The third quarter of 2024 ended on a high note for global custodian banks, with the four that have already presented results seeing double-digit percentage increases in assets under custody/administration (AUC/A). Securities services fees also saw jumps across the board, with Citi reporting a standout growth of 24 per cent year-on-year (YoY).
[This article was updated on 5 November 2024 with reported figures for BNP Paribas.]
Citi CEO Jane Fraser lauded the bank’s securities services for delivering a “record quarter”. The department’s 24 per cent YoY increase corresponded to revenues of USD1.4 billion, with a major portion attributed to “a 24 per cent increase in non-interest revenue” from new mandates, as well as deepening partnerships with existing clients, and market valuations. This was also reflected in the 22 per cent increase in AUC/A.
The other major contributor to the sector’s revenues at Citi was “a 23 per cent increase in net interest income, primarily driven by higher deposit spreads and volumes”.
Click here for the source documents: BNY Mellon, State Street, JP Morgan, Citi, Northern Trust, BNP Paribas
New revenue streams
Likewise, State Street enjoyed significant growth on the coattails of new business, which pushed its investment servicing AUC/A up 17 per cent YoY to USD46.8 trillion. The bank also credited higher quarter-end market levels and new client flows for the increase. New AUC/A wins within the bank’s investment services amounted to USD466 billion.
State Street’s growth in servicing fees was more subdued than Citi at three per cent YoY. The bank attributed this to “higher average market levels and net new business, excluding a previously disclosed client transition”, which were tempered by “pricing headwinds, a previously disclosed client transition, and lower client activity, including asset mix shift”.
Outside of securities services, the bank scored two new mandates in the quarter for State Street Alpha, its “front-to-back asset servicing platform” through which clients can modularly plug in a range of services. Those two mandates brought the year-to-date figure to five.
At BNP Paribas, new mandates, including a €5 billion one with German pension fund VZN, and one worth €7 billion with French private equity firm PAI Partners VIII, contributed to a 13 per cent YoY growth in AUC/A. Its securities services revenues grew seven per cent YoY, attributed to “impact of higher net interest margin and higher client cash balances”.
Big jumps
BNY saw AUC/A exceed USD50 trillion for the first time, an increase of 14 per cent YoY. Like its competitors, the bank attributed its good performance to higher market values, client inflows, and net new business.
At JP Morgan, securities services revenue jumped nine per cent to USD1.3 billion, “largely driven by fee growth on higher market levels and volumes”.