State Street’s investment servicing of assets under custody and/or administration increased by 2 percent compared to Q2 2019 to $33.5 trillion, according to newly published 2Q20 figures.
The Boston-based bank said the increase was attributed to higher period-end market levels and client flows, which also contributed to the increase of assets under management, totalling $3.1 trillion and marking a year-on-year growth of 5 percent, and also aided by net inflows from cash and exchange-traded funds (ETFs).
Although State Street saw servicing fees increase by 2 percent compared to 2Q19, this marked a small decrease compared to 1Q20, owing to lower average market levels.
Fee revenue increased by 5 percent, largely due to stronger Charles River Development (CRD) revenues as a subsidiary of State Street.
The elevated foreign exchange and volatility of CRD as a result of stronger deposit balances and participation in the Money Market Mutual Fund Liquidity programme was offset by a decreased net interest income, following lower market rates.
In terms of new business and revenue, investment servicing mandates announced during 2Q20 totalled $162 billion, while investment management net inflows of $23 billion, although negatively impacted by institutional outflows, were driven by cash and ETF inflows.
Elsewhere, securities finance decreased by 27 percent compared to 2Q19, which State Street said was driven by lower agency spreads and dividend activity and client deleveraging in Enhanced Custody.
Ron O’Hanley, chairman and CEO of State Street commented: “Our Q2 results again reflect the strength of our business model and the dedication and talent of our employees. Although the shape of the economic recovery remains uncertain, we remain focused on being an essential partner to our clients and a high performing organisation.”
“Our capital position remains strong, as evidenced by the Federal Reserve's most recent stress test, and we are confident in our ability to continue to operate effectively, help stabilise the financial markets as needed, and support our clients with our balance sheet.”
O’Hanley concluded: “As we continue to navigate this extraordinarily challenging time, we are creating a strong foundation for future growth and are well positioned to return capital to shareholders.”
