State Street Corp.'s (STT) second-quarter profit popped 19% as
the institutional money manager reported strength on its top line,
particularly in fee revenue.
Despite persistently low interest rates, State Street has posted
improved core earnings in recent quarters, topping analyst
expectations. Stifel Nicolaus analysts have called the company a
favorite among rival trust banks, citing above-average exposure to
equities and a larger position in servicing mutual funds and
defined contribution plans.
Trust banks act as custodians and servicers for corporations and
Wall Street, with results tied heavily to market actions.
State Street reported a profit of $513 million, or $1 a share,
compared with a year-earlier profit of $432 million, or 87 cents a
share. Excluding items such as discount accretion related to former
conduit securities, earnings rose to 96 cents from 93 cents.
Revenue rose 8% to $2.49 billion, and was up 14% to $2.47
billion on an operating basis.
Analysts polled by Thomson Reuters recently estimated a
per-share profit of 96 cents on $2.39 billion in operating
revenue.
Assets under management ended the period at $2.12 trillion, up
15% from a year earlier and flat from the prior quarter.
In May, the company disclosed that the Securities and Exchange
Commission had joined a growing list of law-enforcement agencies
investigating allegations of improper foreign-exchange trading at
State Street and rival Bank of New York Mellon Corp. (BK). The
banks have previously denied the allegations and said they intend
to defend themselves.
Shares closed Monday at $42.95 and were inactive in recent
premarket trade. Through the latest close, the stock is down 7.3%
since the start of the year.
-By Mia Lamar, Dow Jones Newswires; 212-416-3207; mia.lamar@dowjones.com