Last-quarter reports are trickling in. BNY, State Street, JP Morgan, Citi, and Northern Trust have published their results, showing around nine per cent year-on-year (YoY) growth in their securities services fees for the year as well as in their assets under custody (AUC). The fourth quarter as such was down somewhat.
By Ho Yun Kuan, Nienke Eusterbrock and Alexander Kristofersson
We will continue to fill this table as numbers arrive in the coming days and weeks. BNP Paribas is scheduled to report on 4 February.
Let’s start with the tables, then find the companies’ comments below.
Find our source documents here for BNY, State Street, JP Morgan, Citi, and Northern Trust
Higher market values and client activity
Most of the custodians credit YoY increases to higher market values and client activity.
According to BNY, the nine per cent increase in its assets under custody/administration (AUC/A) primarily reflects “higher market values, client inflows and net new business, partially offset by the unfavourable impact of a stronger US dollar.” The firm points to record numbers both for revenue and net income, boasting a 34 per cent operating margin net of notable items, pre-tax. BNY says it “commenced the phased transition to our strategic platforms operating model”. (Read more on the platforms trend in this recent deep look article.)
JP Morgan states, “Securities Services revenue was US$1.3 billion, up 10 per cent, driven by fee growth on higher client activity and market levels, as well as higher deposit balances.”
Citi, too, observes “continued momentum” in its securities services. “Securities Services revenues of US$1.2 billion increased 15 per cent, largely driven by a 20 per cent increase in non-interest revenue and a nine per cent increase in net interest income, primarily driven by higher deposit volumes. The increase in non-interest revenue was primarily due to the smaller impact from the Argentina currency devaluation and a preliminary eight per cent increase in AUC/A that benefited from new client onboardings, deepening relationships with existing clients, and higher market valuations.”
At Northern Trust, total asset servicing trust, investment and other servicing fees “increased sequentially and from the prior-year quarter”. The YoY increase in categories under this – custody and fund administration fees, as well as investment management was attributed to “favourable markets and net new business”.
Slight blips
State Street is the only organisation that mentions a drop in client activity, stating that its YoY growth in securities services fees was a combination of “higher average market levels and net new business”, “partially offset by pricing headwinds and lower client activity/adjustments”. The lower client activity includes “the impact of a previously disclosed client transition”.
Lower client activity, however, was not an issue that affected QoQ growth in securities services, which increased by one per cent “mainly due to higher client activity/adjustments and net new business”. The 11 per cent YoY growth in AUC/A was credited to higher quarter-end market levels and flows.
The bank’s chairman and CEO Ron O’Hanley says, “Within Investment Services, new AUC/A wins exceeded US$1 trillion, and notably, we met our full-year servicing fee revenue wins goal of US$350 to 400 million, supported by a transformative mandate in the quarter.”
