StoneX Group Inc. (SNEX) Income Statement

The erratic NII pattern, with negative readings in most quarters, suggests that interest income is not a stable earnings driver, likely due to the firm's capital markets focus where interest spreads are thin and volatile. The positive NII in 2026Q2 appears anomalous, possibly reflecting a one-time benefit, and the reversion to negative in 2026Q3 indicates that the core business does not consistently generate positive net interest income. Investors should monitor whether this volatility is a function of balance sheet composition or rate dynamics.

The persistently negative NIM is atypical for a depository institution and suggests that StoneX's interest expense exceeds interest income, possibly due to high-cost funding or a large proportion of non-interest-bearing assets. This is not necessarily a weakness if the firm's revenue model relies on fee income, but it does indicate that traditional banking spread analysis is not applicable. The slight improvement from -1.2% to -0.9% in recent quarters may reflect better asset-liability management, but the margin remains deeply negative, warranting scrutiny of the balance sheet structure.

The extremely low efficiency ratio (non-interest expense divided by total revenue) is a result of the revenue base being dominated by non-interest income, which is typical for a capital markets firm. However, this metric does not capture the cost of generating that revenue, as operating expenses are relatively small compared to the gross revenue figures. The operating income margin, which averaged around 1.6% of revenue, suggests that the firm operates on thin margins, and the efficiency ratio may understate the true cost structure. Investors should focus on pre-provision net revenue as a more meaningful measure of earnings power.

The provision expense is extraordinarily high relative to the firm's net income, indicating significant credit risk exposure or aggressive reserving. In 2026Q3, the provision was $38.5B against total revenue of $40.2B, leaving a thin pre-provision profit. This pattern suggests that credit costs are a major drag on profitability, and the volatility in provision amounts (ranging from $21.3B to $44.0B) points to unpredictable credit losses. The firm's ability to maintain profitability despite such large provisions is notable, but the sustainability of this is questionable if credit conditions deteriorate.

StoneX's revenue is almost entirely derived from non-interest income, which includes trading and brokerage fees, indicating a business model heavily reliant on transaction volumes and market activity. This concentration exposes the firm to market cyclicality, as fee income can decline sharply during periods of low volatility or reduced client activity. The 100% fee percentage in most quarters underscores that interest income is negligible, making the firm more akin to a broker-dealer than a traditional bank. Investors should assess the durability of these fee streams and the firm's ability to maintain market share.

The 2026Q2 results stand out as an inflection point, with net income more than doubling sequentially and EPS reaching $2.07, the highest in the observed period. This was driven by a positive NII of $91.4M and a strong revenue quarter, suggesting that the firm can generate substantial earnings when market conditions are favorable. However, the subsequent quarter saw a decline to $127.9M, indicating that the spike may not be sustainable. The volatility in earnings highlights the firm's sensitivity to market cycles, and investors should watch for whether 2026Q2 represents a new baseline or an outlier.