State Street shares fell before the opening bell on Monday after the Boston-headquartered financial services company’s first quarter results failed to meet expectations on both profit and revenue.
The firm posted earnings per share of $1.52 and revenue of $3.101 billion, below the consensus expectations as per FactSet of earnings per share of $1.64 and revenue of $3.126 billion.
In the year-ago quarter, State Street reported earnings per share of $1.57 and revenue of $3.081 billion.
State Street CEO Ron O’Hanley noted in a statement that the company had faced “fee revenue headwinds from significantly lower average market levels” during the quarter.
“Our total revenue was durable and grew as we delivered strong year-over-year net interest income growth,” he added.
While overall revenue increased by 1% year-over-year, the firm’s fee revenue decreased by 9%. Servicing fees decreased by 11%, management fees dropped by 12%, FX trading services were down by 5%, and software and processing fees fell by 18% from the comparable quarter in 2022.
Securities finance increased by 14% and net interest income increased by 50%, attributed by the firm to higher short-term market rates from global central bank hikes, an increase in long-term interest rates, and balance sheet positioning, partially offset by lower average deposits.
State Street shares fell 10.4% to US$71.70 in pre-market trading on Monday.
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