How did State Street's revenue performance compare to the prior year for the second quarter of 2002?

State Street's total revenue for the second quarter of 2002 was $1.0 billion, representing a 3% increase compared to $988 million in the second quarter of 2001. This growth was primarily driven by increases in servicing fees, management fees, and net interest revenue.

What was the trend in net income and earnings per share for State Street in the first half of 2002?

For the first six months of 2002, State Street reported a net income of $356 million, a significant increase from $288 million in the comparable period of 2001. Diluted earnings per share for the first half of 2002 were $1.08, up from $0.87 in the first half of 2001. These figures, especially the year-over-year comparison for net income, reflect the impact of certain charges in the prior year, such as goodwill amortization and the write-off of an investment.

How is State Street managing its expenses, and what impact did staff reductions have?

Operating expenses for the second quarter of 2002 were $738 million, a 3% increase from the comparable period in 2001. These expenses included approximately $21 million related to staff reductions announced in April 2002. Despite these costs, the company noted that adjusted expense growth was 1%, indicating efforts to manage costs by aligning spending with strategic priorities. Salaries and employee benefits were higher, partly due to these reductions and other factors, but overall expense growth was kept in check.

What is the outlook for State Street's key business segments, particularly Investment Servicing and Investment Management?

The Investment Servicing segment remains the largest contributor, with revenue up 4% year-to-date, driven by new business and increased assets under custody. Investment Management also saw modest revenue growth, with management fees up 5% year-to-date, supported by new business and acquisitions, although constrained by market valuations and lower securities lending revenue. The company continues to focus on expanding its client base and service offerings in both segments.

STT/STT-PG 10-Q Quarterly Report Q2 FY2002

Summary

State Street Corporation (STT) reported its financial results for the second quarter and first half of 2002, showcasing modest year-over-year growth in revenue and net income. Total revenue increased by 3% to $1.0 billion for the quarter and 4% to $2.0 billion for the six-month period, driven primarily by growth in servicing and management fees, and net interest revenue. Net income for the second quarter was $178 million, a 6% increase from the prior year, while the first half of 2002 saw net income of $356 million, up 23% from the comparable period in 2001. Diluted earnings per share were $0.54 for the quarter and $1.08 for the six months, reflecting growth from the previous year. The company's performance highlights include strong fee revenue growth, particularly in servicing and management fees, supported by new business wins and an increase in assets under custody and management. Net interest revenue also saw a healthy increase due to balance sheet growth and improved interest rate spreads. While foreign exchange trading revenue declined due to lower market volatility, overall revenue growth was maintained through diversified streams. The company also noted progress in its strategic initiatives, including an agreement to acquire International Fund Services, signaling continued expansion. Despite some one-time charges related to staff reductions, State Street demonstrated resilience and a continued focus on long-term growth objectives.

Key Highlights

1Total revenue for Q2 2002 increased by 3% to $1.0 billion, and by 4% to $2.0 billion for the first six months.
2Net income rose by 6% to $178 million for Q2 2002 and by 23% to $356 million for the first six months.
3Diluted earnings per share for Q2 2002 were $0.54, up from $0.50 in Q2 2001; for the six-month period, it was $1.08, up from $0.87 in the prior year.
4Fee revenue increased by 2% in Q2 and 5% year-to-date, driven by strong performance in servicing and management fees, despite a decline in foreign exchange trading revenue.
5Net interest revenue saw a 4% increase in Q2 and a 9% increase for the first six months, attributed to balance sheet growth and improved interest rate spreads.
6State Street announced an agreement to acquire International Fund Services (IFS) in July 2002, further expanding its service offerings.
7The company maintained strong regulatory capital ratios, with its Tier 1 risk-based capital ratio at 15.1% for the corporation, significantly exceeding regulatory minimums.

STATE STREET CORP Quarterly Report for Q2 Ended Jun 30, 2002

Summary

Key Highlights

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