Shares of State Street Corp. rose nearly 10% Wednesday after the bank said it will report a second-quarter profit well above analysts' forecasts, putting it on track to hit its full-year guidance.
State Street said that on an operating basis, which typically excludes charges as well as investment gains and losses, it expects to earn 93 cents a share and post $2.2 billion in revenue.
Analysts polled by Thomson Reuters most recently forecast earnings of 72 cents on revenue of $2.21 billion.
State Street's president and chief executive, Joseph Hooley, said its results were helped by "momentum in our servicing fee revenue as well as improvement in trading-services fee revenue."
State Street will officially report earnings July 20.
The positive pre-announcement prompted Janney Capital Markets to upgrade the stock to "buy" from "neutral." State Street's shares rose 9.87%, to $36.63.
Janney wrote in a note to investors that the projected second-quarter results ease a "significant" overhang on its shares because State Street had forecast full-year earnings of $3.32 a share but reported a weak first quarter that, if repeated, would leave the company far short of expectations.
"Going into the quarter, there was a lot of skepticism about their ability to achieve full-year guidance," Janney analyst Thomas McCrohan said in an interview.
State Street's stock has fallen 16% so far this year.
Fellow trust banks Northern Trust Corp. and Bank of New York Mellon Corp. also traded higher Wednesday, as they are seen as similarly exposed to foreign currency fluctuations that, McCrohan said, helped boost State Street's revenue in the second quarter. Northern Trust shares rose 6.92%, to $49.14, while BNY Mellon gained 6.39%, to $26.32.
State Street also said Wednesday that it recorded a charge of $251 million, or 50 cents a share, as it seeks to boost net asset values and loosen limits on investor redemptions at some trust funds damaged during the financial crisis.
The bank's State Street Global Advisors investment management unit curbed redemptions in 2008 in some trust funds that engaged in securities lending, after investors ramped up withdrawals.
State Street said it will begin removing restrictions in August.
