State Street's Financial Fortitude: Q2 Earnings Beat with Soaring Management Fees and Asset Growth

State Street Corporation STT reported second-quarter fiscal 2024 revenues of $3.191 billion, an increase of 2.6% year over year and beating the consensus of $3.146 billion.

Total revenue growth was driven by higher Net Interest Income (NII) and a 2% year-over-year rise in Fee revenue. Management fees and FX trading services increased by 11%, while Servicing fees, Securities finance, Software and processing, and Other fee revenue declined.

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 mix.

Total expenses were $2.269 billion, up 3% year over year. Compensation and benefits fell by 2%, while non-compensation expenses increased by 7% due to higher IT, transaction processing, and occupancy costs.

EPS of $2.15 topped the consensus estimate of $2.03.

Investment Management AUM increased 16% Y/Y to $4.4 trillion as of quarter-end, primarily due to higher quarter-end market levels.

STT’s new servicing fee revenue wins totaled $72 million. New servicing AUC/A wins reached $291 billion, mainly from Asset Managers and Asset Owners.

The standardized CET1 ratio at quarter-end was 11.2%, down 0.6% year over year, due to capital returns and RWA growth for client activity, partially offset by earnings.

State Street returned $407 million to shareholders with $200 million in share repurchases and $207 million in dividends ($0.69 per share).

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In June 2024, State Street announced a planned 10% increase to its quarterly common stock dividend to $0.76 per share in the third quarter, subject to approval by the Board.

“Productivity improvement remains a fundamental component of our strategic agenda. In 2Q, we completed the consolidation of our final operations joint venture in India, which will further enable the transformation of our operating model, unlock efficiency savings, and improve client experience,” commented Ron O’Hanley, Chairman and Chief Executive Officer.

Price Action: STT shares are trading higher by 0.33% at $79.20 at the last check on Tuesday.

Photo by Steve Smith via Flickr