State Street Profits Fall in Q3

State Street reported net income available to common shareholders of $531 million, down from $571 million in the second quarter of 2013 and from $654 million in the third quarter of 2012.

The third quarter of 2012 included a net after-tax benefit of $166 million, the majority of which pertained to recoveries associated with the 2008 Lehman Brothers bankruptcy, says State Street.

On a non-GAAP basis, State Street’s servicing fees increased 0.8% to $1.21 billion in the third quarter of 2013 from the second quarter of 2013, primarily due to stronger global equity markets, partially offset by lower transaction volumes. Compared to the third quarter of 2012, servicing fees increased $111 million or 10.1%, primarily due to stronger global equity markets, the fourth-quarter 2012 acquisition of the Goldman Sachs Administration Services business and net new business.

Jay Hooley, CEO, says demand for the custodian bank’s products, services, and solutions remains strong as evidenced by $200 billion of new asset servicing wins during the quarter.

Securities finance revenue was $74 million in the third quarter of 2013, a decrease of 43.5% from the second quarter of 2013, reflecting historically stronger seasonality in the second quarter, and lower spreads and lower volumes, says State Street. “Securities finance revenue decreased 18.7% from the third quarter of 2012 primarily due to lower spreads.”