Boston-based State Street, the world's biggest institutional asset manager, said on Tuesday net income was $65 million, or 15 cents per share, compared with $223 million, or 57 cents per share, a year earlier. Analysts had expected 58 cents.

On an operating basis, earnings stood at $511 million, or $1.18 per share, down from $540 million, or $1.38 per share, a year earlier.

Revenue rose to $2.7 billion from $2.5 billion a year earlier.

The company also said that the after-tax, unrealized mark-to-market losses in its investment portfolio increased to $6.3 billion, up $3.0 billion from September 30, 2008.

Unrealized losses in its asset-backed commercial paper conduits increased to $3.6 billion, rising $1.4 billion from September 30, 2008.

Since the end of the year, the unrealized after-tax losses in the investment portfolio have improved $400 million to $5.9 billion as of Friday, January 16, 2009, the company said.

Assets under management stood at $1.44 trillion, down 27 percent from $1.98 trillion a year ago. Custody assets stood at $12.04 trillion, down 21 percent from $15.3 trillion a year ago.

(Reporting by Svea Herbst-Bayliss; Editing by Derek Caney)