State Street 3Q revenue rises 5%, profit up
Institutional investment manager State Street Corp. (STT) saw its profit rise 5% in the third quarter, while earnings increased slightly over last year. State Street posted a profit of $543 million, or $1.10 a share in the third quarter. That compares to a profit of $540 million, or $1.08 a share, a year ago. Meanwhile, revenue jumped to $2.4 billion, up 5% from $2.3 billion. The company's third-quarter revenue included $46 million in net interest revenue on the discount accretion tied to former conduit securities on the firm's balance sheet. The firm's third-quarter revenue also reflects a $91 million discrete tax benefit stemming from the firm's restructuring of its former non-U.S. conduit assets. About $85 million is tied to acquisition and restructuring costs. Joseph Hooley, State Street's chairman, president and chief executive officer, said, "Our third-quarter results demonstrate the resiliency of our business model as our operating-basis revenues increased from last year's third quarter by about 12%, supported by prior period new business wins as well as stronger foreign exchange revenue. On an operating basis, we achieved positive operating leverage compared to the second quarter, reflecting effective expense control and expense savings from the business operations and information technology transformation program we launched last November." Hooley said heading into the 2012 fiscal year, State Street is preparing for a "prolonged, worldwide low interest-rate environment," as well as weak economic growth, higher capital requirements and increased regulatory and compliance costs. Write to Kerri Panchuk.