Slowly but surely we are running out of large banks.
State Street (STT) is not a typical bank, but more focusing on institutional/investment services. Down a cool 50%. This might bode very ill for Northern Trust (NTRS) which reports later in the week --- and even Blackrock (BLK).
- State Street Corp (NYSE:STT - News), a leading institutional money manager, said quarterly earnings fell 71 percent and unrealized losses rose in its commercial paper program and investment portfolio. "These results were very disappointing," RBC Capital analyst Gerard Cassidy said, adding that investors were clearly "spooked" by the higher unrealized losses and the company's weak outlook for 2009.
Investors have long worried about State Street's growing unrealized losses and whether the company would have to write them off. Net income in the fourth quarter was $65 million, or 15 cents per share, down from $223 million, or 57 cents per share, a year earlier. The numbers include expenses to cut its workforce and prop up ailing funds.
The company said after-tax, unrealized mark-to-market losses in its investment portfolio increased to $6.3 billion, up $3.0 billion from September 30. (ow) Unrealized losses in its asset-backed commercial paper program increased to $3.6 billion, rising $1.4 billion from September 30.
Worrying investors even further was the company's outlook for 2009. Chairman and Chief Executive Officer Ron Logue said 2009 revenue is expected to be flat with 2008's record results, falling short of the company's long-term goal of 8 percent to 12 percent growth. Operating earnings are also expected to be flat, below the long-term goal of 10 percent to 15 percent growth.
Everytime I see these results I think of Guy Adami and others on CNBC saying in summer 2008 how we should be buying banks because there would be "write UPs" by end of the year. Kool Aid.
No position
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