State Street Q3: EPS Beat, Revenue Misses Consensus On Portfolio Restructuring Losses & More

State Street Corporation STT reported Q3 revenues of $2.69 billion, down 9% Y/Y, missing the consensus estimate of $2.92 billion.

Revenues were impacted by a $294 million loss on sale related to a previously disclosed investment portfolio repositioning. 

Fee revenues rose 3% Y/Y to $2.36 billion, reflecting higher Servicing fees, Management fees, and Other fee revenue.

Net interest income fell 5% Y/Y to $624 million due to lower average deposit balances and deposit mix shift. The net interest margin (NIM) came in at 1.12%.

Total expenses were $2.18 billion, up 3% Y/Y, primarily owing to higher salaries and continued business investments.

EPS (ex-notable items) of $1.93 beats the consensus estimate of $1.81. 

Investment Management AUM increased 13% Y/Y to $3.69 trillion as of quarter-end, primarily due to higher quarter-end market levels.

STT registered new servicing wins of $91 million in Q3, primarily reflecting continued wins in the Official Institutions, Asset Managers, and Private Markets segments.

The standardized common equity tier 1 (CET1) ratio at quarter-end of 11.0% decreased by 2.2% Y/Y, primarily dragged by the continuation of common share repurchases and higher RWA.

"We are pleased with our ongoing transformation and productivity initiatives, which limited our year-over-year expense growth while allowing us to continue investing in our businesses. Further, with the previously announced consolidation of one of our operations joint ventures in India, we expect to generate additional productivity savings in 2024, lower operating costs, and continue to strengthen service quality," said Ron O'Hanley, Chairman and Chief Executive Officer.

In Q3, STT bought back $1 billion of common shares and declared common stock dividends of $213 million (or $0.69 per share)

Price Action: STT shares are trading higher by 4.55% at $70.32 on the last check Wednesday.