01—Abstract
Summary
Summary of the 10-Q filed October 31, 2024. Cited figures are marked; the original filing is the authoritative source.
State Street Corporation (STT) reported a robust third quarter of 2024, with significant year-over-year growth in total revenue and earnings per share.
Total revenue increased by 21%a driven by strong performance in fee revenue and net interest income. Diluted earnings per share saw an impressive 81% increase, primarily attributed to higher total revenue and a notable item in the prior year period. The company demonstrated improved profitability with a pre-tax margin of 28.4% and a return on average common equity of 12.0%.
State Street also returned $674 millionb to shareholders through dividends and share repurchases. The company's Assets Under Custody/Administration (AUC/A) and Assets Under Management (AUM) both saw substantial increases, reflecting positive market conditions and net new business. The company's financial health remains strong, with stable capital ratios, including a CET1 capital ratio of 11.6%.
State Street continued to manage its capital proactively through preferred stock issuances and redemptions, as well as senior note issuances. The provision for credit losses increased to $26 millionc, primarily due to concerns in certain commercial real estate and leveraged loans, alongside macroeconomic factors. Expenses increased by 6%, driven by business investments and performance-related costs, partially offset by productivity savings.
02—Key points
Key Highlights
- Total revenue increased by 21% to $3.26 billion in Q3 2024 compared to Q3 2023.
- Diluted earnings per share (EPS) grew by 81% to $2.26 in Q3 2024.
- Pre-tax margin improved significantly to 28.4% in Q3 2024, up from 19.0% in Q3 2023.
- Assets Under Custody/Administration (AUC/A) increased 17% year-over-year to $46.76 trillion.
- Assets Under Management (AUM) increased 29% year-over-year to $4.73 trillion.
- Returned $674 million to shareholders through common share repurchases ($450 million) and common stock dividends ($224 million) in Q3 2024.
- CET1 capital ratio remained stable at 11.6% as of September 30, 2024.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 31, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $3.26B$2.69B | +21.1% |
| Net Income | $730.00M$422.00M | +73.0% |
| EPS (Basic) | $2.29$1.27 | +80.3% |
| EPS (Diluted) | $2.26$1.25 | +80.8% |
| Shares Outstanding (Basic) | 297.37M313.15M | −5.0% |
| Shares Outstanding (Diluted) | 301.85M317.33M | −4.9% |
05—Questions
Frequently Asked Questions
What drove the significant increase in State Street's revenue in Q3 2024?
State Street's total revenue increased by 21% to $3.26 billion in the third quarter of 2024 compared to the prior year period. This growth was primarily driven by higher fee revenue, which increased by 11%, and a 16% rise in net interest income. Strong performance was noted across various fee streams, including foreign exchange trading services, management fees, and servicing fees.
How did State Street's profitability metrics change in Q3 2024?
Profitability saw a substantial improvement in the third quarter of 2024. Diluted earnings per share (EPS) rose by 81% to $2.26, and the pre-tax margin expanded to 28.4% from 19.0% in the same period last year. Return on average common equity also increased significantly to 12.0% from 7.3%.
What is the current status of State Street's capital position?
State Street maintained a strong capital position as of September 30, 2024, with a Common Equity Tier 1 (CET1) capital ratio of 11.6%, which remained flat compared to the end of the previous year. The Tier 1 leverage ratio was also stable at 5.5%. The company expects these ratios to remain within or above their target ranges.
Did State Street experience any issues with loan quality in the recent quarter?
State Street recorded a $26 million provision for credit losses in Q3 2024, a change from zero in the prior year's quarter. This provision was primarily due to an increase in loan loss reserves for certain commercial real estate and leveraged loans, as well as changes in macroeconomic factors. The company's allowance for credit losses increased, with specific allocations towards leveraged loans and commercial real estate loans.
06—Continue