State Street sees drop in asset servicing revenue
24 April 2019 Boston
Image: Shutterstock
State Street has revealed a 12 percent drop in asset servicing revenue in its Q1 figures for this year, compared to Q1 results last year.
The custodian has suggested the drop was driven by challenging industry conditions including fee concessions and lower client activity and flows, weaker weaker average equity market levels and a previously announced client transition, partially offset by new business.
It also noted that servicing fees were down 3 percent compared to Q4 last year also because of challenging industry conditions, partially offset by higher average equity market levels.
State Street also stated that investment Servicing assets under custody and administration as of Q1 this year decreased 2 percent due to “the impact of negative foreign exchange translation and a previously announced client transition”.
In addition, investment servicing mandates announced in Q1 this year totalled approximately $120 billion with quarter-end servicing assets remaining to be installed in future periods of approximately $310 billion.
Commenting on the Q1 results, Ronald O’Hanley, president and CEO of State Street, said: “Our performance this quarter reflects the continued challenging conditions in the industry as well as lower client activity.”
He added: "We have seen these conditions before and know that focusing on what we can control, including better productivity, process re-engineering and greater resource discipline, while also strengthening client relationships, will deliver shareholder value and drive growth. The expense programme we initiated in Q4 2018 is already delivering benefits."
"Given the secular trends impacting our industry, we continue to prioritise strong service quality and innovation and are working to reignite servicing fee revenue growth through initiatives targeted at specific client segments and markets.”
The custodian has suggested the drop was driven by challenging industry conditions including fee concessions and lower client activity and flows, weaker weaker average equity market levels and a previously announced client transition, partially offset by new business.
It also noted that servicing fees were down 3 percent compared to Q4 last year also because of challenging industry conditions, partially offset by higher average equity market levels.
State Street also stated that investment Servicing assets under custody and administration as of Q1 this year decreased 2 percent due to “the impact of negative foreign exchange translation and a previously announced client transition”.
In addition, investment servicing mandates announced in Q1 this year totalled approximately $120 billion with quarter-end servicing assets remaining to be installed in future periods of approximately $310 billion.
Commenting on the Q1 results, Ronald O’Hanley, president and CEO of State Street, said: “Our performance this quarter reflects the continued challenging conditions in the industry as well as lower client activity.”
He added: "We have seen these conditions before and know that focusing on what we can control, including better productivity, process re-engineering and greater resource discipline, while also strengthening client relationships, will deliver shareholder value and drive growth. The expense programme we initiated in Q4 2018 is already delivering benefits."
"Given the secular trends impacting our industry, we continue to prioritise strong service quality and innovation and are working to reignite servicing fee revenue growth through initiatives targeted at specific client segments and markets.”
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