Boston: State Street Corp, one of the world’s biggest institutional investors, posted a sharp drop in quarterly earnings after taking a multibillion-dollar charge and as fees for managing and administering assets declined amid the financial crisis.
The 217-year-old company reported a loss of $3.3 billion, or $7.12 per share, for the second quarter on Tuesday after a charge to bring previously unrealized losses in its asset-backed commercial paper program onto the balance sheet.
Costs related to repaying a government bailout also weighed on results.
On an operating basis, the company earned $1.04 per share, down from $1.40 a year earlier. Wall Street analysts had expected 99 cents.
In premarket trading, 0the company’s share price fell 3.9%. Through Monday, State Street’s share price has climbed 22.3% this year, staging a dramatic comeback after investors had sent the stock down by more than 20% on worries over unrealized losses that might have to be consolidated.
State Street, which also earns money for keeping records and providing accounting and other services to investment managers, took a charge of $6.1 billion for moving assets from its troubled commercial paper program onto its balance sheet in May.
The unrealized losses on its investment portfolio, which totaled $5.9 billion at the end of the first quarter and worried investors enough to weigh on the company’s share price early in the year, stood at $4.75 billion.
Second-quarter revenue fell 21% to $2.1 billion as investment management fees dropped 31% and servicing fees declined 19%.
Total assets under custody and administration stood at $16.39 trillion, down 17% from a year ago but up 9% from the end of the first quarter. Assets under management stood at $1.6 trillion, down 18% from a year ago but up 12% from the last quarter.
State Street ranks among the world’s biggest investment managers, along with Fidelity Investments.