State Street Corp. said its fourth-quarter earnings rose 17 percent, despite a drop in revenue, but warned that rocky global markets so far this year would probably hurt performance.

The Boston financial giant reported net income of $547 million for the quarter, or $1.34 per share. Revenue for the three months that ended Dec. 31 fell 3.3 percent to $2.5 billion.

State Street said it adjusted past results to account for previously announced overbilling of clients over an 18-year period. The company said it would reimburse customers $240 million after the internal review, up from a $200 million estimate in December.


The company took a pretax charge of $17 million in the fourth quarter to reflect that it would pay clients interest on the overcharges.

State Street, an asset custodian and an investment manager for large institutions, also said it took an after-tax charge of $9 million for legal expenses related to a number of regulatory matters it's been battling. The company recently settled pay-to-play charges with federal securities regulators, who alleged that it made payments in exchange for pension custody contracts in Ohio.

"Our performance in the fourth quarter reflects the continued challenges presented throughout 2015," chief executive Jay Hooley said in a statement, "including challenging global equity markets, particularly in emerging markets, persistent low interest rates, the strengthening US dollar, and heightened regulatory expectations."

State Street shares fell 7.2 percent to $51.91, the most since Aug. 8, 2011. The shares have trailed those of other custody banks in the past year, slumping 28 percent, compared with a drop of 9.8 percent for Northern Trust Corp. and a decline of 3.6 percent for Bank of New York Mellon Corp.

In a conference call with analysts Wednesday morning, Hooley said the company was working to put its regulatory issues behind it and to boost revenue. State Street's financial chief said a 10 percent drop in global equity values generally translates to a 2 percent decline in revenue for the company.


Hooley said expense controls were helping, including staff reductions announced in the third quarter. Hooley said the cuts would save $75 million in 2016 and $550 million a year by 2020. In October, State Street said it would cut 600 jobs, including 170 in Massachusetts.

On Wednesday, the company said its treasurer, David J. Gutschenritter, is retiring. He will be replaced by Tracy Atkinson, effective Feb. 1, but will remain an adviser through July 30 "to ensure an orderly transition."

For the full year in 2015, State Street's net income fell 5.6 percent to $1.85 billion, or $4.47 per share. Total revenue rose 0.8 percent to $10.4 billion.

State Street also has seen billions of dollars in outflows from its exchange-traded fund business, as institutions moved money into less risky investments amid market volatility. The company said it also saw net inflows in several new ETFs.

Beth Healy can be reached at beth.healy@globe.com