State Street reports rise in Forex trading services revenues for Q2 2022
State Street Corporation (NYSE:STT) reported its second-quarter 2022 financial results today.
Foreign exchange trading services increased 16% compared to 2Q21, primarily reflecting higher FX spreads, partially offset by lower client FX volumes. Foreign exchange trading services decreased (8)% compared to 1Q22, mainly due to lower client FX volumes, partially offset by higher FX spreads.
Across all segments, fee revenue decreased (6)%, largely reflecting lower Servicing fees and Other fee revenue as well as the impact of currency translation, partially offset by higher FX trading services revenue.
Net interest income (NII) increased 25% compared to 2Q21, primarily driven by higher short and long term interest rates and growth in loan balances. Compared to 1Q22, NII increased 15%, mainly due to higher short and long term interest rates, partially offset by lower investment portfolio balances.
Other income decreased compared to 2Q21, reflecting the absence of a gain on sale of a majority interest in our Wealth Manager Services business in 2Q21.
CET1 ratio (standardized) increased 1.7% points compared to 2Q21, primarily driven by higher retained earnings, the issuance of $1.9 billion of common stock in 3Q21 to finance the proposed acquisition of BBH Investor Services and lower RWA, partially offset by lower AOCI. CET1 ratio (standardized) increased 1.0% point compared to 1Q22, primarily reflecting planned RWA reductions and management actions to reduce AOCI impact of the investment portfolio.
Tier 1 leverage ratio increased 0.8% point compared to 2Q21, primarily reflecting higher retained earnings and the issuance of $1.9 billion of common stock in 3Q21 to finance the proposed acquisition of BBH Investor Services, partially offset by lower AOCI. Tier 1 leverage ratio increased 0.1% point compared to 1Q22.
Ron O’Hanley, Chairman and Chief Executive Officer, commented:
“Our second-quarter results reflect the strength and durability of our business model as strong growth in net interest income and improved FX trading performance enabled us to partially offset significant fee revenue headwinds from weaker equity and fixed income markets. Operating expenses continued to be well-controlled as we remained committed to expense discipline, while managing inflationary pressures and investing back into our businesses, resulting in a healthy pre-tax margin for the quarter.”
O’Hanley added:
“Our capital ratios remain strong. The results of the recent supervisory stress test highlighted the strength of our balance sheet and capital position under stress. For the second year in a row, we are pleased to have announced a 10% increase to our common stock dividend and it remains our intention to reinitiate our existing common share repurchase program in the fourth quarter of 2022.”