State Street Swings To Profit

State Street's revenues rise nearly 9% on higher investment management and servicing fees.
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State Street

(STT) - Get Report

swung to a profit in the second-quarter, helped by higher investment management and servicing fees.

Earnings for the quarter ended June 30 came in at $432 million, or 87 cents a share, compared with a loss of $3.31 billion, or $7.12 a share, in the same period a year ago.

On an operating basis, which excludes the impact of special items, the company reported earnings of 93 cents a share, up from 89 cents in the year-ago quarter. Those results were in line with expectations. Earlier in July, State Street previewed its results and announced that it would report earnings of 93 cents, prompting analysts to boost their estimates.

Revenue for the quarter rose 8.6% to $2.3 billion from $2.12 billion, with revenue generated from fees rising 11.9% to $1.7 billion from $1.52 billion.

Servicing fees grew 20% in the second quarter to $957 million, helped by acquisitions of Intesa and Mourant. Investment management fees rose 12% to $193 million. Assets under management grew 14% to $1.56 trillion.

Joseph L. Hooley, president and CEO, said that the strength in the second quarter confirmed their full-year outlook. Capital levels were strong and well in excess of "well capitalized" requirements.

"With the strength of our fee revenue in the second quarter, including the contribution from these two acquisitions, we continue to expect that our operating-basis earnings per share, which exclude discount accretion, will be slightly higher than the operating-basis $3.32 per share reported last year," said Hooley.

The unrealized mark-to-market loss in the investment portfolio was $994 million for the quarter, down approximately 79% from the $4.75 billion reported in the second quarter of 2009.

-- Reported by Shanthi Venkataraman in New York.

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