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State Street reported earnings per share of $2.17, compared to the consensus of $2.11, and total revenue was up 5% from last year at $3.11 billion, slightly below the consensus of $3.13B. It reported net interest income growth of 18%.
Evercare ISI analysts said they expected the stock to decline following results because of relative weakness in NII and fees.
“STT posted a slight beat on a lower provision & tax rate, despite weaker-than-expected NII & fees. Lowlights were deposits down 10% mostly on NIB (though the percentage of operational was steady); NII down 10% q/q with the NIM -12bps sequentially; overall fees advancing thanks to front-office but with mgmt & servicing fees retreating; & some negative fee operating leverage,” they said.
“STT reported a headline beat mostly driven by lower tax rate and loan loss provision. STT came in on the low of end of guidance for both NII where they were down 10% q/q (vs guide of down 5-10%) on continued NIB deposit runoff and fees where they were up ~4% (vs guide of 4-4.5%) but this was primarily driven by lower multiple trading services and CRD-related fees were mostly in-line,” said Citi analysts.
KBW analysts described State Street’s performance as a “low quality beat.”
“Expect shares to be weak on the low-quality beat and all eyes will be on deposit and 2023 NII guidance,” they said.
State Street’s stock declined by over 10%, following the disappointing results.
