US-based asset manager State Street has reported a fall in both net income and revenue in Q4 2020, amid a low rate environment.
On the bright side, the firm reported growth assets under management (AUM) and assets under custody and/or administration (AUC/A) and also kept check on its expenses.
Net income at the firm for the quarter to December 2020 stood at $537m, down 5% from $564m a year ago. Total revenue dropped 4% to $2.92bn from $3.05bn over the period.
High FX trading revenue along with improved servicing and management fees resulted in a 2% rise in fee revenue.
Net interest income of was 22% lower than the previous year, driven by lower market rates. Total expenses fell 5% from $2.27bn from $2.41bn.
Investment Management AUM grew 11% to $3.5trn from $3.1trn, driven by net inflows from ETFs and cash. This was offset by institutional net outflows.
Investment Servicing AUC/A at the end of December 2020 stood at $38.8trn, up 13% from the previous year.
State street chairman and CEO Ron O’Hanley said: “While record low interest rates created a significant headwind in 2020, State Street delivered fee revenue growth and expense reduction that contributed to positive operating leverage and solid EPS growth.”
“While State Street rose to the challenges in 2020, we are laser focused on fee revenue growth and expense management to continue to make progress in 2021 towards our medium-term targets. We are confident in the trajectory of our business and will continue to drive innovation, automation and productivity to achieve these goals.”
Recently, a report said that State Street is reviewing various strategic alternatives for its asset management arm, including a merger with UBS and Invesco.
Also, recently, it was announced that State Street along with other major asset managers including Pimco, will collaborate with Microsoft to build a cloud-based operating platform in a bid to transform asset managers’ operations technology.