State Street (NYSE:STT) revealed a better-than-expected second-quarter profit on tighter costs but reported a decline in sales as fees fell sharply from a year ago.
The Boston, Mass.-based company reported on Tuesday net income of $490 million, or 98 cents a share, compared with a year-earlier $427 million, or 85 cents.
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Expenses were flat from a year ago and down 3% from $1.84 billion the quarter prior, helped by an 11% drop in compensation and employee benefits.
Revenue for the three-month period fell 3% to $2.42 billion from $2.49 billion a year ago, narrowly missing the Street’s view of $2.43 billion. State Street attributed the softness to a slowdown in non-U.S. markets and a 3% decline in servicing fees.
Trading service revenue, which includes foreign exchange trading revenue and brokerage and other fees, tumbled 18% year-over-year to $255 million, hurt by a 24% drop in foreign exchange trading revenue. The company attributed the drop in currency trading revenue to weaknesses in capital markets.
“During the second quarter our business performed well in a challenging economic environment which included increasing weakness in international markets,” State Street CEO Joseph Hooley said in a statement.
Hooley said State Street is approaching the second half of 2012 “with continued caution,” as the global economic environment remains challenging. He said the company will continue focusing on cutting costs and improving its services.
Shares of State Street fell 5.3% to $41.80 Tuesday afternoon on the New York Stock Exchange.