State Street CEO: 'All Engines Were Firing' During Second Quarter

By Justin Baer Features Dow Jones Newswires

State Street Corp.'s second-quarter profits beat Wall Street's estimates as rising interest rates and a market rally lifted revenue.

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State Street's shares jumped 2% in Wednesday afternoon trading after the company posted nearly double-digit revenue growth and raised expectations for full-year results.

"It was driven by revenue, which is nice," said Joseph Hooley, State Street's chairman and chief executive, in an interview "All engines were firing."

State's Street's net profit of $584 million was little changed from $585 million a year earlier. But including certain pretax gains, State Street earned $1.67 a share, exceeding the $1.57 per-share profit analysts expected.

Total revenue rose 9.2% to $2.8 billion.

Servicing and management fees rose along with trading revenue. Net interest income -- or how the bank profits from the spread between its borrowings and the portfolio of securities it holds -- also improved as the U.S. Federal Reserve moved to raise the benchmark federal-funds rate.

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Net interest income totaled $575 million, up 10.4% from a year ago and 12.7% from the first quarter.

Rival Bank of New York Mellon Corp. said last week its net interest revenue rose 4% sequentially, to $826 million. At Northern Trust Corp., revenue on interest fell 7% from the same period.

The increase in net interest income offset what Mr. Hooley called an "OK" quarter for State Street's money-management business. Clients pulled $28 billion in net funds from that division, State Street Global Advisors.

Higher asset prices pulled total assets under management up to $2.6 trillion as compared with $2.56 trillion in March and $2.3 trillion in the year-ago period.

State Street on Wednesday lifted its full-year forecasts for both fee revenue and net interest income. The company now expects fees will rise 6% to 7% this year, compared with a previous target of 4% to 6% growth, and said income from interest should be up by as much as 13% in 2017.

Write to Justin Baer at justin.baer@wsj.com

(END) Dow Jones Newswires

July 26, 2017 16:09 ET (20:09 GMT)