Summary
State Street Corporation (STT) reported its financial results for the third quarter and the first nine months of 2015. The company saw a modest increase in total revenue, driven primarily by a rise in fee revenue, which was partially offset by a decline in net interest revenue. This revenue growth was also impacted by a stronger U.S. dollar, which had a negative translation effect on foreign currency-denominated revenues. Expenses increased due to severance costs related to staff reductions and higher regulatory and compliance costs. Despite these pressures, the company's return on average common equity improved year-over-year. Key financial activities during the period included a significant stock repurchase program, with State Street buying back approximately $350 million of its common stock in the third quarter. The company also announced a multi-year cost efficiency program targeting substantial annualized savings through process digitization and operational changes. Management highlighted the ongoing impact of the strong U.S. dollar and lower global interest rates on net interest revenue, while also managing client deposit levels to balance economic and regulatory objectives. Investors should note the ongoing regulatory environment and its potential impact on future expenses.
Financial Highlights
37 data points| Revenue | $2.61B |
| Interest Expense | $101.00M |
| Net Income | $581.00M |
| EPS (Basic) | $1.33 |
| EPS (Diluted) | $1.31 |
| Shares Outstanding (Basic) | 406.61M |
| Shares Outstanding (Diluted) | 412.17M |
Key Highlights
- 1Total revenue increased by 1% year-over-year for the third quarter of 2015, reaching $2.619 billion, primarily driven by a 5% increase in total fee revenue.
- 2Net interest revenue declined by 10% to $513 million in the third quarter compared to the prior year, attributed to lower yields on interest-earning assets and the impact of a stronger U.S. dollar.
- 3Total expenses rose by 4% to $1.962 billion in the third quarter, largely due to $75 million in severance costs and increased investments in information systems and regulatory compliance.
- 4Return on average common equity improved to 11.3% in the third quarter of 2015 from 10.6% in the same period of 2014.
- 5State Street announced a cost efficiency program targeting approximately $500 million in annualized savings over four to five years through operational process improvements and digitization.
- 6The company repurchased approximately 4.8 million shares of its common stock for $350 million during the third quarter as part of its approved share buyback program.
- 7Management noted that the strengthening U.S. dollar negatively impacted foreign exchange trading revenue and net interest revenue.