Why Is State Street Stock Trading Higher Friday?

State Street Corporation STT reported fourth-quarter revenues of $3.04 billion, down 4% Y/Y, beating the consensus estimate of $2.95 billion.

EPS (ex-notable items) of $2.04 beats the consensus estimate of $1.83. The stock price gained premarket after the results. 

The revenue decline reflected a 14% decrease in Net interest income (NII) and flat total fee revenue. Excluding notable items, total revenue decreased 3%.

Fee revenues were flat Y/Y at $2.36 billion, reflecting Servicing fee growth of 1% and Management fee growth of 5%.

Net interest income fell 14% Y/Y to $678 million due to lower average deposit balances and deposit mix shifts. The net interest margin (NIM) came in at 1.16%.

Total expenses were $2.82 billion, up 25% Y/Y, primarily driven by the FDIC special assessment.

Investment Management AUM increased 19% Y/Y to $4.1 trillion as of quarter-end, primarily due to higher quarter-end market levels.

State Street registered new servicing fee revenue wins of $103 million in the fourth quarter, primarily related to wins in Back office custody, including Private Markets.

The standardized common equity tier 1 (CET1) ratio at quarter-end of 11.6% decreased by 2.0% Y/Y, primarily dragged by the continuation of common share repurchases.

In the fourth quarter, State Street returned $709 million of capital to common shareholders, consisting of $500 million of common share repurchases, and declared common stock dividends of $209 million (or $0.69 per share).

Buyback: State Street announced new authorization to repurchase up to $5 billion of common shares with no expiration date.

Price Action: STT shares are trading higher by 4.29% at $77.50 on premarket the last check Friday.

Photo by Steve Smith via Flickr