State Street Corp. (STT) stock experienced a 4.5% decline after announcing its second-quarter financial results. Although the company reported a profit that exceeded expectations, it fell short of its revenue and net interest income targets.
Strong Earnings Growth
State Street revealed that its earnings for the three months ending June 30 showed a solid 2% increase to $763 million, equating to $2.17 per share. This is compared to $747 million, or $1.91 per share, during the same period last year. Analysts had estimated earnings of $2.10 per share, as compiled by FactSet.
Revenue Misses Forecast
While State Street’s second-quarter revenue rose to $3.11 billion from $2.95 billion, it failed to meet the analyst consensus of $3.14 billion.
Net Interest Income Performance
Net interest income declined by 10% from the first quarter, amounting to $691 million. However, it showed a promising 18% increase over the previous year. Jefferies analyst Ken Usdin noted that State Street’s net interest income fell at the lower end of expectations for a sequential decline of 5% to 10%. Furthermore, it missed the Wall Street consensus estimate by 1%.
State Street’s stock did not join in the gains observed by other financial stocks, indicated by the Financial Select Sector SPDR ETF (XLF) rising 0.2%. Instead, the company experienced a 4.5% decline. In a similar vein, Northern Trust Corp. (NTRS) and Bank of New York Mellon Corp. (BK) both saw decreases of approximately 2.7%.