Summary
State Street Corporation (STT) reported its third quarter 2009 results, reflecting a challenging economic environment and specific legal and operational issues. While total revenue declined year-over-year, driven by lower fee revenue due to market conditions, net interest revenue saw a significant increase. This boost in net interest revenue was primarily attributed to discount accretion from the consolidation of asset-backed commercial paper conduits, partially offset by lower deposit volumes and spreads. The company's expenses were reduced due to workforce reductions and lower incentive compensation accruals, but were impacted by a substantial provision for legal exposure related to active fixed-income strategies. Despite a decline in earnings per share compared to the prior year, State Street maintained strong regulatory capital ratios, exceeding minimum requirements. The company's assets under custody and administration, as well as assets under management, showed growth from the end of 2008, indicating continued client activity. However, the report highlights ongoing legal proceedings, including an SEC investigation and a class-action lawsuit, which have led to increased reserves and could pose future risks.
Financial Highlights
34 data points| Revenue | $2.24B |
| Interest Expense | $175.00M |
| Net Income | $327.00M |
| EPS (Basic) | $0.66 |
| EPS (Diluted) | $0.66 |
| Shares Outstanding (Basic) | 493.45M |
| Shares Outstanding (Diluted) | 498.29M |
Key Highlights
- 1Net income for Q3 2009 was $327 million, or $0.66 per diluted share, down from $477 million, or $1.09 per diluted share, in Q3 2008.
- 2Total revenue decreased by 19% year-over-year to $2.24 billion, primarily due to a 23% drop in total fee revenue, reflecting the impact of global financial market declines.
- 3Net interest revenue increased by 38% to $723 million, largely driven by discount accretion from the consolidation of asset-backed commercial paper conduits.
- 4Total expenses decreased by 10% to $1.73 billion, primarily due to a 20% reduction in salaries and benefits expense from workforce reductions and lower incentive compensation.
- 5A significant provision of $250 million was recorded for legal exposure related to active fixed-income strategies, impacting reported earnings.
- 6Assets under custody and administration grew to $17.94 trillion as of September 30, 2009, up from $15.91 trillion at the end of 2008.
- 7Assets under management increased to $1.74 trillion as of September 30, 2009, up from $1.44 trillion at the end of 2008.