State Street Corporation (NYSE:STT) announced its plan to cut 630 jobs worldwide to improve its earnings as low interest rates diminishes revenue from lending and the trading activity of its clients. The third largest custody bank in the country already reduced its workforce by 2,900 in November 2010, according to report from Bloomberg.
In a conference call with analysts, Joseph L. Hooley, chairman, president & CEO of State Street Corporation, said the move is part of the bank’s strategy to create a “leaner, more efficient, and more profitable enterprise.”
Based on the company’s filing with the Securities and Exchange Commission (SEC), State Street Corporation (NYSE:STT) said it is undertaking targeted staff reductions to “better align expenses with its business outlook for 2013.” The company estimated approximately $133 million, as the cost associated with the job cuts including severance and benefits costs.
State Street Corporation (NYSE:STT) reported that its revenue for the fourth quarter was $2.45 billion, a 6 percent increase compared with its results during the same period a year earlier. The company said its net income was $468 million, higher than its net income during the same quarter in 2011. The result is lower than its $654 million net income in the third quarter of 2012.
The company posted $1.00 earnings per share compared with $0.76 earnings per share during the same quarter a year ago, but lower than its $1.36 earnings per share in the third quarter of 2012. Its net interest was $622 million, up by 3 percent from the same period in 2011. State Street Corporation (NYSE:STT) said its expenses increased from $1.42 billion to $1.86 billion.
For the full year 2012, the company reported a 10.8 percent in earnings per share from $3.79 to $4.20, and its revenue increased from $9.59 billion to $9.65 billion. State Street’s expenses for the whole year decreased from $7.06 billion to $6.89 billion and its ROE climbed to 10.3 percent.
In a statement, Hooley said, “The fourth-quarter and full-year 2012 reflects continued resilience across our asset servicing and asset management businesses. We achieved these results in a restrained revenue environment, generating positive operating leverage and continuing to invest in key markets that position use for further growth.”
Shares of State Street rose nearly 7 percent to $53.64 per share on Friday, at the time of this writing.