The second-oldest continually operating U.S. bank dropped sharply after reporting weaker-than-expected results. 😬
State Street reported a net income of $691 million, missing the $700 million consensus estimate. Lower average non-interest-bearing deposits put pressure on net interest income. However, it beat adjusted earnings estimates of $2.10 by $0.07.
Investment servicing assets under custody (AUC) rose 4%, and investment management assets under management (AUM) jumped 9% YoY. The market’s rebound primarily drove the increases, though it onboarded $1.2 trillion in new AUC. 💰
Here’s how its 5% total revenue increase breaks down:
- Servicing fees -3% YoY
- Management fees -6% YoY
- FX trading services -8% YoY
- Securities finance +9% YoY
- Software and processing fees +18% YoY
- Other fees revenue +$101 million
Total expenses rose 5%, primarily driven by higher salaries, headcount, and business investments. Compensation and employee benefits rose 7% YoY, while non-compensation expenses rose 3%. 🔺
Overall, the slower-than-anticipated revenue growth and quality of earnings concerned investors. $STT was down 12%, its largest one-day decline in about three years. 📉