State Street emerges from tough year

graph up downState Street, the combined asset manager and asset servicing company, managed to increase its total revenue by less than 1% last year after a stronger dollar impacted income from fees generated in Europe and other countries.

The company, which is trying to save millions of dollars in expenses through cost cutting and job reductions, increased its total revenue (fees plus interest) by 0.8% for the full year compared to 2014.

Full-year revenue from fees alone increased 3.3% to $8.2 billion (€7.5 billion) – though in the final quarter (Q4) the stronger dollar set back non-US fee revenue by $53 million when compared to the year-before quarter.

Total revenue fell by 2.9% in Q4 when compared to the previous quarter.

Joseph L. Hooley, State Street's chairman and chief executive officer, said Q4 performance reflected continued challenges seen throughout 2015, including global equity markets – particularly in emerging economies – persistent low interest rates, a stronger dollar, and heightened regulatory expectations.

Hooley said State Street was successful at managing expenses in Q4 in light of revenue pressure.

He also said new asset servicing business totaled $800 billion last year, with $300 billion of new commitments in the last quarter.

The company expects its “multi-year transformation programme and targeted staff reductions” that were announced last year to generate about $75 million of savings this year.

Returning capital to shareholders remains a “top priority”. In Q4 State Street purchased about $350 million of its common stock.

Last year State Street revealed it had overbilled clients over an 18-year period and, in its results yesterday, said it would make a $240 million reimbursement, with interest on top.

Yesterday’s results reported that assets under custody and administration totaled $27.51 trillion and assets under management totaled $2.25 trillion, up 0.9% and 1.9%, respectively on Q3 – but down 2.4% and 8.3% from the year before.

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