State Street Posts 17% Rise in Profit, to 86 Cents a Share

State Street, an institutional investment manager, said fourth-quarter earnings jumped 17% as new business and higher equity valuations boosted servicing and management fees.

Quarterly net income rose to $291 million, or 86 cents per share, from $249 million, or 74 cents a share, in the year-ago period. The result beat Wall Street's average estimate of 84 cents a share, according to Thomson Financial.

Revenue rose 15% to $1.62 billion from $1.42 billion last year, surpassing analysts' expectations of $1.56 billion.

"This was a very strong and solid quarter that was fueled by growth in the asset management business rather than cost cutting or other things," Gerard Cassidy, an analyst at RBC
Capital, told Reuters.

Asset servicing fees climbed 10% to $698 million, pushed by new business and higher equity valuations. Management fees surged 19% to $253 million.

Expenses climbed 13% to $1.18 billion.

The company finished the quarter with $11.85 trillion in total assets under custody.

For the year, profit rose 30% to $1.09 billion, or $3.24 per share.

Looking ahead, State Street Chairman and Chief Executive Officer Ron Logue said in a statement that the bank's 2007 target is to achieve results in the top half of certain goals, including increasing revenue between 8% and 12% and raising earnings per share 14% to 17%.

In the last year, State Street's stock price, which was recently trading higher, has climbed 23.53%, handily outpacing its Standard & Poor's 500 stock index benchmark.