State Street 1Q revenue up on higher asset management fees
Institutional investment adviser State Street (STT) reported first quarter revenue of $2.4 billion, up 3% from a year earlier primarily on a rise in asset management fees. Total fee revenue climbed 16% to about $1.8 billion from $1.54 billion with a 22% rise in servicing fees. First-quarter earnings, excluding items, rose to $439 million, or 88 cents a share, from $369 million, or 75 cents a share, a year ago. Results for the quarter include $212 million, or 25 cents a share, of discount accretion and about $32 million of merger and integration costs and restructuring charges associated with job cuts. Revenue for the three months ended March 31 included $62 million, or 8 cents a share, of interest revenue from discount accretion related to asset-backed commercial paper consolidated in 2009. The company is now fully capitalized under Basel 3 requirements, State Street CEO Joseph Hooley said in a statement. However, fees related to credit ratings agencies continue to drag down profits. Implementation of new regulations under Dodd-Frank are proving costly as well, State Street reports. "Our strong pipeline and significant business opportunities continue to support the momentum in our core business," Hooley said. "While the recovery in the U.S. appears to be slowly strengthening and we have put some issues behind us, uncertainty still affects world markets, particularly in light of developments in the Middle East and Japan," he added. "Overall, we continue to be well-positioned to take advantage of global growth opportunities." Added expenses include restructuring charges for real estate consolidation of $156 million. Write to Jacob Gaffney. Follow him on Twitter @JacobGaffney.