Core Insights - State Street's stock (NYSE: STT) has gained 10% year-to-date (YTD), underperforming the S&P 500's 17% rise during the same period [1] - The stock is currently trading at $85 per share, which is 2% below its fair value of $87 as estimated by Trefis [1] Financial Performance - STT stock has increased 15% from $75 in early January 2021 to around $85 now, while the S&P 500 has risen about 50% during the same period [2] - The stock's returns were inconsistent: 28% in 2021, -17% in 2022, and 0% in 2023, indicating underperformance compared to the S&P 500 [2] - In Q2 2024, State Street reported total revenues of $3.19 billion, up 3% year-over-year (y-o-y), driven by a 2% rise in noninterest revenues and a 6% gain in net interest income [2] - Assets under Custody & Administration (AuC/A) reached $44.31 trillion, up 12% y-o-y, and Assets under Management (AuM) were $4.4 trillion, up 16% y-o-y [2] - For FY 2023, total revenues decreased 2% y-o-y to $11.94 billion, primarily due to a marginal decrease in fee revenue [3] - Adjusted net income for FY 2023 decreased 32% y-o-y to $1.8 billion, attributed to a higher effective tax rate [3] Future Outlook - Revenues are forecasted to remain around $12.55 billion in FY 2024, with an expected adjusted net income margin decline leading to an annual GAAP EPS of $5.71 [3] - The stock's valuation is projected at $87 based on a P/E multiple of just above 15x [3]

Group 1 - State Street is exploring various options for blockchain payment settlements, including creating its own stablecoin and deposit token, joining digital-cash consortiums, and developing solutions through the blockchain payment startup Fnality [1] - Other companies in the financial sector, such as PayPal, Visa, Mastercard, and JPMorganChase, are also engaging in crypto settlement initiatives [1] - Earlier this year, State Street integrated its digital assets team into its overall business to enhance the connection between digital assets and traditional finance [2] Group 2 - The reorganization of State Street's digital assets division involved moving most employees to other units while continuing to provide services and infrastructure for digital assets [2] - State Street aims to deliver a seamless customer experience by combining traditional custody and digital finance, reducing fragmentation for clients [2] - In March, State Street participated in a pilot project called the Canton Network, which included multiple financial institutions to explore blockchain applications in traditional finance [3] Group 3 - The Canton Network project involved 15 asset managers, 13 banks, four custodians, three exchanges, and a stablecoin issuer, focusing on real-time settlement and immediate reconciliation across systems [3] - The project demonstrated that blockchain technology can streamline financial applications while meeting regulatory requirements for asset control, security, and data privacy [3]

Loading...Loading...State Street Corporation STT reported better-than-expected second-quarter results on Tuesday.The company posted quarterly revenues of $3.191 billion, an increase of 2.6% year over year and beating the consensus of $3.146 billion. EPS of $2.15 topped the consensus estimate of $2.03, according to data from Benzinga Pro.Net interest income increased 6% year-over-year to $735 million, primarily due to higher investment securities yields and loan growth, partially offset by a shift in deposit ...

Group 1 - RBC Capital analyst Gerard Cassidy reiterated a Sector Perform rating on State Street Corp (STT) and raised the price target from $85 to $91 [1] - STT reported 2Q24 EPS of $2.15, exceeding the analyst's estimate of $2.05, driven by better-than-expected net interest income and fee revenues [1] - Net interest income (FTE) for the quarter was $736 million, up from $717 million in the prior quarter and $691 million in the year-ago quarter [1] - Tangible book value (TBV) per share increased 1.6% to $45.25 from $44.56 in the prior quarter and 4.8% from $43.18 in the year-ago period [1] - Core return on average assets (ROAA) rose to 0.86% from 0.70% in the prior quarter, while core return on average common equity (ROACE) increased to 11.9% from 9.5% [1] Group 2 - STT has secured over $330 million in servicing fee wins in the past 12 months, indicating strong demand for its products and services [2] - The analyst anticipates a combined payout ratio of approximately 100% for STT in 2024 and 2025 due to strong capital levels [2] - If the Federal Reserve cuts interest rates, STT is expected to experience an immediate impact on its net interest income due to repricing [2] - STT is well positioned for the next 12 months with a strong pipeline of new business and potential for meaningful stock buybacks [2] - STT shares were trading lower by 0.39% at $84.49 at the last check [2]

