State Street Posts Mixed Q3 Results as Fee Revenue Miss Sends Stock Down More Than 8%

State Street reported third-quarter adjusted earnings per share of $3.69, beating estimates of $3.67 by two cents and rising 33% year on year, but total revenue of $4.00 billion fell short of the $4.03 billion analysts expected, and fee revenue of $3.14 billion missed the $3.20 billion estimate. The stock fell 8.3% in pre-market trading on the fee shortfall, even as the company's profit rose 27% from a year earlier.

Within the fee breakdown, servicing fees of $1.49 billion came in below the $1.52 billion estimate but still grew 9.9% year on year. Management fees of $797 million surged 20.0%, FX trading revenue of $427 million rose 17.3%, securities finance fees of $151 million gained 9.4%, and software fees of $175 million were up 4.8%. Net interest income of $864 million beat the $857.91 million estimate and net interest margin expanded 16 basis points year on year to 1.12%.

Assets under custody and administration reached $59.17 trillion, up 15% year on year, while assets under management of $6.31 trillion came in slightly below the $6.38 trillion estimate. Pre-tax margin expanded 3.5 percentage points to 34.6%, return on equity rose 3.0 points to 16.4%, and the CET1 ratio stood at 11.0%. Total expenses were $2.62 billion, up 7.6% year on year.

For the full year, management updated its outlook to call for fee revenue growth of approximately 13% to 14% year on year and net interest income growth of approximately 15% to 16% year on year.