State Street reported first-quarter 2012 earnings per common share of $0.85, down 9% from $0.93 in the first quarter of 2011 and up 12% from $0.76 in the fourth quarter of 2011. Revenue in the first quarter of 2012 was $2.42 billion, up 3% from $2.36 billion in the first quarter of 2011 and up 5% from $2.32 billion in the fourth quarter of 2011.
State Street recorded $21 million of pre-tax acquisition and restructuring costs and $15 million for litigation-related settlements during the first quarter. Of the $21 million, $13 million was related to acquisition costs and $15 million was associated with the previously announced business operations and information technology transformation program, partially offset by a $7 million net credit associated with State Streets withdrawal from its fixed-income trading initiative.
Other highlights included securities finance revenue, which was $97 million in the quarter, up 47% from $66 million in the first quarter of 2011, due primarily to higher spreads, partially offset by lower volumes.Total assets under custody and administration were $23.208 trillion at March 31, 2012, up 2.6% compared to $22.609 trillion at March 31, 2011.
Joseph Hooley, State Street’s chairman, president and chief executive officer, said: During the first quarter our core business momentum in asset servicing and asset management improved, compared to the second half of last year. Our success in winning new business is reflected in solid growth in both fee and total revenue. During the first quarter we won mandates for $233 billion in assets to be serviced. State Street Global Advisors (SSgA) won net new business of $41 billion, excluding the impact of the planned $31 billion reduction in assets managed for the Department of the U.S. Treasury.
Hooley continued, We are pleased with the on-going success of our business operations and information technology transformation program, from which we continue to expect to achieve approximately $94 million in annual pre-tax, run-rate expense savings in 2012.
State Streets total assets were $188 billion at March 31, 2012 and $217 billion at December 31, 2011 and included $17 billion and $50 billion of excess deposits held at the Federal Reserve and other central banks, respectively. The average balance sheet for the first quarter of 2012 was $188 billion, compared to $159 billion for the first quarter of 2011 and $195 billion for the fourth quarter of 2011.
Servicing fees were down 2% to $1.078 billion from $1.095 billion in the first quarter of 2011. The decrease reflected weakness in non-US markets and changes in asset mix, offset partially by net new business and a slight increase in the S & P 500, said State Street.
Fee revenue increased 7% compared to the fourth quarter of 2011, reflecting strength in each of State Streets businesses, primarily due to the impact of improved equity markets and net new business wins.
Servicing fees of $1.078 billion for the first quarter were up 2% from $1.057 billion in the fourth quarter of 2011. The increase was primarily due to higher average equity market valuations and net new business. Trading services revenue, which includes foreign exchange trading and brokerage and other fees, was $280 million, up 3% from $273 million. Foreign exchange trading revenue of $149 million declined 1% due primarily to lower volatility, partially offset by higher volumes.
(JDC)