Core Viewpoint - State Street reported strong Q2 2024 financial results, beating adjusted earnings per share estimates and revenue expectations, leading to a 7.45% increase in share price [1][6]. Company Overview - State Street is a major player in the financial services sector, focusing on Investment Servicing and Investment Management [4]. - The firm operates as a custodian for institutional clients and provides a range of software solutions for financial transactions [4]. - State Street Global Advisors, the investment management division, primarily offers passive investment products, with a significant portion of assets under management tracking market indexes [4]. Financial Performance - State Street's assets under custody/administration (AUC/A) reached $44.3 trillion, a 12% increase from the previous year, while assets under management (AUM) grew to $4.4 trillion, up 16% year-over-year [6][7]. - Total revenue increased by 3%, driven by a 6% rise in net interest income (NII) and a 2% increase in fee revenue [8]. - Fee revenue constituted 79% of total revenue in 2023, with management fees and foreign exchange trading fees contributing to the growth [5][8]. Market Reaction - The market reacted positively to State Street's earnings surprise of 6%, despite a 1% decline in adjusted EPS from the previous year [6]. - The firm's stock price rose to $84.82, reflecting a year-to-date increase of 11.5%, although it still underperformed compared to the financial services sector's 16.5% rise [2][6]. Dividend Information - State Street announced a 10% increase in its quarterly dividend to $0.76 per share, resulting in a dividend yield of 3.6%, significantly above the industry average of 2.4% [7]. - The firm has a strong dividend growth track record, with an annualized 3-year dividend growth rate of 8.27% [7]. Analyst Outlook - The average price target for State Street is $85.16, indicating minimal upside potential, while Wells Fargo has set a higher target of $98, suggesting a 16% upside [10]. - Analysts have rated the stock as a "hold," reflecting cautious sentiment despite the positive earnings report [9][10].

Financial Data and Key Metrics Changes - The second quarter EPS was $2.15, slightly down from $2.17 in the previous year, but would have shown positive growth without an $80 million reserve release last year [10][18] - Total revenue growth was 3% year-over-year, driven by a 6% increase in net interest income (NII) and a 2% increase in fee revenues, supporting modestly positive total operating leverage [18][31] - The pretax margin was nearly 29%, and return on equity was close to 12% for the quarter [8][10] Business Line Data and Key Metrics Changes - In asset services, AUC/A wins totaled $291 billion, with significant contributions from the APAC region [11] - Management fees increased by 11% year-over-year to $511 million, despite aggregate net outflows largely due to client rebalancing [13][22] - Servicing fee revenue wins amounted to $72 million, up from $67 million in the first quarter, totaling over $330 million in the last 12 months [12][21] Market Data and Key Metrics Changes - Global equity markets reached new all-time highs in the second quarter, although gains were concentrated in a few names [9] - Fixed income markets faced challenges due to geopolitical risks and economic data, impacting overall performance [9] Company Strategy and Development Direction - The company is focused on transforming and simplifying its operating model, including consolidating operations in India to improve client experience and productivity [8][27] - The Alpha strategy is seen as a competitive advantage, helping to deepen client relationships and win new long-term clients [12][24] - The company plans to increase its quarterly common stock dividend by 10% to $0.76 per share, reflecting its commitment to returning capital to shareholders [15][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving goals of 6 to 8 new Alpha clients and $350 million to $400 million in servicing fee revenue wins for the year [16][30] - The outlook for total fee revenue growth has been revised to 4% to 5% for the full year, better than previous expectations [30] - Management acknowledged the uncertain economic and political environment but remains optimistic about the company's ability to navigate these challenges [30] Other Important Information - The company reported a strong balance sheet, enabling over $400 million in capital return in the second quarter [15][28] - The company is targeting a full-year expense increase of about 3%, slightly higher than previous guidance [31] Q&A Session Summary Question: Concerns about institutional lead outflows in Global Advisors - Management confirmed that most outflows were due to client rebalancing and do not expect this trend to continue [34] Question: Thoughts on potential acquisitions and consolidation opportunities - Management emphasized a focus on organic growth but remains open to M&A if it aligns with strategic goals [36] Question: Outlook for NII and deposit growth - Management indicated that while NII may see some erosion, they expect stabilization and potential growth in the coming quarters [40][42] Question: Impact of ECB rate cuts on euro deposits - Management noted that the beta on the recent ECB rate cut was similar to previous increases, indicating a balanced approach to deposit pricing [50][52] Question: Confidence in achieving servicing fee sales targets - Management expressed confidence based on a strong pipeline and historical trends showing better performance in the second half of the year [65]

