State Street Q4 Earnings: Fee Revenue Soars, CET1 Ratio Dips

Zinger Key Points

State Street's Q4 earnings beat estimates, with fee revenue up 13%, but deposit mix shift partially offset net interest income growth.
CET1 ratio falls 0.7% in Q4 due to higher capital return and increased RWA for business growth, despite strong earnings and revenue.

State Street Corporation STT shares are trading lower on Friday.

The company reported fourth quarter adjusted earnings per share of $2.60, beating the street view of $2.43. Quarterly sales of $3.412 billion (+12%) outpaced the analyst consensus estimate of $3.320 billion.

The total provision for credit losses was $12 million in the fourth quarter of 2024, mainly due to higher loan loss reserves for certain commercial real estate loans. However, provision for credit losses fell 40% year over year in the quarter underreview.

Fee revenue grew by 13%, driven by strong performance across the business. Servicing fees rose by 6%, management fees increased by 20%, FX trading services grew by 17%, securities finance went up by 22%, and software and processing fees increased by 9%.

Net interest income increased 10% compared to fourth quarter, largely due to higher investment securities yields and double-digit loan growth, partially offset by deposit mix shift.

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NII increased 4% sequentially, largely due to higher deposit balances and loan growth.

The CET1 (Standardized) ratio at the end of the fourth quarter of 2024 was 10.9%, down 0.7% from both 4Q23 and 3Q24, mainly due to higher capital return and increased RWA for business growth, partially offset by capital generated from earnings.

“We executed on our strategy to increase fee revenue growth while continuing to transform our operating model, enhance our capabilities and support our clients. These efforts yielded strong results for the year, including both positive fee and total operating leverage supported by record NII, and overall, exceeded the financial outlook we provided at the outset of 2024,” said Ron O’Hanley, Chairman and Chief Executive Officer.

Price Action: STT shares are trading lower by 3.77% to $96.70 at last check Friday.

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