The Fed, in line with the major central banks, has hiked lending rates rapidly to curb stubborn inflation, which translated to higher profits for banks that typically thrive in a high-interest rate environment.
Banking giants JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC) also saw profits climb in the second quarter on the back of higher interest income.
State Street said its net interest income climbed 18% in the three months ended June 30 to $691 million.
Meanwhile, the broader markets that had slumped in 2022 due to geopolitical turmoil and rate-hike jitters have revived this year as worries around a looming economic slowdown ease. The S&P 500 has risen 17.5% so far in 2023.
Assets under custody or administration (AUC/A) at State Street rose 4% in the reported quarter to $39.59 trillion from a year earlier, driven by higher quarter-end equity market levels and client flows, while assets under management climbed 9% to $3.8 trillion.
Profit came in at $2.17 per share, beating analysts’ average expectations of $2.10 per share, according to IBES data from Refinitiv.
Shares of the custodian bank, however, fell 2.8% in premarket trading as State Street missed revenue estimates. Total revenue climbed 5% to $3.11 billion, below estimates of $3.14 billion amid a drop in servicing, management and FX trading fees.
Deposits at the bank fell to $206 billion, down about 2% sequentially and nearly 10% compared to a year earlier.
Source: Economy - investing.com
