State Street Corp. reported first quarter earnings of $2.002 billion, or $1.02 per common share, down 22.3% from $2.577 billion, or $1.35 per share, in the first quarter of 2008. Total assets under management fell 29% to $1.395 trillion, down from $1.955 trillion, and total assets under custody fell 24% to $11.337 trillion, from $14.9 trillion.
State Street reduced its expenses by 26.5% to $1.304 billion, down from $1.774 billion a year ago. The firm also reduced the mark-to-market losses in its investment portfolio to $5.9 billion, down 6.3% from $6.3 billion in the fourth quarter of 2008.
Ronald E. Logue, chairman and chief executive officer of State Street, said: In one of the toughest operating environments in decades, the strength in new business from prior quarters benefited our results. This momentum, combined with expense controls, enabled us to achieve 440 basis points of operating leverage. While our servicing and management fee revenue declined 20% and 35%, respectively, from the year-ago quarter, both compared with the more than 40% decline in the equity markets.
Logue also noted that State Street won $111 billion in new assets, with $37 billion of that going to its exchange-traded funds.
He concluded, We have taken steps to align our expenses to a weaker market environment, so we believe were well positioned for an economic recovery. Given the continued unsettled economic environment and more weakness in the first quarter than we expected, we now believe that in 2009 we will achieve nearer the weaker end of the ranges we established at our Investor and Analyst Forum in February: operating revenue to decline between 8% and 12%; operating earnings per share to decline between 12% and 16%; and operating return on equity to be between 14% and 17%.