Magazine article American Banker

State Street CEO Speaks of Challenges despite Strong Gains

Magazine article American Banker

State Street CEO Speaks of Challenges despite Strong Gains

Article excerpt

Pressure on State Street Corp. continues to mount, despite double-digit gains in revenues and profits and generally positive trends in its fee-based businesses.

David A. Spina, the company's chairman and chief executive officer, said rising employee compensation costs, continued low interest rates, and a murky outlook on the economic recovery have created "substantial challenges" for the near term.

"We feel good about the momentum in the marketplace, but I've been around the track enough times," Mr. Spina said in an interview. "I'm not all the way there yet to say happy days are here again."

For one thing, Mr. Spina said, 55% growth in earnings per share since last year is "clearly not sustainable, but we might as well enjoy it while we have it."

First-quarter net income jumped 126% from a year earlier, to $217 million. Excluding charges and discontinued operations in this quarter and last year, earnings per share of 67 cents beat the analysts' average estimate by a penny.

But analysts said investors were more concerned with operating expenses, which rose 13% from the first quarter of last year and 11.5% from the fourth quarter. The expenses exclude a charge of $18 million, or 4 cents a share, related to the continuing integration of the custody operations acquired from Deutsche Bank AG in January 2003.

Net interest income fell 1% from a year earlier and 3% from the fourth quarter, to $203 million. Mr. Spina acknowledged that low interest rates have curtailed State Street's ability to reap gains from putting client deposits to work in interest-bearing accounts. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.