State Street has reported an increase of 2 percent in fee revenue in Q4 2019, which reflected higher servicing, management and software and processing fees, partially offset by lower foreign exchange trading services and securities finance revenue.
The increase in servicing fees, according to State Street, primarily reflects higher average market levels and net new business, partially offset by fee pressure.
Revenue for servicing fees was up 1 percent compared to Q4 2018 and 2 percent compared to Q3 2019 each driven by higher average market levels and net new business, partially offset by fee pressure, State Street noted.
Investment servicing mandates announced in Q4 2019 totalled $294 billion with quarter-end servicing assets remaining to be installed in future periods of $1.2 trillion.
Total assets under custody and/or administration totalled $34.4 trillion, compared to $31.6 trillion Q4 2018. The increase, State Street revealed, was primarily due to higher end of period market levels and client flows, partially offset by a previously announced client transition.
Investment management assets under management as of Q4 2019 increased 24 percent to a record $3.1 trillion primarily due to higher end of period market levels and net inflows of $103 billion in 2019.
The report also found that securities finance revenue decreased 8 percent compared to Q4 2018 and 4 percent compared to Q3 2019 each, which State Street says reflected lower securities on loan and enhanced custody balances and spreads.
Commenting on Q4 2019 results, State Street’s CEO and chairperson Ron O'Hanley commented: “We are pleased with these results and our improving performance which reflect hard work and better execution across the organisation.”
Discussing last year, he said: “2019 began with significant industry challenges, including market weakness and increased pricing pressure. We acted aggressively to offset these headwinds, improve value to clients, stabilise revenues and reduce expenses.”
“As a result, we realised approximately $415 million in expense savings, enhanced client service through the establishment of our new coverage model and continued to build our front-to-back Alpha platform, which is producing results for our clients and for State Street. We were also able to deliver a total capital payout of 108 percent to our shareholders."
O'Hanley added: "Looking ahead, we will continue to drive innovation, automation and productivity to achieve our goal of becoming the very best provider to our clients. While we have made measurable progress towards our revenue and cost savings targets, we have more to do to improve margins and reach our medium-term goals by optimising our technology infrastructure and client-centered revenue growth as key drivers. We are confident in the trajectory of our business and focused on continuing to improve our performance."
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