State Street Corp. followed serve Tuesday as custodial banks used the second quarter to bounce back from a year-earlier loss to post a profit.

Armed with stronger fee income and an increase in assets under management, the Boston-based company said its earnings rose to $432 million, or 87 cents per share, from a year-earlier loss of $3.31 billion, or $7.12 a share. The loss in the second quarter of last year was a result of losses from mortgage-backed securities.

Assets under management rose 15% to $1.782 trillion, but declined 7.6% from the previous quarter.

During the quarter, State Street [STT] reported net investment losses of $50 million and a $10 million provision for loan losses related to its commercial real-estate holdings.
Revenue rose 9% to $2.3 billion as total fee revenue increased 12%.

Joseph Hooley, State Street’s chief executive officer, said in an interview Tuesday that the company saw "continued momentum" in its core businesses in the second quarter, most notably in its investment services buinesss because "more outsourcing is going on and we are having more success competing in the market."

"I think we have got active pipelines in the investor services and asset management business," he said. "The goal is to continue to drive increased share of wallet and continued to introduce new products and services to meet today's needs, like fixed income ETFs and collateral management services."

On Tuesday, State Street’s rival BNY Mellon [BK] reported a profit of $658 million, or 54 cents a share, up from $176 million, or 15 cents a share, meeting analyst expectations, according to Thomson Reuters.

Analysts said State Street’s strong results were in sharp contrast to the first quarter when it reported that trading revenue decline 10% despite strong gains from other large financial institutions.

Hooley said the company wants to "follow through on the momentum from the first half of the year." During the second quarter, it completed two acquisitions in Europe, and he said they are always open to more deals, especially internationally. "We are keeping our eyes open for new opportunities," he said.

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