UPDATE: State Street (STT) Tops Q2 EPS by 6c, Revenues Beat; Boosts Expense Savings Program Target to $400M

July 19, 2019 7:31 AM EDT

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(Updated - July 19, 2019 7:32 AM EDT)

State Street (NYSE: STT) reported Q2 EPS of $1.45, $0.06 better than the analyst estimate of $1.39. Revenue for the quarter came in at $2.87 billion versus the consensus estimate of $2.87 billion.

  • EXPENSE SAVINGS PROGRAM TARGET INCREASED TO $400 MILLION, EXCEEDING INITIAL COST-SAVINGS GOAL FOR 2019; $175 MILLION OF SAVINGS ALREADY REALIZED YEAR-TO-DATE
  • NEW INVESTMENT SERVICING WINS OF $390 BILLION DURING QUARTER
  • FRONT-TO-BACK INVESTMENT SERVICING DEMAND INCREASING WITH FIRST MAJOR ANNOUNCEMENT AND STRONG PIPELINE
  • 2019 CCAR CAPITAL PLAN INCLUDED INCREASE IN QUARTERLY DIVIDEND TO $0.52 PER SHARE AND COMMON STOCK REPURCHASES OF UP TO $2 BILLION

Ron O'Hanley, President and Chief Executive Officer : "State Street is acting with urgency to adjust to a challenging external environment. We remain laser focused on steps we can immediately take both to improve financial performance and strengthen client service, including enhanced productivity, process re-engineering and greater resource discipline. Our 2019 expense program has delivered $175 million in savings year-to-date and we now expect to achieve a total of $400 million by year-end. On the revenue side, gross client wins were strong with almost $400 billion of new assets. I am encouraged by the continued momentum with Charles River Development, both in terms of new business on its platform but also due to the depth of the discussions we are having with a range of clients on adopting our leading front-to-back platform. We saw some moderation in industry headwinds and more stable fee revenues as we actively and systematically engage with clients. Moreover, our CCAR results were encouraging, confirming the effectiveness of our balance sheet repositioning last year and allowing us to increase capital return to shareholders."

Revenues

  • Fee revenue decreased 6% reflecting lower servicing, management and markets revenues, partially offset by CRD:
  • Compared to 1Q19, fee revenue was flat reflecting primarily stable servicing fees, higher management fees and lower processing fees.
  • CRD generated $91 million in 2Q19 fee revenues and $45 million in pre-tax operating income before associated amortization expense and acquisition costs.
  • Net interest income (NII) decreased 7% primarily due to lower noninterest-bearing deposit balances and accelerated mortgage backed securities (MBS) premium amortization from falling long rates.

For earnings history and earnings-related data on State Street (STT) click here.



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