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State Street's Q1 Earnings Top as Fee Income Rises Y/Y, Stock Down
STTState Street(STT) ZACKS·2025-04-17 17:00

Core Viewpoint - State Street's first-quarter 2025 earnings exceeded expectations, driven by growth in fee revenues and lower provisions, despite challenges from higher adjusted expenses and lower net interest income [1][2][4]. Financial Performance - Earnings per share were 2.04,surpassingtheZacksConsensusEstimateof2.04, surpassing the Zacks Consensus Estimate of 1.98, and increased by 20.7% year over year [1] - Net income available to common shareholders was 644million,up39.1644 million, up 39.1% from the previous year, exceeding projections of 569.9 million [3] - Total revenues reached 3.28billion,a4.73.28 billion, a 4.7% increase year over year, but fell short of the Zacks Consensus Estimate of 3.30 billion [4] - Net interest income (NII) was 714million,aslightdeclineyearoveryear,attributedtoloweraverageshort−endratesandashiftindepositmix[4]−Thenetinterestmargin(NIM)contractedby13basispointsto1714 million, a slight decline year over year, attributed to lower average short-end rates and a shift in deposit mix [4] - The net interest margin (NIM) contracted by 13 basis points to 1%, below the expected 1.09% [5] Revenue Breakdown - Total fee revenues increased by 6.1% year over year to 2.66 billion, driven by growth in nearly all components except other fee revenue [5] - Non-interest expenses were 2.45billion,down2.52.45 billion, down 2.5% from the prior year, primarily due to the absence of notable items from the previous year [6] - Provision for credit losses was 12 million, down 55.6%, significantly lower than the projected 27.1million[6]AssetManagement−AsofMarch31,2025,totalassetsundercustodyandadministration(AUC/A)were27.1 million [6] Asset Management - As of March 31, 2025, total assets under custody and administration (AUC/A) were 46.73 trillion, up 6.4% year over year, although slightly below the projected 46.86trillion[8]−Assetsundermanagement(AUM)reached46.86 trillion [8] - Assets under management (AUM) reached 4.67 trillion, an 8.5% increase year over year, driven by higher market levels and net inflows, but also below the estimate of 4.82trillion[8]ShareholderActions−Inthereportedquarter,StateStreetrepurchasedsharesworth4.82 trillion [8] Shareholder Actions - In the reported quarter, State Street repurchased shares worth 100 million [9] Strategic Outlook - The company is expected to benefit from relatively higher interest rates, strategic buyouts, and rising AUM, although concerns remain regarding rising expenses and concentrated fee-based revenues [10]