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July 19, 2021

State Street registers growth in profit in second quarter

State Street had a positive momentum in Q2 2021, posting a 10% year-on-year rise in its net income and 3% growth in total revenue.

Highlights

The US-based asset manager’s net income was $763m in the three-months to June 2021, compared to $694m a year ago and $519m in the previous quarter.

The firm also benefitted from a 6% increase in total fee revenue to $2.51bn from $2.38bn, which was driven by strong servicing and management fees.

This was partially offset by lower FX trading services as well as software and processing fees.

However, net interest income slumped 16% to $467m, because of ‘lower investment portfolio yields and a decline in average short-end market rates’. This was partially offset by increase in deposits, noted State Street.

Total expenses of $2.11bn rose 1% from the prior year. The figure was lower than the previous quarter as productivity savings outweighed higher revenue-related costs and planned investments for client onboarding, operations, technology and product innovation.

Investment Servicing AUC/A as of 30 June 2021 stood at $42.6trn, a 27% surge from $33.5trn a year earlier.

The rise was attributed to higher period-end market levels, client flows, and net new business growth.

Net inflows from ETFs and cash led to a 28% jump in Investment Management AUM to $3.9trn.

Standardized Common Equity Tier 1 (CET1) was 11.2% at June-end 2021, a fall of 1.1% points from the prior year and a rise of 0.4% points from the previous quarter.

Tier 1 leverage ratio of 5.2% was down 0.9% points from a year ago and down 0.2% points from Q1 21.

Liquidity coverage ratio was 104% at the end of this second quarter, versus 109% a year ago.

State Street chairman and CEO Ron O’Hanley said: “Our second quarter results reflect the successful execution of our strategic priorities.

“We delivered record fee revenue with continued expense discipline, driving considerable pre-tax margin expansion and earnings growth in the second quarter thus demonstrating meaningful progress toward our medium-term targets.”

Moreover, the firm’s board approved a common share repurchase programme of up to $3bn through 2022.

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