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
Last updated for complete reference in early March, with numbers from BNP Paribas, HSBC and Caceis.
Let’s start with the tables, then find the companies’ comments below.
Find our source documents here for BNY, State Street, JP Morgan, Citi, Northern Trust, BNP Paribas, and HSBC. As we could not swiftly find HSBC’s 2023 year total for the revenues, they don’t go into our year-on-year calculation, which otherwise points to 7.5% growth in all. Please note that the precision of these numbers are somewhat illusory; they could differ both in how they are reported by each company and how they have been selected or processed on our side.
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.”
BNP Paribas saw its quarterly securities services business hop up over 13 percent in revenues, “driven up by fees (on outstandings and transactions)”. The 9% growth for the full year was described as “a robust increase, driven notably by net interest revenues”. New mandates in the fourth quarter included a new mandate with Insignia Financial in Australia featuring AU$320bn under management and administration, to provide custody and administration services, and “continued robust development in private capital” was observed. On the side of technological innovation, BNP Paribas describes how “[i]n the context of the ECB’s wholesale central bank money experimentation programme, Securities Services took part in the Caisse des Dépôts’ first digital bond issuance as issuing and paying agent”.
HSBC, describing itself as number 2 among securities services providers in the APAC region, noted 4% growth in its Securities Services revenues for the quarter (as reported in the segment of Global Banking and Markets), versus the corresponding period a year earlier. Landing this at $580 million, HSBC saw this growth being “due to fee growth in MENA and Asia markets as well as rates environment, partially offset by divestments within our fund administration business”. Under “Wholesale Transaction Banking and Wealth”, the bank listed $331 million as “Fee and other income” for securities services in the quarter, after 10% year on year growth “primarily driven by a gain on sale within our fund administration business”.
CACEIS, referring to itself as “ is ”a consolidator in the European asset servicing market”, mentions on its homepage that per end-2024, it held €5.3 trillion in assets under custody and €3.4 trillion in assets under administration.
