State Street’s (STT - Free Report) first-quarter 2020 adjusted earnings of $1.67 per share comfortably outpaced the Zacks Consensus Estimate of $1.35. Also, the figure was 34.7% higher than the prior-year level.
The stock surged 7.8% in pre-market trading, driven by success of the company’s cost-saving efforts and improvement in fee income. Notably, the full-day trading session will depict a better picture.
The results reflect new investment servicing wins of $171 billion, improvement in fee income and successful implementation of its cost-saving initiatives. However, lower net interest income mainly due to lower rates and rise in provisions were headwinds.
After considering several non-recurring items, net income available to common shareholders was $580 million, up 28.3% from the year-ago quarter.
Revenues Up, Expenses Down
Total revenues were $3.07 billion, increasing 4.5% year over year. Also, the top line beat the Zacks Consensus Estimate of $2.91 billion.
Net interest revenues declined 1.3% from the year-ago quarter to $664 million. The fall was mainly due to lower market rates, partially offset by solid deposit balance and episodic market-related benefits.
Net interest margin decreased 24 basis points year over year to 1.30%.
Total fee revenues grew 6.2% from the prior-year quarter to $2.40 billion. This rise was mainly driven by higher foreign exchange trading services, which surged 63.9% from the year-ago quarter.
Non-interest expenses were $2.26 billion, down 1.7% from a year ago. The decline was attributed to the company’s cost-savings efforts. Excluding notable items, adjusted expenses decreased 1.1% from the prior-year period to $2.24 billion.
Provision for credit losses jumped 49.4% from the year-ago period to $124 million.
As of Mar 31, 2020, total assets under custody and administration were $31.9 trillion, down 2.4% year over year. Also, assets under management were $2.7 trillion, up 4.1% from the prior-year figure.
Strong Capital and Profitability Ratios
Under Basel III (Standardized approach), estimated Tier 1 common ratio was 10.7% as of Mar 31, 2020 compared with 11.5% in the corresponding period of 2019.
Return on common equity came in at 10.9% compared with 8.7% in the year-ago quarter.
Share Repurchase Update
During the reported quarter, State Street repurchased $500 million worth of shares. This was part of its 2019 capital plan. In mid-March, the company suspended the share buyback plan amid coronavirus pandemic.
Our Take
New business wins, strong balance sheet position and cost-saving efforts are likely to continue supporting State Street's profitability. However, lower interest rates and coronavirus-induced economic slowdown remain major near-term concerns.
State Street currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Major Regional Banks
The Bank of New York Mellon Corporation’s (BK - Free Report) first-quarter 2020 earnings per share of $1.05 surpassed the Zacks Consensus Estimate of 90 cents. Moreover, the figure reflects a rise of 11.7% from the prior-year quarter.
KeyCorp’s (KEY - Free Report) first-quarter 2020 earnings of 12 cents per share surpassed the Zacks Consensus Estimate of 6 cents. The figure takes into account the Current Expected Credit Losses accounting methodology, impact of coronavirus and market-related valuation adjustments.
U.S. Bancorp (USB - Free Report) reported first-quarter 2020 earnings per share of 72 cents, which surpassed the Zacks Consensus Estimate of 49 cents. However, the bottom line declined 28% from the prior-year figure.
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State Street’s (STT - Free Report) first-quarter 2020 adjusted earnings of $1.67 per share comfortably outpaced the Zacks Consensus Estimate of $1.35. Also, the figure was 34.7% higher than the prior-year level.
The stock surged 7.8% in pre-market trading, driven by success of the company’s cost-saving efforts and improvement in fee income. Notably, the full-day trading session will depict a better picture.
The results reflect new investment servicing wins of $171 billion, improvement in fee income and successful implementation of its cost-saving initiatives. However, lower net interest income mainly due to lower rates and rise in provisions were headwinds.
After considering several non-recurring items, net income available to common shareholders was $580 million, up 28.3% from the year-ago quarter.
Revenues Up, Expenses Down
Total revenues were $3.07 billion, increasing 4.5% year over year. Also, the top line beat the Zacks Consensus Estimate of $2.91 billion.
Net interest revenues declined 1.3% from the year-ago quarter to $664 million. The fall was mainly due to lower market rates, partially offset by solid deposit balance and episodic market-related benefits.
Net interest margin decreased 24 basis points year over year to 1.30%.
Total fee revenues grew 6.2% from the prior-year quarter to $2.40 billion. This rise was mainly driven by higher foreign exchange trading services, which surged 63.9% from the year-ago quarter.
Non-interest expenses were $2.26 billion, down 1.7% from a year ago. The decline was attributed to the company’s cost-savings efforts. Excluding notable items, adjusted expenses decreased 1.1% from the prior-year period to $2.24 billion.
Provision for credit losses jumped 49.4% from the year-ago period to $124 million.
As of Mar 31, 2020, total assets under custody and administration were $31.9 trillion, down 2.4% year over year. Also, assets under management were $2.7 trillion, up 4.1% from the prior-year figure.
Strong Capital and Profitability Ratios
Under Basel III (Standardized approach), estimated Tier 1 common ratio was 10.7% as of Mar 31, 2020 compared with 11.5% in the corresponding period of 2019.
Return on common equity came in at 10.9% compared with 8.7% in the year-ago quarter.
Share Repurchase Update
During the reported quarter, State Street repurchased $500 million worth of shares. This was part of its 2019 capital plan. In mid-March, the company suspended the share buyback plan amid coronavirus pandemic.
Our Take
New business wins, strong balance sheet position and cost-saving efforts are likely to continue supporting State Street's profitability. However, lower interest rates and coronavirus-induced economic slowdown remain major near-term concerns.
State Street currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Major Regional Banks
The Bank of New York Mellon Corporation’s (BK - Free Report) first-quarter 2020 earnings per share of $1.05 surpassed the Zacks Consensus Estimate of 90 cents. Moreover, the figure reflects a rise of 11.7% from the prior-year quarter.
KeyCorp’s (KEY - Free Report) first-quarter 2020 earnings of 12 cents per share surpassed the Zacks Consensus Estimate of 6 cents. The figure takes into account the Current Expected Credit Losses accounting methodology, impact of coronavirus and market-related valuation adjustments.
U.S. Bancorp (USB - Free Report) reported first-quarter 2020 earnings per share of 72 cents, which surpassed the Zacks Consensus Estimate of 49 cents. However, the bottom line declined 28% from the prior-year figure.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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