This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

State Street Suffers Q3 Trading Weakness but Revenue Rises From Year Earlier (Update 1)

  • Third-quarter EPS of $1.17, misses consensus estimate of $1.18
  • EPS rises from $1.01 a year earlier, on operating basis
  • Revenue of $2.43 billion misses estimate of $2.51 billion
  • Revenue up from $2.36 billion a year earlier
  • Assets under custody and management continue to grow

Updated from 8:53 a.m. ET with market reaction and comment from Jefferies analyst Ken Usdin.

NEW YORK ( TheStreet) -- State Street (STT - Get Report) on Tuesday reported a sequential revenue decline, as part of the industry's weak trading trend for the third quarter, but the asset manager and custody bank saw total revenue grow over 3% year-over-year.

State Street of Boston reported third-quarter net income available to common shareholders of $531 million, or $1.17 a share, declining from $571 million, or $1.24 a share, during the second quarter, and from $654 million, or $1.36 a share, during the third quarter of 2012.

The year-earlier results include an after-tax benefit of $166 million, or 35 cents a share, "the majority of which pertained to recoveries associated with the 2008 Lehman Brothers bankruptcy," according to State Street.

Third-quarter revenue totaled $2.469 billion, below the consensus estimate of $2.523 billion. Revenue declined from $2.580 billion in the second quarter, as trading services revenue dropped 13.5% to $256 million. Servicing fees were up 1% from the second quarter, to $1.211 billion. Securities finance revenue was down 43.5% sequentially to $74 million in the third quarter. The company also saw a 5% quarter-over-quarter decline in net interest income to $553 million.

The year-over-year revenue comparison was more favorable. Servicing fees grew 10% and management fees also grew 10% to $276 million in the third quarter (they were flat from the second quarter). Trading services revenue was up 10%. Securities finance revenue was down 19% year-over-year.

Processing fees and other revenue grew 3% quarter-over-quarter and 23% year-over-year, to $103 million in the third quarter.

Total operating expenses for the third quarter were $1.687 billion, down 4% from the second quarter and up 1% from a year earlier.

State Street CEO Joseph Hooley in the company's earnings release said the third-quarter results "reflect the strength of our core business with operating-basis fee revenue up 9% from the third quarter of 2012, in a period impacted by the cyclical declines in market-driven revenue from a summer slowdown as well as the effect of the low interest-rate environment."

He added that "Demand for our products, services, and solutions remains strong as evidenced by $200 billion of new asset servicing wins during the quarter."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
STT $77.43 0.00%
AAPL $126.60 0.00%
FB $86.91 0.00%
GOOG $521.84 0.00%
TSLA $269.15 0.00%

Markets

DOW 17,757.91 +138.40 0.79%
S&P 500 2,077.42 +14.31 0.69%
NASDAQ 5,013.1230 +26.2560 0.53%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs