State Street’s securities finance revenue hits a plateau in Q2
17 July 2020 New York
Image: JacobLund/Shutterstock.com
State Street has failed to build upon its Q1 securities financing revenue figures which hit six-year low.
The bank earned $92 million from its securities finance activities in Q2, mirroring the same figure from the first three months of the year.
The Q2 revenue figures represent a 27 percent decrease compared to the same period last year. The bank says the result was primarily driven by lower agency spreads and dividend activity and client deleveraging in enhanced custody balances.
Q2 marks the second consecutive quarter the bank has failed to break into triple digits for revenue; a benchmark it had previously surpassed in every quarter since 2014.
Overall, the bank’s fee revenue increased by 5 percent, which it says was largely due to stronger Charles River Development revenues, including a significant client implementation and several client renewals, elevated foreign exchange volume and volatility, and improving servicing fees.
This was partially offset by a decline in securities finance revenue and lower average international equity markets, State Street explains.
In its first report for 2020, State Street notes 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.
It also attributed these factors to the negative growth in its Q1 from servicing fees, management fees and trading fees.
According to IHS Markit, global securities finance revenue for the first half of the year dropped by 4.8 percent year-on-year
The bank earned $92 million from its securities finance activities in Q2, mirroring the same figure from the first three months of the year.
The Q2 revenue figures represent a 27 percent decrease compared to the same period last year. The bank says the result was primarily driven by lower agency spreads and dividend activity and client deleveraging in enhanced custody balances.
Q2 marks the second consecutive quarter the bank has failed to break into triple digits for revenue; a benchmark it had previously surpassed in every quarter since 2014.
Overall, the bank’s fee revenue increased by 5 percent, which it says was largely due to stronger Charles River Development revenues, including a significant client implementation and several client renewals, elevated foreign exchange volume and volatility, and improving servicing fees.
This was partially offset by a decline in securities finance revenue and lower average international equity markets, State Street explains.
In its first report for 2020, State Street notes 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.
It also attributed these factors to the negative growth in its Q1 from servicing fees, management fees and trading fees.
According to IHS Markit, global securities finance revenue for the first half of the year dropped by 4.8 percent year-on-year
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
