State Street Q1 Profit Rises 9% on Higher Revenues; Adjusted Net Tops Views, Revenue Misses (STT)

Early on Friday, financial services company State Street Corporation (STT) reported a increase in first quarter profit and revenue, as the company saw an increase in free revenue growth due to stronger equity markets. Adjusted earnings topped Wall Street views, but revenue missed expectations.

The Boston-based company said its first quarter net income rose to $455 million, or 98 cents per share, from $417 million, or 85 cents per share, a year ago.

On an adjusted basis, earnings per share came in at 96 cents compared to 84 cents last year. According to analysts polled by Thomson Reuters, the company was expected to earn 93 cents per share in the quarter.

Total revenue in the quarter rose 1% to $2.44 billion from the same period last year. Adjusted revenue came in at $2.47 billion. Both figures missed the analysts’ view of $2.48 billion.

The company was aided by a 9% increase in servicing fee revenue, coming in at $1.18 billion. However, net interest income declined 4.9% to $607 million; net interest margin fell 21 basis points to 1.31%.

State Street Chairman, President, and CEO Joseph Hooley said, “The first-quarter results reflect good performance and our continued commitment to delivering value-added solutions to our clients across our asset servicing and asset management businesses. The strength in the equity markets, combined with higher volumes and increased volatility in foreign-exchange trading, supported our fee revenue.”

Total assets under management increased 10% to $2.18 trillion from $1.98 trillion a year ago.

“Overall, the environment continues to show signs of gradual improvement as reflected by investors shifting into equities. However, given the ongoing fragile state of the global markets, we continue to remain cautious for 2013,” Hooley also added.

State Street shares were down 6 cents, or -0.11%, during pre-market trading on Friday. The stock is up +20.21% year-to-date.

The Bottom Line
Shares of State Street (STT) have a dividend yield of 1.84% based on last night’s closing price of $56.51 and the company’s annualized dividend payout of $1.04 per share.

State Street Corporation (STT) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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