State Street to Cut Jobs, Misses Third-Quarter Expectations
October 23 2015 - 8:30AM
Dow Jones News
State Street Corp. on Friday said it would slash jobs as choppy
markets bite into the trust bank's bottom line.
Third-quarter results, wherein profit was flat and assets fell,
reflect the decline in equity valuations globally, particularly in
emerging economies, combined with prolonged low interest rates and
a strong U.S. dollar, said Chief Executive Joseph Hooley.
Rattled by renewed concerns about the economy's health, markets
turned volatile during the third quarter. Earlier this weak, fellow
trust bank Bank of New York Mellon similarly pointed to unfavorable
market conditions for its third-quarter profit decline, and several
large money managers said they were bruised by market declines and
investor outflows.
"In light of the continued challenging environment," Mr. Hooley
said, State Street is accelerating its cost-cutting plan. During
the quarter, the firm took a $75 million severance charge stemming
from layoffs, and State Street said it plans to cut between 200 to
600 jobs globally. The company expects to save $50 million after
the layoffs are completed by the end of next year.
For the period, State Street reported a profit of $543 million,
little changed from a year earlier. Per-share earnings were $1.32
versus $1.26. On an operating basis, which excludes severance costs
and a real-estate gain, among other items, earnings per share
dropped to $1.16 from $1.35. Revenue inched up to $2.62 billion
from $2.61 billion. Operating revenue, meanwhile, was $2.65
billion.
Analysts projected $1.23 in operating earnings per share on
$2.67 billion in operating revenue, according to Thomson
Reuters.
Assets under custody and administration declined 4.2% to $27.27
trillion while assets under management dropped 9% to $2.20
trillion. Fee revenue rose 4.8% to $2.11 billion.
Shares in the bank, down about 12% this year, were inactive
premarket.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 23, 2015 08:15 ET (12:15 GMT)
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