How did Net Interest Income (NII) perform in Q3 2023?

NII decreased by 5% to $624 million in Q3 2023 compared to Q3 2022. This decline was mainly due to lower average deposit balances and a shift in deposit mix towards interest-bearing deposits, partially offset by higher interest rates.

What is the outlook for State Street's capital ratios?

State Street expects its CET1 capital ratio to remain within its target range of 10-11% and its Tier 1 leverage ratio to move into its target range of 5.25-5.75% in the fourth quarter of 2023. The CET1 ratio decreased to 11.0% as of September 30, 2023, from 13.6% at the end of 2022, primarily due to share repurchases and higher risk-weighted assets.

How is State Street managing its expenses?

Total expenses increased by 3% in Q3 2023, driven by higher compensation and employee benefits ($1.08 billion, up 4%) and information systems and communications ($411 million, up 3%). These increases were partially offset by productivity savings and the absence of acquisition and restructuring costs from the prior year.

STT/STT-PG 10-Q Quarterly Report Q3 FY2023

Q: What caused the significant drop in net income and EPS in Q3 2023?

The significant drop in net income and EPS was primarily due to a $294 million pre-tax loss on the sale of investment securities as part of a portfolio repositioning. This one-time event reduced EPS by approximately $0.68.

Summary

State Street Corporation's (STT) Q3 2023 filing reveals a mixed financial performance, impacted by a significant one-time event. Total revenue decreased by 9% year-over-year to $2.7 billion, primarily due to a $294 million pre-tax loss on the sale of investment securities as part of a portfolio repositioning. This repositioning, while impacting short-term results, is expected to benefit Net Interest Income (NII) in future periods. Diluted Earnings Per Share (EPS) fell 31% to $1.25. Despite the revenue decline, total fee revenue saw a modest 3% increase to $2.36 billion, driven by higher servicing, management, and software/processing fees, although offset by lower securities finance and FX trading revenue. Expenses increased by 3% to $2.18 billion, largely due to higher compensation and ongoing business investments. The company continued to return capital to shareholders, declaring $0.69 per share in common stock dividends and repurchasing approximately $1.0 billion in common stock during the quarter.

Financial Highlights

38 data points

Beta

Revenue

$2.69B

Net Income

$422.00M

0.2% Net Margin

EPS (Diluted)

$1.25

Total Assets

$284.42B

Cash & Equivalents

$4.01B

Free Cash Flow

$87.00M

Financial Statements

Beta

Revenue	$2.69B
Interest Expense	$1.70B
Net Income	$422.00M
EPS (Basic)	$1.27
EPS (Diluted)	$1.25
Shares Outstanding (Basic)	313.15M
Shares Outstanding (Diluted)	317.33M

Key Highlights

1Q3 2023 diluted EPS of $1.25, down 31% year-over-year, impacted by a $294 million loss on investment securities sale.
2Total revenue decreased 9% to $2.7 billion, primarily due to the investment securities sale and lower Net Interest Income (NII).
3Total fee revenue increased 3% to $2.36 billion, driven by higher servicing, management, and software/processing fees.
4Total expenses rose 3% to $2.18 billion, reflecting higher compensation and business investments.
5Assets Under Custody/Administration (AUC/A) grew 12% to $40.02 trillion, and Assets Under Management (AUM) increased 12.9% to $3.7 trillion.
6State Street returned $1.2 billion to shareholders via dividends and share repurchases in Q3 2023.
7The company's CET1 capital ratio stood at 11.0% as of September 30, 2023.

STATE STREET CORP Quarterly Report for Q3 Ended Sep 30, 2023

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions