We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
State Street (STT) Gains on Q2 Earnings Beat, Y/Y Revenue Rise
Read MoreHide Full Article
State Street’s (STT - Free Report) second-quarter 2024 earnings of $2.15 per share surpassed the Zacks Consensus Estimate of $2.01. The bottom line declined 1% from the prior-year quarter.
STT shares jumped 3% in the pre-market trading on a better-than-expected quarterly performance. However, a full day’s trading session will depict a clearer picture.
Results have primarily been aided by growth in fee revenues and higher net interest revenues (NIR). Also, the company witnessed improvements in the total assets under custody and assets under management (AUM) balances. However, higher expenses have hurt the results to some extent.
Net income available to common shareholders was $655 million, down 9.8% from the year-ago quarter. Our projection for the metric was $594.4 million.
Revenues Improve, Expenses Rise
Total revenues of $3.19 billion increased 2.6% year over year. Also, the top line beat the Zacks Consensus Estimate of $3.15 billion.
NIR was $735 million, up 6.4% year over year. The rise was driven by higher investment securities yields and loan growth, partially offset by deposit mix shift. Our estimate for the metric was $681.9 million.
The net interest margin contracted 6 basis points year over year to 1.13%.
Total fee revenues increased 1.5% year over year to $2.46 billion. We estimated the metric to be $2.47 billion.
Non-interest expenses were $2.27 billion, up 2.6% from the prior-year quarter. The rise was due to an increase in almost all cost components, except for compensation and employee benefits costs. Our estimate for the metric was $2.27 billion.
Provision for credit losses was $10 million against a provision benefit of $18 million in the prior-year quarter. Our prediction for the metric was $19.8 million.
The Common Equity Tier 1 ratio was 11.2% as of Jun 30, 2024, compared with 11.8% in the corresponding period of 2023. The return on common equity was 11.9% compared with 13.0% in the year-ago quarter.
Asset Balances Increase
As of Jun 30, 2024, total assets under custody and administration were $44.31 trillion, up 11.9% year over year. The rise was driven by higher quarter-end equity market levels, net new business and client flows. We had projected the metric to be $42.19 trillion.
AUM was $4.42 trillion, up 16.3% year over year, primarily driven by higher quarter-end market levels and net inflows. Our estimate for the metric was $4.09 trillion.
Share Repurchase Update
In the reported quarter, State Street repurchased shares worth $200 million.
Our Take
Persistently rising expenses and a tough operating backdrop are major concerns. Yet, higher interest rates and solid business servicing wins are expected to keep supporting STT’s financials.
State Street Corporation Price, Consensus and EPS Surprise
The Bank of New York Mellon Corporation’s (BK - Free Report) second-quarter 2024 adjusted earnings of $1.51 per share surpassed the Zacks Consensus Estimate of $1.43. Also, the bottom line increased 9.4% from the prior-year quarter.
BK’s results were primarily aided by a rise in fee revenues and lower expenses. The assets under custody and/or administration and assets under management balances grew on a solid market rally. However, a decline in net interest revenues hurt BK’s results to some extent.
High interest rates, the resurgence of the investment banking business and solid markets revenues drove JPMorgan’s (JPM - Free Report) second-quarter 2024 adjusted earnings to $4.40 per share. The bottom line handily surpassed the Zacks Consensus Estimate of $4.19.
The results excluded a $2.04-per-share net gain related to Visa shares, an 18-cent-per-share donation of Visa shares to pre-fund contributions to the company’s Foundation and net investment securities losses of 14 cents per share. After including these one-time items, earnings were $6.12 per share.
JPM’s equity underwriting fees jumped 56% year over year and debt underwriting fees grew 51%. Advisory fees jumped 45%. Overall, JPM’s total IB fees were up 50% from the prior-year quarter.
