Securities finance dips in State Street’s Q3 2012 results
18 October 2012 Massachusetts
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State Street's Q3 2012 results revealed securities finance revenue of $91 million, a decline of 36.4 percent from Q2 2012. But revenue was higher than it was in the same quarter in 2011.
This drop was attributed to “second-quarter seasonality”. Compared to Q3 2011, securities finance revenue increased 7.1 percent due to higher spreads, offset partially by lower volumes.
Outside of securities finance, net gains from sales of available-for-sale securities of $24 million were recorded in Q3 2012, and separately, $6 million of net losses from other-than-temporary impairment were recorded, resulting in $18 million of net gains related to investment securities.
Overall revenue for the firm was $2.36 billion, a decrease of 3 percent from $2.42 billion and $2.43 billion in Q2 2012 and Q3 2011.
Net interest revenue of $619 million decreased 8 percent from $672 million in the second quarter of 2012 and increased 7 percent from $578 million in the third quarter of 2011.
GAAP results included a net post-tax benefit of $166 million, composed of a $362 million benefit related to claims associated with the 2008 Lehman Brothers bankruptcy; partially offset by a $60 million provision for previously disclosed litigation arising out of asset management and securities lending businesses.
Joseph Hooley, State Street's chairman, president and CEO, said that the results reflected continued resilience across both asset servicing and asset management, which was partially offset by weakness in trading services.
"Although equity markets have improved, clients remain conservative in their investment allocations which adversely affects our revenue. We continue to see demand for our solutions as evidenced by new asset servicing wins, and net new assets of $78 billion to be managed by State Street Global Advisors and a strong pipeline."
"We look forward to integrating the recently closed acquisition of the Goldman Sachs Administration Services business and introducing these clients to our broad range of products and services. While acquisitions are consistent with our long-term growth strategy, one of our highest priorities in the current environment is returning capital to our shareholders."
This drop was attributed to “second-quarter seasonality”. Compared to Q3 2011, securities finance revenue increased 7.1 percent due to higher spreads, offset partially by lower volumes.
Outside of securities finance, net gains from sales of available-for-sale securities of $24 million were recorded in Q3 2012, and separately, $6 million of net losses from other-than-temporary impairment were recorded, resulting in $18 million of net gains related to investment securities.
Overall revenue for the firm was $2.36 billion, a decrease of 3 percent from $2.42 billion and $2.43 billion in Q2 2012 and Q3 2011.
Net interest revenue of $619 million decreased 8 percent from $672 million in the second quarter of 2012 and increased 7 percent from $578 million in the third quarter of 2011.
GAAP results included a net post-tax benefit of $166 million, composed of a $362 million benefit related to claims associated with the 2008 Lehman Brothers bankruptcy; partially offset by a $60 million provision for previously disclosed litigation arising out of asset management and securities lending businesses.
Joseph Hooley, State Street's chairman, president and CEO, said that the results reflected continued resilience across both asset servicing and asset management, which was partially offset by weakness in trading services.
"Although equity markets have improved, clients remain conservative in their investment allocations which adversely affects our revenue. We continue to see demand for our solutions as evidenced by new asset servicing wins, and net new assets of $78 billion to be managed by State Street Global Advisors and a strong pipeline."
"We look forward to integrating the recently closed acquisition of the Goldman Sachs Administration Services business and introducing these clients to our broad range of products and services. While acquisitions are consistent with our long-term growth strategy, one of our highest priorities in the current environment is returning capital to our shareholders."
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