State Street Corp. said Wednesday that its fourth-quarter profit rose 17% as rising global stock markets increased fees for record keeping and money management.
The Boston companys net income rose to $291 million, or 86 cents a share, from $249 million, or 74 cents, a year earlier. The 86 cents beat the average estimate of 16 analysts surveyed by Bloomberg by 2 cents.
State Street, which trails JPMorgan Chase & Co. and Bank of New York Co. Inc. in custody assets, topped estimates for the sixth straight quarter and had faster growth than two of its rivals, Mellon Financial Corp. and Northern Trust Corp. Rising stock prices in Europe and Asia helped State Street generate 43% of revenue from outside the United States; its goal was 50%.
Richard Bove, an analyst at Punk, Ziegel & Co. in Pinellas Park, Fla., said in an interview before the results were released that State Street has been the most successful overseas, so it will benefit from the shift in activity overseas to boost overall earnings. Mr. Bove has a buy rating on the shares.
State Streets revenue for the year rose 15%, to $6.3 billion, earnings grew 14%, to $3.21 a share, and return on shareholders equity was 16%, meeting the companys targets. Its long-term goals are to increase revenue 8%-12%, earnings per share 10%-15%, and return on equity 14%-17%.
Our 2007 target is to achieve in the top half of these ranges, said Ronald Logue, State Streets chief executive.
Fees from servicing custody assets grew 10%, to $698 million, as assets under custody rose 17%, to $11.9 trillion. Fees from the money management unit rose 19% to, $253 million, and the units assets rose 21%, to $1.8 trillion.
State Streets expenses rose 13%, to $1.2 billion, and revenue rose 15%, to $1.6 billion. Revenue in the previous quarter rose 9.1%.
