10-QPeriod: Q2 FY2011

STATE STREET CORP Quarterly Report for Q2 Ended Jun 30, 2011

Filed August 5, 2011For Securities:STTSTT-PG

Summary

State Street Corporation (STT) reported a strong second quarter of 2011, with total revenue increasing by 8% year-over-year to $2.49 billion. This growth was primarily driven by a significant 12% increase in fee revenue, led by robust performance in servicing fees (up 16%) and management fees (up 24%), reflecting new business wins and improved market valuations. Conversely, net interest revenue declined by 13% due to lower discount accretion related to former conduit securities. The company also demonstrated a commitment to returning capital to shareholders, declaring a quarterly dividend of $0.18 per share, a notable increase from the previous year. Furthermore, State Street repurchased approximately $225 million of its common stock under its authorized repurchase program. Despite a challenging interest rate environment impacting net interest margin, the company's diversified fee-based businesses and strategic acquisitions like BIAM have contributed to overall revenue growth, positioning STT favorably in the market.

Financial Highlights

36 data points
Beta

Revenue

$2.49B

Net Income

$513.00M

20.6% Net Margin

EPS (Diluted)

$1.00

Total Assets

$190.46B

Free Cash Flow

-$2.32B

Financial Statements
Beta
Revenue$2.49B
Interest Expense$147.00M
Net Income$513.00M
EPS (Basic)$1.01
EPS (Diluted)$1.00
Shares Outstanding (Basic)496.81M
Shares Outstanding (Diluted)501.04M

Key Highlights

  • 1Total revenue increased by 8% to $2.49 billion, driven by a 12% rise in fee revenue.
  • 2Servicing fees increased by 16% and management fees by 24%, reflecting new business and improved market valuations.
  • 3Net interest revenue decreased by 13%, primarily due to lower discount accretion from conduit securities.
  • 4The company declared a quarterly common stock dividend of $0.18 per share, marking the first increase since 2009.
  • 5State Street repurchased approximately $225 million of its common stock under its 2011 repurchase program.
  • 6Total expenses decreased by 9% year-over-year, largely due to the absence of a significant securities lending charge in the prior year's second quarter.
  • 7Assets under custody and administration grew to $22.76 trillion, and assets under management increased to $2.12 trillion.

Frequently Asked Questions

Revenue growth was primarily driven by fee revenue, which increased by 12% year-over-year. This was particularly strong in servicing fees (up 16%) and management fees (up 24%), indicating successful new business acquisition and positive market performance impacting asset valuations.

Net interest revenue declined by 13% to $572 million. This decrease was mainly attributed to a reduction in discount accretion related to former conduit securities, which was impacted by sales and pay-downs in the investment portfolio.

State Street increased its commitment to shareholders by declaring a quarterly common stock dividend of $0.18 per share, the first increase since 2009. Additionally, the company repurchased approximately $225 million of its common stock during the quarter under its authorized repurchase program.

Investment Servicing saw a 7% increase in total revenue, with strong growth in servicing fees. Investment Management's total revenue increased by 16%, benefiting from higher management fees due to improved market valuations and the acquisition of BIAM.