Summary
State Street Corporation (STT) reported mixed financial results for the third quarter and first nine months of 2016 compared to the prior year. Total revenue remained largely flat for the quarter at $2.62 billion, while net income available to common shareholders decreased by 6% to $507 million. For the nine-month period, total revenue declined 2% to $7.68 billion, but net income available to common shareholders increased by 8% to $1.41 billion. The company completed the acquisition of GE Asset Management (GEAM) in July 2016, which contributed $112 billion in Assets Under Management (AUM) and boosted management fees. However, the company also recorded significant expenses, including $29 million in acquisition and restructuring costs for GEAM, $10 million in restructuring charges for its State Street Beacon program, and a $42 million pre-tax charge for a legal reserve related to transition management business activities. Despite a slight dip in EPS for the quarter, the year-to-date EPS showed an increase of 13%. State Street also continued its share repurchase program, buying back approximately 4.7 million shares in the third quarter. Financially, State Street benefited from the December 2015 U.S. rate hike which positively impacted net interest revenue, though this was partially offset by lower global interest rates and a stronger U.S. dollar. The company continued to manage its balance sheet and liquidity, with average total interest-earning assets decreasing year-over-year, partly due to management actions to optimize capital and liquidity positions in response to the evolving regulatory environment. Regulatory capital ratios remained strong, with Common Equity Tier 1 capital well above minimum requirements. The company also provided an update on its resolution plan submission to regulators, noting ongoing efforts to address identified deficiencies.
Financial Highlights
38 data points| Revenue | $2.62B |
| Interest Expense | $110.00M |
| Net Income | $563.00M |
| EPS (Basic) | $1.31 |
| EPS (Diluted) | $1.29 |
| Shares Outstanding (Basic) | 388.36M |
| Shares Outstanding (Diluted) | 393.21M |
Key Highlights
- 1Total revenue for Q3 2016 was $2.62 billion, a slight increase from Q3 2015 ($2.61 billion).
- 2Net income available to common shareholders decreased by 6% to $507 million in Q3 2016 compared to $539 million in Q3 2015.
- 3Acquisition of GE Asset Management (GEAM) completed on July 1, 2016, adding $112 billion in AUM and boosting management fees.
- 4Company declared $0.38 per share in common stock dividends in Q3 2016 and repurchased approximately 4.7 million shares for $325 million.
- 5Restructuring charges of $10 million were recorded for the State Street Beacon transformation program in Q3 2016.
- 6A pre-tax charge of $42 million was established for a legal reserve related to transition management business activities.
- 7Net interest revenue increased 5% to $537 million in Q3 2016, benefiting from the December 2015 U.S. rate hike, though offset by lower global rates and a stronger USD.