Wrapping up Q2 earnings, we look at the numbers and key takeaways for the custody bank stocks, including Federated Hermes (NYSE: FHI) and its peers.
Custody banks safeguard financial assets and provide services like settlement, accounting, and regulatory compliance for institutional investors. Growth opportunities stem from increasing global assets under custody, demand for data analytics, and blockchain technology adoption for settlement efficiency. Challenges include fee pressure from large clients, substantial technology investment requirements, and competition from both traditional players and fintech firms entering the space.
The 13 custody bank stocks we track reported a mixed Q2. As a group, revenues were in line with analysts’ consensus estimates.
In light of this news, share prices of the companies have held steady as they are up 3.7% on average since the latest earnings results.
Federated Hermes (NYSE: FHI)
With roots dating back to 1955 and a pioneering role in money market funds, Federated Hermes (NYSE: FHI) is an investment management firm that offers a wide range of funds and strategies for institutional and individual investors.
Federated Hermes reported revenues of $424.8 million, up 5.5% year on year. This print was in line with analysts’ expectations, and overall, it was a strong quarter for the company with a solid beat of analysts’ EBITDA estimates and a beat of analysts’ EPS estimates.
"In the second quarter, we saw continued interest in our broad suite of MDT equity and alternative quantitative investment solutions, which deploy a disciplined, repeatable process that is based on fundamental and technical factors and offers the opportunity for outperformance," said J. Christopher Donahue, president and chief executive officer.
Interestingly, the stock is up 5.4% since reporting and currently trades at $52.44.
Is now the time to buy Federated Hermes? Access our full analysis of the earnings results here, it’s free.
Best Q2: Voya Financial (NYSE: VOYA)
Originally spun off from Dutch financial giant ING in 2013 and rebranded with a name suggesting "voyage," Voya Financial (NYSE: VOYA) provides workplace benefits and savings solutions to U.S. employers, helping their employees achieve better financial outcomes through retirement plans and insurance products.
Voya Financial reported revenues of $1.9 billion, up 2.2% year on year, outperforming analysts’ expectations by 13.5%. The business had a stunning quarter with an impressive beat of analysts’ AUM estimates and a beat of analysts’ EPS estimates.
Voya Financial achieved the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 11.6% since reporting. It currently trades at $75.75.
Is now the time to buy Voya Financial? Access our full analysis of the earnings results here, it’s free.
Slowest Q2: Franklin Resources (NYSE: BEN)
Operating under the widely recognized Franklin Templeton brand since 1947, Franklin Resources (NYSE: BEN) is a global investment management organization that offers financial services and solutions to individuals, institutions, and wealth advisors worldwide.
Franklin Resources reported revenues of $1.59 billion, down 3.7% year on year, falling short of analysts’ expectations by 18.8%. It was a softer quarter as it posted a significant miss of analysts’ EPS estimates.
Franklin Resources delivered the weakest performance against analyst estimates in the group. Interestingly, the stock is up 4.2% since the results and currently trades at $24.97.
Read our full analysis of Franklin Resources’s results here.
WisdomTree (NYSE: WT)
Originally founded as a financial media company before pivoting to ETF management in 2006, WisdomTree (NYSE: WT) is a financial services company that creates and manages exchange-traded funds (ETFs) and other investment products for individual and institutional investors.
WisdomTree reported revenues of $112.6 million, up 5.2% year on year. This print lagged analysts' expectations by 0.5%. Aside from that, it was a mixed quarter as it also produced an impressive beat of analysts’ yield estimates but a miss of analysts’ EBITDA estimates.
The stock is up 2.6% since reporting and currently trades at $13.60.
Read our full, actionable report on WisdomTree here, it’s free.
Northern Trust (NASDAQ: NTRS)
Founded in 1889 during Chicago's post-Great Fire rebuilding boom, Northern Trust (NASDAQ: NTRS) provides wealth management, asset servicing, and banking solutions to corporations, institutions, families, and high-net-worth individuals globally.
Northern Trust reported revenues of $2.00 billion, down 26.4% year on year. This result topped analysts’ expectations by 1.9%. It was a strong quarter as it also recorded an impressive beat of analysts’ AUM estimates and a narrow beat of analysts’ advisory and servicing fees estimates.
Northern Trust had the slowest revenue growth among its peers. The stock is flat since reporting and currently trades at $127.43.
Read our full, actionable report on Northern Trust here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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