State Street Global Advisors, the money manager behind the
largest ETF in the world, "SPY," posted a 15.6 percent increase in
second-quarter net income thanks mostly to strong equity market
action and a continued control of costs.
The asset management firm said net income in the second quarter
totaled $571 million, or $1.24 a diluted share, compared with $494
million, or $1.01 a share, in the same year-earlier period.
Revenues rose to $2.58 billion, and total assets under management
were up 12.5 percent year-on-year at $2.146 trillion, although they
came in 1.4 percent lower when compared with this year's first
The firm also reported a 12.6 percent year-on-year increase in
management fees, totaling $277 million in second quarter thanks to
strong markets and to net new business, which in the quarter
amounted to $201 billion in asset servicing mandates and $11
billion in net new assets, excluding the SPDR Gold Shares
(NYSEArca:GLD), to be managed at State Street, according to the
State Street's ETF assets ended the quarter at $328.8 billion,
down slightly from $354 billion at the end of the first quarter,
according to data compiled by IndexUniverse. Outflows of some $11.5
billion from the SPDR Gold Shares (NYSEArca:GLD) in the three-month
period ended June 28 were mostly to blame. GLD has now bled more
than $19.5 billion year-to-date. State Street isn't the investment
manager of that ETF, but acts as distribution agent.
"We reported a strong second quarter with revenue growth driven
by new business and improved equity markets," Joseph Hooley, State
Street's chairman and CEO, said in a prepared statement. "Seasonal
factors and increased market volatility benefited our securities
finance and foreign exchange businesses."
State Street continued to focus on controlling costs, and that
focus is helping the firm's bottom line. The second-largest U.S.
ETF provider cut its work force by 630 people in January. That
resulted in a drop in expenses related to compensation and employee
benefits expenses, which were partly linked to savings stemming
from its business operations and information-technology
This program is expected to bring total incremental pretax
expense savings of $220 million in 2013, and in its entirety,
should generate savings exceeding $500 million by 2015, according
to information the company provided earlier this year.
"We achieved positive operating leverage compared to both the
first quarter of 2013 and the second quarter of 2012," Hooley said
in today's earnings statement.
State Street bought back $560 million of its common stock in the
second quarter-part of the firm's efforts to increase its share
repurchase program to $2.1 billion in the March 2013 to March 2014
period. That goal represents an increase of 16.6 percent from the
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