Core Insights - State Street Corporation reported revenue of $3.19 billion for the quarter ended June 2024, reflecting a year-over-year increase of 2.6% [1] - The earnings per share (EPS) for the quarter was $2.15, slightly down from $2.17 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $3.15 billion, resulting in a surprise of +1.36% [1] - The company achieved an EPS surprise of +6.97%, with the consensus EPS estimate being $2.01 [1] Financial Metrics - Net interest margin (FTE) was reported at 1.1%, matching the average estimate from five analysts [2] - Average balance of total interest-earning assets was $261.74 billion, surpassing the four-analyst average estimate of $250.50 billion [2] - Basel III Advanced Approaches - Tier 1 Leverage Ratio stood at 5.3%, in line with the average estimate [2] - Basel III Standardized Approach - Tier 1 capital ratio was 13.3%, slightly above the 13.1% average estimate [2] - Assets under Management (AUM) reached $4,415 billion, exceeding the estimated $4,318.27 billion [2] - Basel III Standardized Approach - Total capital ratio was reported at 15%, above the 14.2% average estimate [2] - Assets under Custody and/or Administration (AUC/A) totaled $44,312 billion, significantly higher than the two-analyst average estimate of $37,496.93 billion [2] - Total fee revenue was $2.46 billion, matching the five-analyst average estimate [2] - Net Interest Income on a fully taxable-equivalent basis was $736 million, exceeding the estimated $697.06 million [2] - Net Interest Income was reported at $735 million, above the average estimate of $696.04 million [2] - Software and processing fees were $214 million, slightly below the estimated $214.97 million [2] - Other fee revenue was $48 million, exceeding the average estimate of $43.02 million [2] Stock Performance - Shares of State Street have returned +10.1% over the past month, outperforming the Zacks S&P 500 composite's +3.8% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Key TakeawaysState Street posted records for both assets under control/administration and assets under management. Its quarterly profit and sales beat estimates.The financial services firm reported higher interest income and fee revenue.State Street shares rose to their highest level in more than a year. Shares of State Street (STT) rose after the financial services firm reported record-high numbers for two key measures of assets held and its results beat forecasts, aided by rising interest income and manag ...

/// STATE 2024 Financial Highlights NYSE: STT July 16, 2024 All comparisons are to corresponding prior year period unless otherwise noted • EPS of $2.15, as compared to $2.17 in 2Q23 • Total revenue of $3.2B, up 3% – Fee revenue up 2%, primarily reflecting higher Management fees and FX trading services revenue, partially offset by lower Servicing fees, Other fee revenue, Securities finance revenue and Software and processing feesFinancial performance– NII up 6%, largely due to higher investment securities y ...

Core Viewpoint - State Street's second-quarter 2024 earnings exceeded expectations, driven by growth in fee revenues and net interest revenues, despite a decline in net income compared to the previous year [1][2]. Financial Performance - Earnings per share were $2.15, surpassing the Zacks Consensus Estimate of $2.01, but down 1% year over year [1]. - Total revenues reached $3.19 billion, a 2.6% increase year over year, beating the Zacks Consensus Estimate of $3.15 billion [2]. - Net income available to common shareholders was $655 million, a decrease of 9.8% from the prior-year quarter [1]. Revenue Breakdown - Net interest revenues (NIR) amounted to $735 million, up 6.4% year over year, driven by higher investment securities yields and loan growth [2]. - Total fee revenues increased by 1.5% year over year to $2.46 billion [2]. Expense Analysis - Non-interest expenses rose to $2.27 billion, up 2.6% from the prior-year quarter, attributed to increases in almost all cost components [2]. - The net interest margin contracted by 6 basis points year over year to 1.13% [2]. Asset Management - Total assets under custody and administration were $44.31 trillion, an 11.9% increase year over year, driven by higher equity market levels and client flows [4]. - Assets under management (AUM) reached $4.42 trillion, up 16.3% year over year, primarily due to higher market levels and net inflows [4]. Shareholder Actions - In the reported quarter, State Street repurchased shares worth $200 million [5]. Capital Ratios - The Common Equity Tier 1 ratio was 11.2% as of June 30, 2024, down from 11.8% in the same period of 2023 [3]. - Return on common equity was 11.9%, compared to 13.0% in the year-ago quarter [3].