Northern Trust has recorded the lowest quarterly revenue from its securities lending business since at least 2015.
Revenue from securities lending in Q3 came in at $19.7 million, marking the first quarter Northern Trust has failed to earn at least $20 million in the past five years. Prior to 2015, Northern Trust reported securities lending revenue on an annual basis.
In its latest quarterly report, the US bank primarily attributed the revenue decrease to lower spreads.
The latest earnings report comes directly after Northern Trust achieved the highest quarterly securities lending revenue ($27.3 million) since at least 2015.
The third quarter has historically been a leaner period for lending revenue at Northern Trust but last quarter’s earnings were down from the same period in 2019 when it brought in $21.1 million.
Northern Trust’s experience mirrors its peers and also jives with this year’s global securities lending revenue trend of underperforming compared to 2019.
BlackRock and BNY Mellon also reported below-par earnings in Q3 following stellar revenue hauls in Q2.
State Street, likewise, reported year-on-year decrease in Q3 lending revenue.
All three cited tighter spreads as the chief reason for the lacklustre results.
Overall, the global securities finance industry generated $1.77 billion in revenue in the lender-to-broker market in Q3, equaling a 17 percent year-over-year decrease from the $2.13 billion generated for lenders in Q3 2019, according to DataLend.
Northern Trust was unable to immediately comment further on the report.
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