State Street Corp. (NYSE:STT) reported stronger-than-expected second-quarter results on Thursday.

The company posted earnings of $3.65 per share, topping analysts’ estimates of $3.29. Revenue increased 17% year over year (Y/Y) to $4.05 billion, exceeding the Street’s expectation of $3.88 billion.

Fee revenue rose 17%, driven by higher Servicing and Management fees along with higher FX trading services revenue.

Servicing fees increased 13% Y/Y, and management fees jumped 29% Y/Y, while foreign exchange trading surged 26% Y/Y. Software services fell 2% Y/Y, while securities finance revenue grew 19% Y/Y in the quarter.

Record AUM Growth

Investment Servicing assets under custody and/or administration (AUC/A) rose 18% Y/Y to $57.9 trillion at quarter-end, reflecting higher market levels, client flows, and net new business. Investment Management assets under management (AUM) increased 23% Y/Y to $6.3 trillion.

CEO Ron O’Hanley added that the company delivered record total revenue, along with all-time highs in AUC/A and AUM during the quarter, highlighting continued business momentum. He added that this performance drove strong year-over-year operating leverage in the second quarter and marked the 10th consecutive quarter of positive operating leverage excluding notable items.

Read Also: Top Wall Street Forecasters Revamp State Street Expectations Ahead Of Q2 Earnings

Net Interest Income and Credit Costs

Net interest income rose 18% Y/Y to $860 million, driven by a 17-basis-point expansion in net interest margin.

There was no provision for credit losses compared with $30 million a year earlier, on reserve release related to commercial loan sales and repayments.

State Street’s standardized CET1 ratio stood at 10.8%, up 10 basis points from a year earlier, reflecting capital generated from earnings.

The bank returned $631 million to shareholders during the quarter, including $400 million in share repurchases and $231 million in dividends, or 84 cents per share.

"Following the release of the Federal Reserve’s stress test results, we recently declared a 10% per share increase to our third quarter common stock dividend, reflecting the resilience of our franchise and our continued focus on returning capital to shareholders." added O’Hanley.

STT Stock Price Activity: State Street shares were down 2.26% at $182.37 at the time of publication on Thursday, according to Benzinga Pro data.

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