State Street sees new servicing wins of $205 bn in Q4 2020
20 January 2021 US
Image: Par maglara/adobe.stock.com
State Street’s Q4 2020 results revealed investment servicing mandates announced in Q4 totalled $205 billion, with quarter-end servicing assets remaining to be installed in future periods of $436 billion.
Servicing business wins totalled $787 billion in 2020, with an increasing proportion incorporating State Street Alpha.
The bank also saw three new wins for its Alpha platform in the quarter, while Charles River Development achieved annual recurring revenue of $233 million in Q4 2020, an increase of 17 per cent year-on-year.
Elsewhere, results showed investment servicing assets under custody and/or administration (AUC/A) reached $38.7 trillion representing a 13 per cent increase on 2019’s Q4 figure of $34.3 trillion.
In its Q3 2020 results, State Street revealed that its investment servicing of AUC/A reached $36.6 trillion.
In terms of revenue, servicing fees increased 1 per cent compared to Q4 2019, primarily driven by higher average market levels, partially offset by normal pricing headwinds, softness in recent sales, and client activity/adjustments, says State Street.
State Street explains servicing fees were relatively flat compared to Q3 20, as higher average market levels and moderate net new business offset client activity/adjustments and normal pricing headwinds.
It also recorded a slight uptick in securities finance revenue quarter-on-quarter for Q4 2020 but, full-year earnings still represent a multi-year low for the agent lender primarily due to lower balances and spreads.
Q4 revenue reached $88 million, up from $84 million in Q3 but down on the $92 million achieved in each of the first two quarters of 2020.
The Q4 quarter-on-quarter 5 per cent uptick was due primarily to higher agency lending and enhanced custody balances.
Meanwhile, Q4 2020 revenue was down 21 per cent year-on-year from $111 million, which State State says is primarily driven by lower balances and spreads on its enhanced custody offering.
Further financial highlights from the report show total fee revenue was up 2 per cent.
Commenting on the Q4 results, Ron O'Hanley, chairman and CEO, says: "2020 was a challenging year for our clients, employees and our communities globally. I am proud of our employees worldwide who continued to put our clients first and deliver strong results for our shareholders despite the difficult operating environment.”
According to O’Hanley, while record low interest rates created a significant headwind in 2020, State Street delivered fee revenue growth and expense reduction that contributed to positive operating leverage and solid EPS growth.
O'Hanley highlights: “While State Street rose to the challenges in 2020, we are laser focused on fee revenue growth and expense management to continue to make progress in 2021 towards our medium-term targets.”
“We are confident in the trajectory of our business and will continue to drive innovation, automation and productivity to achieve these goals. As we look ahead in 2021, as a result of our strong, elevated capital position, we have announced a number of capital actions that will take place in the first-quarter and are expected to benefit our shareholders in the year ahead,” he concludes.
Servicing business wins totalled $787 billion in 2020, with an increasing proportion incorporating State Street Alpha.
The bank also saw three new wins for its Alpha platform in the quarter, while Charles River Development achieved annual recurring revenue of $233 million in Q4 2020, an increase of 17 per cent year-on-year.
Elsewhere, results showed investment servicing assets under custody and/or administration (AUC/A) reached $38.7 trillion representing a 13 per cent increase on 2019’s Q4 figure of $34.3 trillion.
In its Q3 2020 results, State Street revealed that its investment servicing of AUC/A reached $36.6 trillion.
In terms of revenue, servicing fees increased 1 per cent compared to Q4 2019, primarily driven by higher average market levels, partially offset by normal pricing headwinds, softness in recent sales, and client activity/adjustments, says State Street.
State Street explains servicing fees were relatively flat compared to Q3 20, as higher average market levels and moderate net new business offset client activity/adjustments and normal pricing headwinds.
It also recorded a slight uptick in securities finance revenue quarter-on-quarter for Q4 2020 but, full-year earnings still represent a multi-year low for the agent lender primarily due to lower balances and spreads.
Q4 revenue reached $88 million, up from $84 million in Q3 but down on the $92 million achieved in each of the first two quarters of 2020.
The Q4 quarter-on-quarter 5 per cent uptick was due primarily to higher agency lending and enhanced custody balances.
Meanwhile, Q4 2020 revenue was down 21 per cent year-on-year from $111 million, which State State says is primarily driven by lower balances and spreads on its enhanced custody offering.
Further financial highlights from the report show total fee revenue was up 2 per cent.
Commenting on the Q4 results, Ron O'Hanley, chairman and CEO, says: "2020 was a challenging year for our clients, employees and our communities globally. I am proud of our employees worldwide who continued to put our clients first and deliver strong results for our shareholders despite the difficult operating environment.”
According to O’Hanley, while record low interest rates created a significant headwind in 2020, State Street delivered fee revenue growth and expense reduction that contributed to positive operating leverage and solid EPS growth.
O'Hanley highlights: “While State Street rose to the challenges in 2020, we are laser focused on fee revenue growth and expense management to continue to make progress in 2021 towards our medium-term targets.”
“We are confident in the trajectory of our business and will continue to drive innovation, automation and productivity to achieve these goals. As we look ahead in 2021, as a result of our strong, elevated capital position, we have announced a number of capital actions that will take place in the first-quarter and are expected to benefit our shareholders in the year ahead,” he concludes.
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