Higher interest rates, decent consumer spending and a decent loan balance (up 2% year over year) supported NII in the quarter.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Shutterstock
State Street (STT) Gains on Q2 Earnings Beat, Y/Y Revenue Rise
State Street’s (STT - Free Report) second-quarter 2024 earnings of $2.15 per share surpassed the Zacks Consensus Estimate of $2.01. The bottom line declined 1% from the prior-year quarter.
STT shares jumped 3% in the pre-market trading on a better-than-expected quarterly performance. However, a full day’s trading session will depict a clearer picture.
Results have primarily been aided by growth in fee revenues and higher net interest revenues (NIR). Also, the company witnessed improvements in the total assets under custody and assets under management (AUM) balances. However, higher expenses have hurt the results to some extent.
Net income available to common shareholders was $655 million, down 9.8% from the year-ago quarter. Our projection for the metric was $594.4 million.
Revenues Improve, Expenses Rise
Total revenues of $3.19 billion increased 2.6% year over year. Also, the top line beat the Zacks Consensus Estimate of $3.15 billion.
NIR was $735 million, up 6.4% year over year. The rise was driven by higher investment securities yields and loan growth, partially offset by deposit mix shift. Our estimate for the metric was $681.9 million.
The net interest margin contracted 6 basis points year over year to 1.13%.
Total fee revenues increased 1.5% year over year to $2.46 billion. We estimated the metric to be $2.47 billion.
Non-interest expenses were $2.27 billion, up 2.6% from the prior-year quarter. The rise was due to an increase in almost all cost components, except for compensation and employee benefits costs. Our estimate for the metric was $2.27 billion.
Provision for credit losses was $10 million against a provision benefit of $18 million in the prior-year quarter. Our prediction for the metric was $19.8 million.
The Common Equity Tier 1 ratio was 11.2% as of Jun 30, 2024, compared with 11.8% in the corresponding period of 2023. The return on common equity was 11.9% compared with 13.0% in the year-ago quarter.
Asset Balances Increase
As of Jun 30, 2024, total assets under custody and administration were $44.31 trillion, up 11.9% year over year. The rise was driven by higher quarter-end equity market levels, net new business and client flows. We had projected the metric to be $42.19 trillion.
AUM was $4.42 trillion, up 16.3% year over year, primarily driven by higher quarter-end market levels and net inflows. Our estimate for the metric was $4.09 trillion.
Share Repurchase Update
In the reported quarter, State Street repurchased shares worth $200 million.
Our Take
Persistently rising expenses and a tough operating backdrop are major concerns. Yet, higher interest rates and solid business servicing wins are expected to keep supporting STT’s financials.
State Street Corporation Price, Consensus and EPS Surprise
State Street Corporation price-consensus-eps-surprise-chart | State Street Corporation Quote
State Street currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
The Bank of New York Mellon Corporation’s (BK - Free Report) second-quarter 2024 adjusted earnings of $1.51 per share surpassed the Zacks Consensus Estimate of $1.43. Also, the bottom line increased 9.4% from the prior-year quarter.
BK’s results were primarily aided by a rise in fee revenues and lower expenses. The assets under custody and/or administration and assets under management balances grew on a solid market rally. However, a decline in net interest revenues hurt BK’s results to some extent.
High interest rates, the resurgence of the investment banking business and solid markets revenues drove JPMorgan’s (JPM - Free Report) second-quarter 2024 adjusted earnings to $4.40 per share. The bottom line handily surpassed the Zacks Consensus Estimate of $4.19.
The results excluded a $2.04-per-share net gain related to Visa shares, an 18-cent-per-share donation of Visa shares to pre-fund contributions to the company’s Foundation and net investment securities losses of 14 cents per share. After including these one-time items, earnings were $6.12 per share.
JPM’s equity underwriting fees jumped 56% year over year and debt underwriting fees grew 51%. Advisory fees jumped 45%. Overall, JPM’s total IB fees were up 50% from the prior-year quarter.
Higher interest rates, decent consumer spending and a decent loan balance (up 2% year over year) supported NII in the quarter.