What drove the change in State Street's revenue compared to the prior year's quarter?

State Street's total revenue increased by 1% year-over-year to $3.101 billion. This was primarily driven by a significant 50% increase in Net Interest Income (NII) to $766 million, due to higher market rates. However, this was partially offset by a 9% decrease in total fee revenue to $2.335 billion, largely attributed to lower average market levels impacting servicing and management fees, as well as lower foreign exchange trading and software/processing fees.

How did State Street manage its capital and return capital to shareholders?

State Street maintained strong capital levels, with a Common Equity Tier 1 (CET1) capital ratio of 12.1% as of March 31, 2023, down from 13.6% at the end of the prior year due to share repurchases. The company returned approximately $1.5 billion to shareholders in the first quarter of 2023 through common stock dividends ($0.63 per share, an 11% increase year-over-year) and common share repurchases ($1.25 billion).

What is the impact of the company's proposed acquisition of CF Global Trading?

State Street announced an agreement to acquire CF Global Trading, which is expected to add scale to its outsourced trading services and further enhance its Alpha platform. The transaction is anticipated to be completed by the end of 2023, subject to customary closing conditions. This strategic move aims to bolster its capabilities in a key service area.

What are the key challenges State Street faces in its fee-based businesses?

State Street's fee revenue was impacted by several factors, including lower average equity and fixed income market levels, which reduce the value of assets under custody and administration (AUC/A) and assets under management (AUM). Additionally, client activity, normal pricing headwinds, and specific client-related pricing adjustments contributed to the decline in servicing and management fees. The company noted that fee operating leverage was negative 11.0% points.

STT/STT-PG 10-Q Quarterly Report Q1 FY2023

Summary

State Street Corporation (STT) reported its first quarter 2023 financial results, highlighting a year-over-year increase in Net Interest Income (NII) driven by higher market rates, which partially offset a decline in fee revenue. Fee revenue was negatively impacted by lower average market levels, client activity, and pricing adjustments across servicing and management fees. Total revenue saw a slight increase of 1%, while total expenses rose by 2%, primarily due to business investments and higher salaries, though partially offset by productivity savings. Key financial metrics showed a decrease in Earnings Per Share (EPS) to $1.52 from $1.57 in the prior year's quarter, and Return on Average Common Equity (ROE) dipped to 9.3% from 9.5%. The company returned approximately $1.5 billion to shareholders through dividends and share repurchases, underscoring a commitment to capital return. State Street also announced the agreement to acquire CF Global Trading to expand its outsourced trading services. Management's discussion points to a challenging revenue environment for fee-based services due to market conditions but anticipates continued benefits from higher interest rates on NII. The company's capital ratios remain strong, with CET1 at 12.1% as of March 31, 2023, although down from the previous quarter due to share repurchases. Investors should monitor the impact of continued market volatility on fee revenues and the effectiveness of strategic initiatives like the CF Global Trading acquisition.

Financial Highlights

38 data points

Beta

Revenue

$3.10B

Net Income

$549.00M

0.2% Net Margin

EPS (Diluted)

$1.52

Total Assets

$290.82B

Cash & Equivalents

$3.70B

Free Cash Flow

-$3.04B

Financial Statements

Beta

Revenue	$3.10B
Interest Expense	$1.26B
Net Income	$549.00M
EPS (Basic)	$1.54
EPS (Diluted)	$1.52
Shares Outstanding (Basic)	341.11M
Shares Outstanding (Diluted)	345.47M

Key Highlights

1Total revenue increased by 1% to $3.101 billion compared to the prior year's quarter.
2Net Interest Income (NII) surged by 50% to $766 million, driven by higher market rates.
3Total fee revenue decreased by 9% to $2.335 billion, primarily due to lower servicing and management fees.
4Earnings Per Share (EPS) decreased to $1.52 from $1.57 year-over-year.
5Return on Average Common Equity (ROE) slightly decreased to 9.3% from 9.5%.
6The company returned approximately $1.5 billion to shareholders through common stock dividends and share repurchases.
7State Street announced an agreement to acquire CF Global Trading to enhance its outsourced trading services.

STATE STREET CORP Quarterly Report for Q1 Ended Mar 31, 2023

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions