State Street Corp.'s (STT) first-quarter earnings fell 9.3% on
lower fees and trading services revenue.
State Street is one of the country's largest trust banks, acting
as a custodian for investment firms' securities and handling other
back-office duties. The company's bottom line has been pressured by
historically low interest rates and it was challenged during the
second half of 2011 by cautious clients and quiet stock markets,
which impacted fees from client activities.
State Street took additional cost-control measures during the
fourth quarter, such as withdrawing from its fixed-income trading
initiative and making targeted staff reductions.
State Street reported a profit of $427 million, or 85 cents a
share, down from $471 million, or 93 cents, a year earlier.
Excluding items, earnings fell to 84 cents from 88 cents. The
most-recent quarter included acquisition and restructuring costs of
3 cents a share and 2 cents a share for litigation-related
settlements. Revenue rose 2.5% to $2.42 billion.
Analysts polled by Thomson Reuters had most recently forecast
earnings of 86 cents on revenue of $2.33 billion.
Servicing fees were down 2% to $1.08 billion, reflecting
weakness in non-U.S. markets.
Trading services revenue--which includes foreign-exchange
trading revenue and brokerage and other fees--declined 7% to $280
million. Foreign-exchange trading revenue decreased 7%, while
brokerage and other fees were down 8%.
Securities finance revenue jumped 47% to $97 million as higher
spreads partially offset lower volume.
The company also has a major investment management arm, State
Street Global Advisors, whose clients include nonprofit
organizations, corporations and pension funds. In the latest
period, investment management fees at Global Advisors totaled were
flat at $236 million.
Total assets under management as of at March 31, were $1.993
trillion, down 6% from a year ago.
State Street shares closed Monday at $43.68 and were inactive
premarket. The stock is up 2.2% over the past three months.
-By Melodie Warner, Dow Jones Newswires; 212-416-2283;
melodie.warner@dowjones.com