J.P. Morgan Reports Moderate 1Q For State Street

According to J.P. Morgan, State Street STT saw a moderate 1Q. J.P. Morgan said that STT posted moderate 1Q operating EPS of $0.88, a penny above its estimate and was cleaner than recent quarters with fewer non-recurring items. “Results were marked by better than expected, flattish core net interest margin and growth in core business of servicing and asset management (albeit both little less than expected), which offset decline in F/X and securities lending fees, and modest (1% qoq) expense growth. Servicing fee growth lagged assets under custody for the third straight quarter despite continued new business wins. According to management, F/X revenues have not seen any pricing changes yet and indirect F/X business with pension fund clients is a very small part of overall F/X fees. However, our concern is that the spotlight on F/X will likely cause other clients to also scrutinize their F/X pricing. STT's platform allows it to capture shift in F/X trading by clients to electronic but those carry lower fees.” State Street closed yesterday at $45.69.