Summary
State Street Corporation (STT) reported a mixed financial performance for the second quarter of 2015. Total revenue saw a modest 1% increase year-over-year, driven by a 2% rise in fee revenue, primarily from asset servicing and management fees. However, net interest revenue declined by 5%, impacted by lower yields on interest-earning assets and the stronger U.S. dollar. Net income available to common shareholders experienced a significant 35% decrease to $393 million, or $0.94 per diluted share, largely due to a substantial $250 million charge to increase legal accruals related to the company's indirect foreign exchange business prior to 2010. This legal accrual, which now totals $585 million, significantly impacted the quarter's profitability and return on equity, which fell to 8.3% from 11.9% in the prior year. Despite the earnings decline, State Street demonstrated a commitment to returning capital to shareholders through a quarterly common stock dividend of $0.34 per share and approximately $350 million in common stock repurchases during the quarter. The company also highlighted an increase in assets under custody and administration, partly due to new business wins and stronger equity markets, though asset management saw net outflows primarily due to seasonal factors related to an ETF. The company's regulatory capital ratios remained strong, exceeding minimum requirements.
Financial Highlights
35 data points| Revenue | $2.61B |
| Interest Expense | $94.00M |
| Net Income | $418.00M |
| EPS (Basic) | $0.95 |
| EPS (Diluted) | $0.93 |
| Shares Outstanding (Basic) | 410.67M |
| Shares Outstanding (Diluted) | 416.71M |
Key Highlights
- 1Total revenue increased by 1% to $2.61 billion, driven by a 2% rise in fee revenue, largely from servicing and management fees.
- 2Net income available to common shareholders decreased by 35% to $393 million ($0.94/share) due to a significant $250 million legal accrual for indirect foreign exchange business.
- 3Return on average common equity declined to 8.3% from 11.9% in the prior year, primarily due to the increased legal accrual.
- 4Total expenses increased by 15% to $2.13 billion, heavily influenced by the aforementioned legal accrual.
- 5Asset servicing and management fees saw increases of 3% and 1%, respectively, supported by new business and stronger equity markets.
- 6State Street repurchased approximately $350 million of its common stock during the quarter under its approved buyback program.
- 7Net interest revenue decreased by 5% to $535 million, impacted by lower yields and a stronger U.S. dollar.