Profits jump at State Street to €358m
The Boston-based company employs more than 2,200 staff and has offices in Dublin, Drogheda, Kilkenny and Naas.
Custody banks, hit by record- low interest rates that reduce the return on investments and lending, have worked to buoy profits by cutting expenses. State Street and its largest rival, New York-based Bank of New York Mellon Corp, have made or planned a combined 3,750 job cuts in the past 13 months as each company aimed to reduce costs by more than $575m annually by 2015.
Northern Trust, the third-largest independent US custody bank, said yesterday it will cut about 700 jobs as part of expense-saving measures.
State Street saved about $80m last year through the job cuts and investments in technology, and will reduce costs by an estimated $170m this year, Robert Lee, an analyst with Keefe Bruyette & Woods Inc in New York, wrote in a research note on January 9.
Revenue increased 13% to $2.32 billion, led by a 30% rise in securities lending, while expenses declined 0.4% from a year earlier. Compensation and employee benefits declined 6.7%.
“Our results for 2011 also demonstrated the positive impact of expense controls we put in place,” chief executive Joseph L Hooley said in the statement.
Investment management fees declined 8.6% to $202m as the amount of money State Street manages for clients fell 7.2% to $1.87 trillion. The decrease in assets reflected customer withdrawals in cash, fixed income and active equities “amid the turmoil in Europe”, the company said.
Net income rose more than fourfold to $371m compared with the fourth quarter of 2010, when the company spent $500m cutting jobs and restructuring its investment portfolio.
State Street’s operating profit excludes those items and money from the sale or maturing of bonds whose value was written down in May 2009, which the company records as “discount accretion” within net interest income.
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