State Street has seen a 12% fall in its asset servicing business during the first quarter of the year, reporting $1.2 billion in fee revenues.
The Boston-based global custodian stated the drop was down to “challenging industry conditions including fee concessions and lower client activity and flows.” State Street also cited “weaker equity average equity markets levels and a previously announced client transition.”
Investment servicing mandates in the first quarter totalled approximately $120 billion, with quarter-end servicing assets remaining to be installed in future periods at around $310 billion.
Total assets under custody and administration (AuC/A) were $32.6 trillion, down nearly 2% on the year.
Securities finance revenues were also down 16% to $118 million, the biggest drop among its businesses in the quarter. State Street said this reflected a balance sheet repositioning initiative it enacted between the third and fourth quarter of last year.
In comparison to the fourth quarter of last year, both asset servicing fees and securities finance revenue declined three and two percent respectively.
“Our performance this quarter reflects the continued challenging conditions in the industry as well as lower client activity. We have seen these conditions before and know that focusing on what we can control, including better productivity, process re-engineering and greater resource discipline, while also strengthening client relationships, will deliver shareholder value and drive growth,” said Ron O’Hanley, CEO and president, State Street.
“Given the secular trends impacting our industry, we continue to prioritise strong service quality and innovation and are working to reignite servicing fee revenue growth through initiatives targeted at specific client segments and markets.”
The results reflect a similar performance to BNY Mellon, which saw a drop of 7% in asset servicing fees in the first quarter at $1.4 billion.
BNY Mellon stated the decline was also due to lower foreign exchange and net interest revenue from lower deposits and subdued client activity.