State Street's combined assets under custody (AuC) and administration (AuA) jumped more than a trillion dollars from the fourth quarter last year to the first quarter this year, from $24.37 trillion in Q4 to $25.42 trillion in Q1, according to its quarterly earnings report released today.
One of the world's largest custodians by AuC is edging closer to the first, with BNY Mellon's AuC and AuA remaining stagnant in Q1 at $26.3 trillion in combined AuC and AuA.
State Street's custody assets alone were $18.59 trillion in the first quarter compared to $17.81 trillion in the fourth quarter and $16.91 trillion in the first quarter last year. BNY Mellon does not report AuC and AuA separately in its quarterly reports.
State Street recorded revenues of $2.47 billion in the first quarter of the year, a slight increase sequentially ($2.46 billion) and year over year ($2.42 billion).
Securities finance revenue in the first quarter was $78 million, down 19.6% year on year and up 5.4% from Q4. Lower spreads and volumes account for the shift in revenues, State Street says.
Servicing fees overall rose 2.2% to $1.2 billion in the first quarter from Q4 due to stronger global equity markets and higher transaction volumes, the firm says. That represents a 9.0% increase year over year, taking into account stronger equity markets, net new business and the acquisition of Goldman Sachs Administration Services (GSAS). State Street bought GSAS for $550 million in cash last summer.
Foreign exchange revenue rose 23.7% from the Q4 to Q1 due to higher volumes and volatility, State Street says.
State Street also completed the final phase of its $1.8 billion common stock purchase program in the first quarter, which was announced in March 2012, buying $360 million more of its common stock. State Street says its board of directors last month approved another stock purchase program of an additional $2.1 billion in common stock.
The firm estimates its pro forma Basel III Tier 1 common ratio at 10.6% at the end of Q1.
"The strength in the equity markets, combined with higher volumes and increased volatility in foreign-exchange trading, supported our fee revenue," Joseph L. Hooley, State Street's chairman, president and CEO, said in the earnings statement. "We continue to control expenses across the organization and generate benefits from our transformation program. As a result, we achieved positive operating leverage as compared to the year-ago quarter.
"Overall, the environment continues to show signs of gradual improvement as reflected by investors shifting into equities. However, given the ongoing fragile state of the global markets, we continue to remain cautious for 2013."