State Street Q2: Topline Miss, 18% Net Interest Income Growth, EPS Beat & More

State Street Corporation STT reported Q2 revenues of $3.11 billion, up 5% Y/Y, missing the consensus estimate of $3.14 billion.

EPS of $2.17 beats the consensus estimate of $2.10. 

Net interest income rose 18% Y/Y to $691 million, primarily due to higher short-term market rates from global central bank hikes, long-term interest rates, and balance sheet positioning. The net interest margin (NIM) rose 25 basis points Y/Y to 1.19%.

Fee revenues rose 2% Y/Y to $2.42 billion. The provision for credit losses reflects an $18 million reserve release in 2Q23, compared to $ 44 million in Q1 2023.

Total expenses were $2.21 billion, up 5% Y/Y, primarily reflecting higher salaries, headcount, and business investments.

Investment Management AUM increased 9% to $3.8 trillion as of quarter-end, primarily due to higher quarter-end market levels.

STT registered new servicing wins of $141 billion in 2Q, primarily reflecting continued strong sales in the Asset Owners, Official Institutions, and Alternatives client segment.

The standardized common equity tier 1 (CET1) ratio at quarter-end of 11.8% decreased by 1.1% Y/Y, primarily dragged by the continuation of common share repurchases.

Dividend Increase Plan

"For the third consecutive year, we announced our plan to increase our per share common stock dividend by 10%, and we intend to continue to execute on our common share repurchase authorization of up to $4.5 billion during 2023, subject to market conditions and other factors," said Ron O'Hanley, Chairman and Chief Executive Officer. 

Price Action: STT shares are trading lower by 3.90% at $74.44 on the last check Friday.