State Street Corp.'s second-quarter profits beat Wall Street's estimates as rising interest rates and a market rally lifted revenue.
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.
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"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.
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 email@example.com
(END) Dow Jones Newswires
July 26, 2017 16:09 ET (20:09 GMT)