Log in
Forgot password ?
Become a member for free
Sign up
Sign up
Dynamic quotes 

4-Traders Homepage  >  Equities  >  Nyse  >  State Street Corp    STT

News SummaryMost relevantAll newsSector newsTweets

State Street Quarterly Profit Jumps 21% on Lehman Claims

share with twitter share with LinkedIn share with facebook
share via e-mail
10/16/2012 | 10:43pm CEST

--Profit lifted by 35-cent-a-share gain related to Lehman bankruptcy claims

--Revenue falls 2.9% on lower trading-services revenue, servicing fees

--Expenses down 21%; on track for $180 million cumulative cost savings by year-end

(Adds details throughout)

   By Liz Moyer and Melodie Warner 

State Street Corp.'s (>> State Street Corporation) third-quarter earnings rose 21% to $674 million, bolstered by a gain from claims associated with the Lehman Brothers' bankruptcy, while revenue declined more than expected.

The Boston-based firm is one of the biggest U.S. trust banks, acting as custodian for investment firms' securities and handling other back-office duties that make up the plumbing of Wall Street.

Like many financial firms, though, the company's top and bottom lines have been pressured by historically low interest rates and declining trading volumes as clients grow more risk-averse.

State Street has taken cost-control measures, such as withdrawing from its fixed-income-trading initiative and making targeted staff reductions.

But the company hasn't been moving quickly enough for some. One year ago, activist investor Nelson Peltz of Trian Partners launched a public campaign to push State Street's management to improve profitability and shareholder returns.

The Financial Times reported Monday that four unnamed large shareholders of State Street were pushing for a change of leadership in the company. A State Street spokeswoman declined to comment except to say, "Despite the challenging operating environment, we are confident in the resiliency of our business and proud of our track record."

State Street reported a profit of $674 million, or $1.36 a share, up from $555 million, or $1.10 a share, a year earlier. The most-recent quarter included a gain of 35 cents a share that was primarily for claims associated with the 2008 Lehman Brothers' bankruptcy. Adjusted per-share earnings rose to 99 cents from 96 cents.

Revenue dropped 2.9% to $2.36 billion. Analysts polled by Thomson Reuters had most recently forecast earnings of 96 cents a share on revenue of $2.37 billion.

Chairman and Chief Executive Joseph L. Hooley said in a statement that revenue was hurt by clients who "remain conservative in their investment allocations" despite improved equity markets.

Expenses fell 21% in the third quarter, to $1.42 billion and the company said it was on track to achieve pretax operating expense savings of $90 million to $100 million in 2012. Cumulative expense savings as part of a multiyear restructuring effort are expected to be $180 million by year-end.

State Street has also continued an acquisition streak that investors have criticized for diluting shareholder value. On Monday, the company completed its $550 million acquisition of Goldman Sachs Group Inc.'s (>> Goldman Sachs Group, Inc.) hedge-fund administration business, a deal that makes State Street the biggest manager of behind-the-scenes activities for hedge funds, such as tax reporting and accounting.

Servicing fees were down 0.5% at $1.1 billion.

Trading-services revenue, which includes foreign-exchange trading revenue and brokerage and other fees, declined 31% to $232 million. Foreign-exchange trading revenue decreased 44%, while brokerage and other fees were down 10%.

Securities finance revenue jumped 7.1% to $91 million.

Total assets under management as of at Sept. 30 were $2.065 trillion, up 11% from $1.855 trillion a year ago.

Shares closed up 4.7%, to $43.53 on Tuesday. They are up 8% year-to-date.

Write to Melodie Warner at melodie.warner@dowjones.com

Stocks mentioned in the article : State Street Corporation, Goldman Sachs Group, Inc.
share with twitter share with LinkedIn share with facebook
share via e-mail
Latest news on STATE STREET CORP
08/21 STATE STREET GLOBAL ADVISORS : Announces Impact of Receiving Settlement Payment
08/18 STATE STREET GLOBAL ADVISORS : Announces Net Asset Value Impacts to SPDR ETFs
08/17 STATE STREET : Chief Financial Officer Eric Aboaf to Speak at the Barclays Finan..
08/17 STATE STREET GLOBAL ADVISORS : Announces Annual Rebalancing of the SSGA Gender D..
08/16 STATE STREET : Recognized by Global Investor/ISFMagazine as Top Global Custodian..
08/16 First National Bank Sioux Falls Cuts Stake in Raven Industries, Inc. (RAVN)
08/14 STATE STREET GLOBAL ADVISORS : Announces Net Asset Value Impact to SPDR STOXX Eu..
08/10 Bank of America Corp DE Buys 103,291 Shares of Monro Muffler Brake, Inc.
08/09 DURECT Co. (DRRX) Shares Sold by Bank of New York Mellon Corp
08/05 Weyco Group, Inc. (WEYS) Shares Bought by Bank of New York Mellon Corp
More news
News from SeekingAlpha
08/10 DST SYSTEMS : Unlocking The Value Trap
08/10 Mike Mayo launches bank coverage at his new shop
08/07 Vanguard Brings You Banks And Stuff
08/07 Tracking Yacktman Asset Management Portfolio - Q2 2017 Update
08/01 STATE STREET BANK VS. PNC FINANCIAL :  Which The Better Buy Here?
Financials ($)
Sales 2017 11 574 M
EBIT 2017 3 679 M
Net income 2017 2 208 M
Debt 2017 -
Yield 2017 1,76%
P/E ratio 2017 15,72
P/E ratio 2018 13,81
Capi. / Sales 2017 2,98x
Capi. / Sales 2018 2,86x
Capitalization 34 527 M
Duration : Period :
State Street Corp Technical Analysis Chart | STT | US8574771031 | 4-Traders
Technical analysis trends STATE STREET CORP
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 21
Average target price 99,4 $
Spread / Average Target 7,7%
EPS Revisions
Joseph L. Hooley Chairman & Chief Executive Officer
Michael F. Rogers President & Chief Operating Officer
Eric W. Aboaf Chief Financial Officer & Executive Vice President
Albert Jerry Cristoforo Chief Technology Officer & Executive VP
Ali El Abboud EVP, Head-Application Development & Maintenance
Sector and Competitors
1st jan.Capitalization (M$)
BLACKROCK9.15%66 866
UBS GROUP1.76%64 347