10-QPeriod: Q2 FY2017

STATE STREET CORP Quarterly Report for Q2 Ended Jun 30, 2017

Filed August 4, 2017For Securities:STTSTT-PG

Summary

State Street Corporation's (STT) Q2 2017 filing indicates a strong operational quarter with significant year-over-year growth in key financial metrics. Total revenue rose by 9% to $2.81 billion, driven by a 9% increase in fee revenue and a 10% rise in net interest income. This growth was fueled by higher global equity markets, contributions from the acquired GEAM operations, new business wins, and higher client volumes. Diluted Earnings Per Share (EPS) also saw a positive trend, increasing by 4% to $1.53. The company continues to invest in its "State Street Beacon" transformation program, which aims to enhance efficiency and deliver cost savings, although this program also incurred restructuring costs of $62 million in the quarter. State Street also highlighted robust growth in Assets Under Custody and Administration (AUCA) and Assets Under Management (AUM), increasing by 12% and 13% respectively year-over-year, driven by market appreciation and new business. The company maintained a strong capital position, with a Return on Average Common Equity (ROE) of 12.6%, and demonstrated its commitment to shareholder returns through increased dividends and significant share repurchases. Despite a challenging regulatory environment and ongoing investments, the company appears to be executing well on its strategic objectives.

Financial Highlights

34 data points
Beta

Revenue

$2.81B

Net Income

$620.00M

22.1% Net Margin

EPS (Diluted)

$1.53

Total Assets

$238.27B

Free Cash Flow

$329.00M

Financial Statements
Beta
Revenue$2.81B
Interest Expense$125.00M
Net Income$620.00M
EPS (Basic)$1.56
EPS (Diluted)$1.53
Shares Outstanding (Basic)375.39M
Shares Outstanding (Diluted)380.92M

Key Highlights

  • 1Total revenue increased by 9% year-over-year to $2.81 billion, driven by growth in fee revenue and net interest income.
  • 2Diluted EPS grew 4% year-over-year to $1.53, supported by higher revenue and operational efficiencies.
  • 3Assets Under Custody and Administration (AUCA) increased 12% year-over-year, reflecting strong client growth and favorable market conditions.
  • 4Assets Under Management (AUM) grew 13% year-over-year, primarily due to higher equity markets and the GEAM acquisition.
  • 5The company declared a quarterly common stock dividend of $0.38 per share, an increase from the prior year's $0.34 per share.
  • 6State Street repurchased approximately 2.7 million shares of common stock for $227 million under its share repurchase program.
  • 7Restructuring charges of $62 million were recorded for the 'State Street Beacon' transformation program, with expected annual pre-tax savings of $550 million by the end of 2020.

Frequently Asked Questions

State Street reported a strong quarter with a 9% increase in total revenue to $2.81 billion and a 4% increase in diluted EPS to $1.53, year-over-year. This growth was driven by higher fee revenue and net interest income, supported by favorable market conditions and new business wins.

AUCA increased by 12% year-over-year to $31.04 billion (likely a typo in the original text, but interpreted as billions from context, should be $31.037 trillion based on tables), while AUM grew by 13% year-over-year to $2.61 trillion. This growth was attributed to higher global equity markets, net new business, and the acquisition of GEAM operations.

State Street Beacon is a multi-year transformation program focused on digitizing business processes, enhancing client value, and reducing expenses. While it incurred $62 million in restructuring charges in Q2 2017, it is expected to generate significant annual pre-tax savings.

State Street demonstrated its commitment to shareholder returns by increasing its quarterly common stock dividend by 11% to $0.42 per share (declared for Q3 2017) and repurchasing approximately $227 million of its common stock in Q2 2017.