control, increase speed of decision-making, and deliver an enhanced client experience. Our operation is our product and what our clients experience from us. Therefore, an effective, clear operating model is critical to effective delivery to our clients.

At the same time, we continued to make strategic investments to modernize our platforms and build capabilities. Our focus on service quality is showing positive results — our Net Promoter Score, a key metric that measures customer base loyalty, is reinforcing our actions and reflecting an improved experience for our clients.

“Data is at the center of investment markets and activity. We play a central role in helping clients protect, manage, deploy, and employ data.”

State Street has been developing AI functionality for over five years, and today we are home to hundreds of AI practitioners. Leveraging the promise of AI has contributed to our transformation efforts and driven greater service quality, accuracy, and speed. We have used machine learning to enhance or automate existing processes to reduce manual work and increase efficiencies in ways that unlock capacity for our employees to advance more strategic and higher-impact work. This includes replacing manual reconciliation work, accelerating the identification of portfolio data errors, automating the ingestion of unstructured data, reducing false positives in anti-money laundering and sanctions screening, and driving other efficiencies by strengthening controls.

Generative AI provides even greater opportunities, and we are carefully deploying use cases after thorough testing, risk assessments, and control design. Today, we are developing generative AI capabilities to provide clients with strategic, impactful, and actionable insights from their data to augment human analysis and improve business results.

Our people and our communities

Culture and the associated desired behaviors are fundamental to business success. Our business is driven by our people, who come to work every day to drive outcomes for clients, each other, and our communities. In 2023, State Street Foundation donated more than $25 million to communities around the globe where our employees live and work. This included our 1:1 matching gift program and our 2:1 matching gift program for key global relief partners responding to crisis situations worldwide. We believe that business success is a function of the success of our communities; our employees completed more than 84,000 hours of volunteering during 2023, further amplifying our impact.

We actively support diverse-owned firms to help to build capabilities, promote economic empowerment, and foster entrepreneurship. Our debt issuances have included various minority-, women-, and veteran-owned firms in our syndicates and as lead bookrunners.

“Culture and the associated desired behaviors are fundamental to business success. Our business is driven by our people, who come to work every day to drive outcomes for clients, each other, and our communities.”

We are proud of these efforts and have seen strong outcomes. Diverse-owned firms have underwritten more than 40 percent of the approximately $11 billion of State Street-issued publicly offered debt from 2021 through 2023.

In 2023, we released the results of an independent civil rights audit at State Street, an important next step in strengthening our diversity, equity, and inclusion efforts. We also reaffirmed our diversity goals launched in 2018; we made positive progress over the past five years across the majority of these goals.

A confident future

We support and move forward the investment ecosystem each day. We hold a unique place in our industry, and we are well positioned to leverage our scale and innovation to continue to drive value for our clients. Our role comes with a well-understood responsibility — to our clients, our shareholders, and the entire global financial system — and it is a responsibility that our 46,000 employees focus on every day.

2023 was a year of many accomplishments for us. We had much to execute strategically and technologically. Thanks to our extraordinary employees, we did execute, serving our clients well and delivering innovative capabilities. We finished strong and created a springboard for our businesses in 2024 and beyond.

In 2024, we are focused on delivering against key strategic priorities:

  • Deliver fee revenue growth
  • Extend market leadership in our Markets and Financing and Investment Management businesses
  • Enhance company productivity while providing our clients service and operational excellence
  • Build out even more technological capabilities to support growth, manage risk, and improve resilience
  • Continue to foster a workplace culture that accelerates business performance; sharpens accountability; and attracts, retains, and inspires top talent

I am confident in our path forward, and we remain focused on the execution of our strategy and accountability for our results. Our plans for 2024 and beyond are ambitious — underpinned by our purpose, supported by top talent, and focused on serving our clients and other stakeholders in ways that ultimately drive value for you, our shareholders.

Thank you for your continued partnership and trust.

Signature ronald ohanley

Ronald P. O’Hanley

Chairman and CEO

Forward-looking statements

This annual report, including, without limitation, the letters to shareholders, contains forward-looking statements as defined by U.S. securities laws. These statements are not guarantees for future performance, are inherently uncertain, are based on assumptions that are difficult to predict, and have a number of risks and uncertainties.

Further, the forward-looking statements speak only as of the time of this annual report is first published, and State Street does not undertake efforts to revise forward looking statements. Refer to Item 1A of the Form 10-K included with
this annual report for details.