State Street 3Q Profit Up; Sees Weak Second Half

BOSTON (AP) — State Street Corp. said Tuesday its third-quarter profit rose but warned its business in the second half of 2009 is weaker than previously expected as it is collecting fewer transaction fees.

"We expected our second half of 2009 to be stronger than it now appears to be," CEO Ronald Logue said in a statement, noting that the slow pace of the economic recovery has forced the firm to revise its expectations.

For the full year, State Street is now predicting operating profit of $4.13 to $4.17 per share and a 16 percent decline in operating revenue.

The average analyst estimate for its 2009 earnings was for $4.16 a share, according to Thomson Reuters.

In the third quarter, Boston-based State Street earned a profit of $516 million, up 8 percent from $477 million a year earlier. However, per-share profit fell to $1.04 from $1.09 since the number of outstanding shares was higher. The per-share profit met expectations of analysts.

Revenue fell 19 percent to $2.24 billion from $2.77 billion. Analysts had expected $2.21 billion.

State Street provides accounting, brokerage and other services to mutual funds, retirement plans, insurance companies and other customers.

Its shares fell $4.23, or 8 percent, to $48.02 in afternoon trading Tuesday.