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State Street’s Total Revenues Rose in 1H17: Here’s Why

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Marginal rise

State Street Corporation (STT) witnessed an 8% rise in its total revenues in 1H17 compared to 1H16. In 1H16, the company posted total revenues of ~$5.1 billion and in 1H17, the company reported total revenues of ~$5.5 billion. This marginal rise in the company’s total revenues was mainly due to net interest income.

In 1H17, State Street garnered net interest income of ~$1.1 billion compared to ~$1.0 billion in 1H16, which implies an increase of 5%. State Street generated interest income of ~$1.3 billion in 1H16 and ~$1.4 billion in 1H17, which reflects an increase of 8%. The company generates the majority of its interest income from investment securities, loans and leases, repurchase agreements, and interest-bearing deposits with banks.

State Street garnered interest income of $224 million from loans and leases in 1H17 compared to $184 million in 1H16. The company saw a substantial rise in its interest expenses in 1H17 compared to 1H16.

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State Street incurred total interest expenses of $216 million in 1H16 and $265 million in 1H17, which reflects a substantial increase of 23%. This increase was mostly due to a rise in interest expenses related to its long-term debt. In 1H17, the company incurred $148 million of interest expenses related to long-term debt compared to $122 million incurred in 1H16.

State Street has incurred interest expenses on deposits of $57 million in 1H17 compared to $54 million in 1H16.

Net interest margins

State Street Corporation (STT) had a net interest margin of ~1.3% on June 30, 2017. The June 30, 2017, net interest margins of its peers (XLF) follow:

  • JPMorgan Chase (JPM): ~2.3%
  • Bank of America (BAC): ~2.3%
  • Citigroup (C): ~2.7%
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