State Street’s STT first-quarter 2025 earnings of $2.04 per share surpassed the Zacks Consensus Estimate of $1.98. The bottom line also increased 20.7% from the prior-year quarter.

Results were aided by growth in fee revenues and lower provisions. Also, the company witnessed improvements in total assets under custody and administration (AUC/A) and assets under management (AUM) balances. However, higher adjusted expenses and lower net interest income (NII) acted as spoilsports. Shares of STT lost roughly 3% in pre-market trading in light of these negatives.

Net income available to common shareholders was $644 million, up 39.1% from the year-ago quarter. Our projection for the metric was $569.9 million.

STT’s Revenues Improve, Adjusted Expenses Rise

Total quarterly revenues of $3.28 billion increased 4.7% year over year. However, the top line missed the Zacks Consensus Estimate of $3.30 billion.

NII was $714 million, down marginally year over year. The fall was due to lower average short-end rates and a deposit mix shift, partially offset by higher investment securities yields and loan growth. Our estimate for the metric was $717.6 million.

The net interest margin (NIM) contracted 13 basis points year over year to 1%. We expected NIM to be 1.09%.

Total fee revenues increased 6.1% year over year to $2.66 billion. The growth was driven by an increase in almost all the components except other fee revenue. We estimated the metric to be $2.56 billion.

Non-interest expenses were $2.45 billion, down 2.5% from the prior-year quarter. The fall was majorly due to the absence of the prior-year notable items and lower other expenses. Excluding one-time costs incurred in the last year's quarter, adjusted expenses rose 2.8%. Our estimate for the metric was $2.48 billion.

Provision for credit losses was $12 million, down 55.6%. We had projected the metric to be $27.1 million.

The Common Equity Tier 1 ratio was 11% as of March 31, 2025, compared with 11.1% in the corresponding period of 2024. The return on average common equity was 10.6% compared with 7.7% in the year-ago quarter.

Asset Balances Increase for State Street

As of March 31, 2025, the total AUC/A was $46.73 trillion, up 6.4% year over year. The rise was driven by higher quarter-end equity market levels and client flows. We had projected the metric to be $46.86 trillion.

AUM was $4.67 trillion, up 8.5% year over year, primarily led by higher quarter-end market levels and net inflows. Our estimate for the metric was $4.82 trillion.

STT’s Share Repurchase Update

In the reported quarter, State Street repurchased shares worth $100 million.

Our Take on STT

Relatively higher interest rates, strategic buyouts, rising AUM and solid business servicing wins are expected to keep supporting STT’s financials. However, persistently rising expenses and concentrated fee-based revenues are concerns.

State Street currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of STT’s Peer Banks

The Bank of New York Mellon Corporation’s BK first-quarter 2025 adjusted earnings of $1.58 per share surpassed the Zacks Consensus Estimate of $1.49. Also, the bottom line reflected a jump of 22.5% from the prior-year quarter. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

BK’s results were primarily aided by a rise in fee revenues and NII alongside lower provisions. AUC/A balance grew on higher inflows. However, higher expenses and lower assets under management AUM balances were undermining factors.

Solid trading performance, impressive growth in credit card and wholesale loans and decent investment banking performance drove JPMorgan’s JPM first-quarter 2025 earnings of $5.07 per share. The bottom line handily surpassed the Zacks Consensus Estimate of $4.62.

Robust capital markets performance, higher mortgage banking performance and higher NII supported JPM’s quarterly performance. On the other hand, higher provisions and non-interest expenses acted as a headwind.

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This article originally published on Zacks Investment Research (zacks.com).

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