State Street net drops 16%

APR 21, 2009
Custody bank State Street Corp. said Tuesday its first-quarter profit fell 16 percent due to declines in both fee revenue and interest revenue. Net income available to common shareholders declined to $445 million, or $1.02 per share, from $530 million, or $1.35 per share, a year earlier. Operating earnings, which exclude charges tied to merger and integration costs, totaled $1.04 per share during the period. Analysts polled by Thomson Reuters, on average, forecast earnings of $1.02 per share. Analysts do not always include special charges in their estimates. State Street's profit declined mainly due to a drop in fee revenue. The Boston-based bank's fee revenue dropped 27 percent to $1.42 billion, from $1.96 billion a year ago. Revenue across all types of fees, including servicing, management, trading, securities finance and processing, all fell. Servicing fees, which account for more than half of State Street's fee revenue fell 20 percent to $766 million in the first quarter, from $960 million last year. Net interest revenue also declined, falling 10 percent to $564 million. As a trust bank, State Street has been able to largely avoid the problems of traditional commercial banks, especially rising loan losses. State Street set aside $84 million for loan losses during the first quarter, compared with none during the first quarter last year. State Street was able to offset some of the declining revenue by cutting costs. The bank reduced expenses by 27 percent. Total expenses fell to $1.3 billion during the quarter as the bank cut salaries and benefit costs by 31 percent. The weakening economy, which slowed business, will keep pressure on earnings in 2009, the company's chairman and chief executive, Ronald Logue said in a statement. Logue said the unsettled economic environment will likely lead to State Street's 2009 operating earnings falling at the lower end of its outlook released in February. At that time, State Street said it expected operating earnings to decline between 12 percent and 16 percent during the year. At the end of the first quarter, assets under custody fell to $11.34 trillion from $14.90 trillion a year earlier. Assets under management declined to $1.4 trillion from $1.96 trillion a year earlier.

Latest News

Roughly three-fifths of Americans agree on higher taxes for large corporations, higher-income households
Roughly three-fifths of Americans agree on higher taxes for large corporations, higher-income households

Pew survey reveals slight majority consensus on tax rates, but views splinter based on political alignment and income levels.

The Fed's going to cut rates
The Fed's going to cut rates

While the Federal Reserve's decision to hold interest rates steady in March was widely expected, it's the reactions from financial professionals that provide a more nuanced picture of the central bank's approach.

Ontario Pension Fund revamps PE business in light of global risk
Ontario Pension Fund revamps PE business in light of global risk

The pioneering member of Canada's Maple Eight is stepping back from its go-it-alone private equity approach as a drought in deals and Trump's trade war prompt a rethink.

Raymond James, RBC reel in UBS advisors managing over $690M in assets
Raymond James, RBC reel in UBS advisors managing over $690M in assets

The firms' latest additions in Florida and Nevada come as a strategic change at UBS raises risk of advisor defections.

Assetmark debuts new advisor succession planning program
Assetmark debuts new advisor succession planning program

The new program offers opportunities and events structured for rookies, next-gen advisor leaders, and soon-to-exit veterans.

SPONSORED Beyond the all-in-one: Why specialization is key in wealth tech

In an industry of broad solutions, firms like intelliflo prove 'you just need tools that play well together'

SPONSORED Record growth: Interval funds emerge as key players in alternative investments

Blue Vault Alts Summit highlights the role of liquidity-focused funds in reshaping advisor strategies