States Street profits reduced by severance costs

State Street said first-quarter profit fell 22%, reduced mostly by severance costs related to the company’s fourth round of job cuts since 2010.

Bloomberg News reports that net income decreased to $356m from $455m, a year earlier, the company said last week in a statement. Earnings included $72m in pretax severance expenses. 

'The environment for the custody banks is continuing to take out revenue and they just can’t really continue to wait on interest rates to go higher', Marty Mosby, an analyst with Guggenheim Securities said in a telephone interview. 'State Street started this process about a year ahead of everyone else, and so they got to the end of their previous initiatives ahead of the others'.

State Street has relied over the past three years on a combination of cost cutting and global equity-market gains to overcome the negative impact of low interest rates. In three rounds of cuts from November 2010 to January 2013, the company eliminated about 2,900 staff. 

To access the complete Bloomberg article hit the link below:

State Street Profit Drops 22% on Severance Costs

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