Shares of State Street Corp. (STT - Get Report) rose 0.4% to $71.30 Friday after the financial services company beat Wall Street's earnings expectations and announced it would lay off about 1,500 employees.
The Boston-based company said the new cost-cutting program will reduce its workforce by 6%, about 1,500 employees, and will cut the number of senior managers by 15%.
The company reported adjusted fourth-quarter income of $1.68 a share, beating consensus estimate by 1 cent. Fourth-quarter net interest income totaled $697 million, up 13% from a year ago.
"Amidst challenging market and industry headwinds, we have launched a new expense program designed to reduce costs," Ronald O'Hanley, president and CEO, said in a statement. "As part of that program, we recorded a $223 million pre-tax repositioning charge, the benefits of which we expect to fully realize within 12 to 15 months."
The company said new business wins remained strong, with a record $1.9 trillion of new asset servicing commitments in 2018, including $140 billion of new mandates in the fourth quarter. Net interest income increased significantly and foreign exchange trading performed well, State Street said, while weaker equity markets and challenging industry conditions drove underperformance in servicing fees.
"While we have made progress on our technology transformation, much remains to be done and we are not satisfied with our recent performance. Structural costs are still too high and our automation efforts have not moved fast enough," O'Hanley said.