State Street Corp (NYSE:STT) Q2 2019 Earnings Conference Call - Final Transcript
Jul 19, 2019 • 10:00 am ET
Eric W. Aboaf
assumes current equity index levels. While markets revenues are always difficult to forecast, we currently expect them to take a seasonal step down quarter-over-quarter given the summer months, similar to what we experienced last year.
Processing fees and others expected to be down sequentially, but still within our quarterly guidance of $70 million to $80 million at CRD, with CRD expected to be in the low 80s.
In regard to NII, given the expectation of lower long rates, continued rotation of deposits into interest bearing and two rate cuts, we currently expect sequential quarter NII to be down 1% to 3%.
And turning to expenses, we expect expenses ex notable items to be flat on a sequential quarter basis, including the CRD build. Finally, we expect to see the tax rate between 19% to 20% similar to our year-to-date tax rate.
Moving to our summary on Page 13, while we remain unsatisfied with our revenue performance, we did see some moderation servicing fee headwinds that help result in flat total fee revenues quarter-on-quarter. Moreover, the underlying expense reduction we've achieved to-date demonstrates our ability to further bend the cost curve as we've now reduced headcount 2% year-to-date, while also raising this year's expense savings target to $400 million. And we achieved a non-objection to our 2019 CCAR submission, and we'll be able to deliver on our priority of increasing capital return to shareholders.
Finally, as Ron noted in his opening remarks, we will be providing updates in our current business strategy and the results for our technology reassessment. We look forward to coming back to you in the fall with our progress.
And with that, let me hand the call back to Ron.
Ronald P. O'Hanley
Thanks, Eric. Operator, we can now open the call to questions.