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April 19, 2021

State Street profit slips in Q1 2021 even as AuM grows

State Street has reported a 18% decrease in net income in Q1 2021. The firm’s expenses also rose, though it reported a growth in assets.

Key metrics

Net income at the firm for the quarter to March 2021 stood at $519m, or $1.37 per share, compared to $634m, or $1.62 per share, in the previous year.

Total revenue dropped 4% to $2.95bn from $3.06bn over the period.

Total fee revenue rose 4% to $2.48bn from $2.4bn. This was said to be driven by higher servicing, management, as well as software and processing fees>

Lower global interest rates and the lack of episodic market-related benefits in led to a 30% year-on-year plunge in net interest income to $467m.

Total expenses increased 3% to $2.33bn from $2.26bn, reflecting “unfavourable currency translation and higher notable items”.

Investment Management AUM at the end of March 2021 surged 34% to $3.6trn. This was driven by net inflows from ETFs and cash.

Investment Servicing AUC/A was $40.3trn at the end of the period, 26% higher than the prior year. This was attributed to higher period-end market levels, net new business growth, and client flows.

State Street chairman and CEO Ron O’Hanley said: “Core operating expenses continue to be controlled and we remain committed to expense discipline by driving productivity gains through automation and process reengineering, while investing back into our businesses.

“During the first quarter, we completed the repurchase of approximately $475 million of our common stock and have just announced a common share repurchase programme for 2Q21 of up to $425 million, consistent with the limit set by the Federal Reserve.”

State Street in the news

Recently, M&G Corporate Services, a unit of M&G, selected State Street to offer outsourced middle office services.

State Street recently also said that it is providing the technology to support the new wholesale digital currency trading platform of Pure Digital for institutional investors.

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