State Street Corp , one of the world's largest institutional investors, reported higher quarterly earnings and said unrealized losses in its investment portfolio shrank.

The Boston-based company said first-quarter net profit climbed to $495 million from $476 million a year earlier as assets under management rose and it earned 8 percent more in fees for managing them.

Earnings per share were 99 cents, compared with $1.02 a year ago. The company increased its outstanding shares by raising capital last year.

On an operating basis, it reported earnings of 75 cents a share, meeting Wall Street analysts' average forecast.

State Street said it further cut the risk in its investment portfolio, where unrealized losses narrowed to $1.44 billion from $2.29 billion at the end of the 2009 fourth quarter.

Unrealized losses have worried analysts and weighed on the company's stock price.

First-quarter revenue was $2.3 billion, compared with $2 billion a year ago.

Investment fees at the 272-year old company, which also earns money for keeping records and providing account and other services to investment managers, rose to $1.54 billion.

It reported a 21 percent rise in expenses from operations to $1.56 billion as salaries and employee benefits rose.

Assets under custody increased to $19.04 trillion from $15.03 trillion, while assets under management climbed to $1.93 trillion from $1.4 trillion.

(Reporting by Svea Herbst-Bayliss; editing by John Wallace)

Investment