State Street Corp. (STT) fourth-quarter profit more than doubled
as the institutional money-management firm's revenue from servicing
and management fees strengthened.
The parent of State Street Global Advisors has seen business
stabilize but has warned results would weaken in the second half of
last year because of the slow pace of economic recovery and its
trend of collecting fewer transaction fees.
Chairman and Chief Executive Ronald E. Logue, who is leaving the
company in March, on Wednesday highlighted that the company's
momentum of improvement in its core business continued, saying
servicing fee and management fee revenue grew from the
previous.
His successor, Chief Operating Officer Joseph L. Hooley, added
the company is increasingly confident about increasing revenue this
year because of the strength servicing and management, but he sees
market-based revenue lagging.
Competitor Bank of New York Mellon Corp. (BK) earlier Wednesday
reported a near-doubling in profit also, as moves to free itself
from securities losses yielded big rewards.
State Street posted a profit of $498 million, or $1 a share,
from $234 million, or 54 cents a share, a year earlier.
Analysts surveyed by Thomson Reuters expected a 97-cent
profit.
Total operating-basis revenue shrank 13% to $2.31 billion.
Unrealized mark-to-market losses at State Street's investment
portfolio dropped 64% from the previous quarter.
Tangible common equity ratio, which measures how much of a
bank's hard assets it common shareholder actually own, was 6.6%, up
two percentage points from a year earlier and one point from the
previous quarter. Tier 1 capital ratio, a key measure of financial
strength, fell to 18% from 20% a year earlier but increased from
15% in the previous quarter.
Total assets under management grew 32% to $1.91 billion from a
year earlier and 10% from the third quarter.
State Street shares closed Tuesday at $43.20 and weren't active
premarket.
-By Joan E. Solsman, Dow Jones Newswires; 212-416-2291;
joan.solsman@dowjones.com