Net Income Declines At State Street

Tom Burroughes

21 October 2009

State Street, the Boston-headquartered firm specializing in asset management and custody, said that in the third quarter of 2009, its earnings per common share fell to $1.09 on $2.236 billion of revenue, compared with $1.09 per share on $2.77 billion of revenue in the same period last year.

Compared to the second quarter of 2009, third-quarter 2009 results improved from a loss of $7.12 per share on revenue of $2.122 billion, the banking group said in a statement.

The second quarter of 2009 includes an after-tax extraordinary loss of $3.684 billion or $7.91 per share related to the effect of the consolidation of the State Street-administered asset-backed commercial paper conduits onto the company’s balance sheet.

Assets under management stood at $1.735 trillion at the end of September, a 2.9 per cent rise on the same period a year before. Assets under management and custody stood at $17.94 trillion - a drop of 2.8 per cent.

State Street had a Tier 1 capital ratio of 15.6 per cent.

Investment management fees, generated by State Street Global Advisors, are $219 million, down 16 per cent from $261 million in the year-ago quarter. The decline in management fees is attributable primarily to the approximately 16 per cent fall in average month-end equity valuations, as well as a change in the composition of assets under management from active to passive strategies.