State Street (STT) Q2 2024 earnings summary

Executive summary

• Total revenue grew 3% year-over-year to $3.2B in Q2 2024, driven by higher net interest income and management fees, with EPS at $2.15 and ROE at 11.9%.

• Achieved record assets under custody/administration (AUC/A) of $44.3T and assets under management (AUM) of $4.4T, with $291B in new AUC/A wins.

• Maintained expense discipline, with total expenses up 3% year-over-year, supporting positive operating leverage and a pre-tax margin of 28.6%.

• Completed consolidation of the final operations joint venture in India, enhancing efficiency and increasing headcount.

• Announced a planned 10% increase in the quarterly common stock dividend to $0.76 per share, starting in Q3 2024, subject to board approval.

Financial highlights

• EPS was $2.15, slightly down from $2.17 year-over-year, with net income at $711M, down 7% year-over-year.

• Revenue grew 3% year-over-year, with net interest income up 6% to $735M and fee revenues up 2%.

• Management fees increased 11% year-over-year, driven by higher market levels and prior net inflows.

• FX trading revenue grew 11% year-over-year, while securities finance revenues declined due to lower US specials activity.

• Total expenses rose 3% year-over-year, reflecting business investments and higher revenue-related costs.

Outlook and guidance

• Full-year total fee revenue expected to be up 4%-5%, above prior guidance.

• Full-year NII now expected to be up slightly year-over-year, improving from previous guidance.

• Full-year expenses, excluding notable items, expected to be up about 3%, slightly higher than prior outlook.

• Supervisory stress test results confirmed capital strength; CET1 and leverage ratios expected to remain within or above target ranges.

• On track to deliver 6-8 new Alpha mandate wins for the year, with 3 year-to-date.