STATE STREET CORP Quarterly Report for Q2 Ended Jun 30, 2024

Summary

State Street Corporation's (STT) Q2 2024 performance shows a modest increase in total revenue driven by higher net interest income and fee revenue. While total fee revenue saw a 2% increase year-over-year, this was primarily attributed to growth in management fees and foreign exchange trading services, partially offset by declines in servicing fees and other fee categories. Net interest income rose by 6%, boosted by higher investment securities yields and loan growth. However, net income available to common shareholders decreased by 10% compared to the prior year, impacted by a 3% rise in total expenses and a higher provision for credit losses. The company returned $407 million to shareholders through dividends and share repurchases, and strategically completed the consolidation of its Indian operations joint venture, which is expected to yield future efficiencies. Key financial metrics indicate a slight pressure on profitability, with a decrease in earnings per share and return on equity. The company's Assets Under Custody/Administration (AUC/A) grew by 12% to $44.31 trillion and Assets Under Management (AUM) increased by 15% to $4.37 trillion year-over-year, reflecting positive market levels and client flows. State Street's capital position remains robust, with CET1 and Tier 1 leverage ratios within or above target ranges, supported by a recent preferred stock issuance. Investors should monitor the impact of ongoing business investments, productivity savings, and potential pricing headwinds on future revenue growth and expense management.

Key Highlights

• 1Total revenue increased by 3% year-over-year to $3.19 billion, primarily driven by a 6% increase in Net Interest Income (NII) and a 2% increase in Total Fee Revenue.
• 2Net income available to common shareholders decreased by 10% to $655 million, or $2.15 per diluted share, compared to $726 million, or $2.17 per diluted share, in the prior year's quarter.
• 3Assets Under Custody and/or Administration (AUC/A) increased by 12% year-over-year to $44.31 trillion, while Assets Under Management (AUM) grew by 15% to $4.37 trillion.
• 4Total expenses increased by 3% to $2.27 billion, influenced by business investments and revenue-related costs, partially offset by productivity savings.
• 5The company returned approximately $407 million to shareholders in Q2 2024 through common share repurchases ($200 million) and common stock dividends ($207 million).
• 6State Street completed the consolidation of its final operations joint venture in India, aiming for future efficiency savings.
• 7Common Equity Tier 1 (CET1) capital ratio stood at 11.2% as of June 30, 2024, with Tier 1 leverage ratio at 5.3%, both within or above target ranges.

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