Shares of State Street, the investment-management company based in Boston, experienced a significant decline of 10% in one day, marking its largest percentage drop since March 16, 2020. The dip comes after State Street reported lower-than-expected net interest income for the second quarter of the year.
In midday trading, State Street stock was down 9.9% at $69.80. However, it is important to note that over the past 12 months, shares have seen an overall increase of almost 17%.
For the second quarter, State Street reported a quarterly profit of $763 million, or $2.17 per share, compared to $747 million, or $1.91 per share, in the same period last year. Despite beating the previous year’s earnings, analysts had expected a profit of $2.10 per share, according to FactSet.
While State Street’s revenue for the quarter reached $3.11 billion, marking a 5% increase from the previous year, it fell short of analysts’ expectations of $3.14 billion. Additionally, net interest income rose by 18% to $691 million compared to the same period last year but experienced a 10% decline from the first quarter of this year, falling short of analysts’ expectations of $717 million.
During a conference call with analysts, Chief Executive Ronald O’Hanley acknowledged that the company’s results were below their potential. He further highlighted that net interest income is projected to continue declining in the next two quarters and emphasized the need for State Street to grow its fee revenue to offset these declines.
To address these challenges, State Street is focusing on cost control and plans to utilize additional tactical expense levers at their disposal.
Overall, despite the disappointing results for the second quarter, State Street remains committed to navigating the current market conditions and finding ways to drive growth in the future.