State Street Reports Q2 Results

State Street said assets under custody during the second quarter of 2013 increased 1.3% from quarter one and 14.8% from last year to $25.7 trillion; however, assets under management decreased 1.4% sequentially and increased 12.5% from last year to $2.1 trillion.

Net income available to common shareholders of $571 million increased from $455 million in the first quarter of 2013 and increased from $480 million in the second quarter of 2012.

Securities finance revenue, $131 million, decreased 8.4% from last year due to lower spreads but increased 67.9% sequentially due to seasonality.

Trading services revenue was up 5.3% sequentially to $296 million due to strength in FX offset by a decrease in distribution fees associated with SPDR Gold ETF, which also led to a decrease in brokerage and other fees. Higher volumes and volatilities drove FX revenue up 17.1% sequentially and 32.6% from last year.

Servicing fees increased 2.2% sequentially to $1.2 billion due to new business and stronger global equity markets; it increased 10.6% from the second quarter of 2012, in part due to the acquisition of the Goldman Sachs Administrative Services business. Management fees increased 5.3% sequentially to $277 million.

Net interest margin remained at 131 basis points, the same as quarter one; it decreased 154 points from the first quarter of 2012, however, due to lower yields on earning assets and higher central bank balances.

Joseph Hooley, State Street’s chairman, president and CEO, said: “We reported a strong second quarter with revenue growth driven by new business and improved equity markets. Seasonal factors and increased market volatility benefited our securities finance and foreign exchange businesses. The second-quarter results also reflected our continued success in realizing the expected benefits from our Business Operations and Information Technology Transformation program and ongoing expense management. Importantly, we achieved positive operating leverage compared to both the first quarter of 2013 and the second quarter of 2012.

“We remain focused on returning capital to our shareholders. During the second quarter of 2013, we purchased approximately $560 million of our common stock and have approximately $1.5 billion remaining on our March 2013common stock purchase program authorizing the purchase of up to $2.1 billion of our common stock through March 31, 2014.”