Summary
State Street Corporation (STT) reported its financial results for the second quarter and first six months of 2014, showing modest revenue growth driven by its core Investment Servicing and Investment Management businesses. Total revenue for the second quarter increased by 1% year-over-year, primarily due to higher servicing and management fees, which benefited from stronger global equity markets and net new business. However, net interest revenue declined by 6% due to lower yields on interest-earning assets. Expenses also rose by 3% in the quarter, largely driven by compensation and employee benefits, though partially offset by efficiency gains from the Business Operations and Information Technology Transformation program. Net income was up 7% for the quarter, reaching $622 million, with diluted EPS increasing 11% to $1.38. For the first six months, net income saw a 6% decrease to $985 million, reflecting higher expenses and lower net interest revenue, despite a 4% increase in total fee revenue. From a capital and regulatory perspective, State Street successfully completed its Basel III qualification period and began using the advanced approaches framework for capital ratio calculations. The company also continued its capital return program by repurchasing $410 million of its common stock and declaring a $0.30 per share dividend in the second quarter. The report highlights the company's status as a systemically important financial institution (G-SIB) and the increased compliance costs associated with new regulations. The company also provided an update on its ongoing business transformation program, which is expected to yield significant expense savings.
Financial Highlights
35 data points| Revenue | $2.60B |
| Interest Expense | $89.00M |
| Net Income | $622.00M |
| EPS (Basic) | $1.41 |
| EPS (Diluted) | $1.38 |
| Shares Outstanding (Basic) | 427.82M |
| Shares Outstanding (Diluted) | 435.32M |
Key Highlights
- 1Total revenue for Q2 2014 increased 1% year-over-year to $2.6 billion, driven by a 3% increase in total fee revenue.
- 2Net income available to common shareholders rose 6% to $602 million ($1.38 diluted EPS) in Q2 2014 compared to the prior year.
- 3Servicing fees increased 7% and management fees increased 8% in Q2 2014, reflecting stronger equity markets and new business wins.
- 4Net interest revenue decreased 6% in Q2 2014 due to lower yields on interest-earning assets.
- 5Total expenses increased 3% in Q2 2014, mainly due to higher compensation and employee benefits, partially offset by cost savings from the IT transformation program.
- 6State Street completed its Basel III qualification period and began using advanced approaches for regulatory capital calculations.
- 7The company repurchased $410 million of common stock and declared a $0.30 per share dividend in Q2 2014, demonstrating a commitment to capital return.