State Street’s securities finance business stumbles in Q1
21 April 2020 Boston
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State Street recorded its lowest quarterly securities finance revenue in six years for Q1.
The bank earned $92 million from its securities finance activities in the first three months for the year, marking the first time it has failed to break into triple digits since 2014.
Revenue for Q1 was down 22 percent compared to same period last year, which the bank says was due to lower spreads and enhanced custody balances.
Its first-quarter results were also down 17 percent on the $111 million it earned in Q4 2019 as a result of lower spreads and balances, the bank says.
In its first report for 2020, State Street explains that its securities finance revenue drop-off was due to, among other factors, the value of equity and fixed-income markets, market interest and foreign exchange rates, the volume of client transaction activity, competitive pressures in the investment servicing and asset management industries, and the timing of revenue recognition with respect to software and processing fee revenues.
State Street also attributed these factors to the negative growth in its Q1 revenue from servicing fees, management fees, trading fees.
The last time the Boston headquartered bank failed to earn at least $100 million from its securities financing business was Q3 2014 when fell just short with $99 million. In Q1 of the same year it only took home $85 million.
At the time the bank said the Q4 decline was due to a seasonal decline in securities finance and a summer slowdown in trading services. Meanwhile, its Q1 2014 revenue was actually up 20 percent from Q4 2013, which the bank attributed to new business in its enhanced custody business.
More broadly, the bank chalked up modest growth in its overall fee revenue for Q1.
Despite being offset by the securities finance decline, total fee revenue hit $2,399 million in Q1, up from $2,368 million in Q4 2019 and $2,260 million in Q1 2019.
The bank earned $92 million from its securities finance activities in the first three months for the year, marking the first time it has failed to break into triple digits since 2014.
Revenue for Q1 was down 22 percent compared to same period last year, which the bank says was due to lower spreads and enhanced custody balances.
Its first-quarter results were also down 17 percent on the $111 million it earned in Q4 2019 as a result of lower spreads and balances, the bank says.
In its first report for 2020, State Street explains that its securities finance revenue drop-off was due to, among other factors, the value of equity and fixed-income markets, market interest and foreign exchange rates, the volume of client transaction activity, competitive pressures in the investment servicing and asset management industries, and the timing of revenue recognition with respect to software and processing fee revenues.
State Street also attributed these factors to the negative growth in its Q1 revenue from servicing fees, management fees, trading fees.
The last time the Boston headquartered bank failed to earn at least $100 million from its securities financing business was Q3 2014 when fell just short with $99 million. In Q1 of the same year it only took home $85 million.
At the time the bank said the Q4 decline was due to a seasonal decline in securities finance and a summer slowdown in trading services. Meanwhile, its Q1 2014 revenue was actually up 20 percent from Q4 2013, which the bank attributed to new business in its enhanced custody business.
More broadly, the bank chalked up modest growth in its overall fee revenue for Q1.
Despite being offset by the securities finance decline, total fee revenue hit $2,399 million in Q1, up from $2,368 million in Q4 2019 and $2,260 million in Q1 2019.
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