J.P. Morgan, Citi, State Street and BNY Mellon, four of the largest global custodian banks, all reported significant increases in assets under custody (AuC) year-over-year in their second quarter 2011 reports.
AuC at J.P. Morgan were up 14% over the previous year, to $16.9 trillion. Citi reported a 19% increase in AuC to $13.5 trillion. Total AuC at State Street were $22.76 trillion, an increase of 19.6% compared with Q2 2010. But BNY Mellon led the group with an increase of 21% in AuC and AuA compared with the previous year, now totaling $26.3 trillion.
BNY Mellon attributes its increased assets under custody and administration to the acquisitions of BHF Asset Servicing and Global Investment Servicing in Q3 last summer, as well as new business intake and a change in market values. Total revenue for asset servicing was $980 million in Q2 this year, up from $923 million in Q2 and from $668 million in Q2 2010.
Asset servicing fees for the quarter at State Street totaled $1.12 billion, a 2.6% increase over the previous quarter and a 15.5% increase over the previous year, which State Street attributes to net new business, increases in daily equity valuations and the acquisition of Intesas securities servicing business in May last year. In the second quarter we achieved strong growth in fee revenue due to continued momentum in servicing and management fee revenues driven by global client demand, and supported by seasonal factors affecting securities finance, Joseph L. Hooley, State Street’s chairman, president and CEO, said in the earnings statement.
Citis Transaction Services (TS) group, which includes its custody business, was one of the few business lines at Citi to show revenue growth. Revenues at TS were up 6% from the prior year period to $2.7 billion, which the bank attributes to growth in cash, trade and securities services products, particularly in emerging markets.
Net revenue for J.P. Morgans Worldwide Securities Services group, which includes its custody business, was $1.0 billion, an increase of $47 million, or 5%, over Q2 2010. The increase was driven by higher market levels, higher net interest income and net inflows of assets under custody, J.P. Morgan said in its report. Net income as a whole increased by $17 million (5% over the previous year) in its Treasury & Securities Services business, reflecting seasonal activity in securities lending and depositary receipts, the statement said.
Earnings per share of BNY Mellon, State Street, Citi and J.P. Morgan were up $0.59, $1.00, $1.09 and $1.27, respectively.
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