What’s Driving State Street’s Fee Revenues?
A marginal rise
State Street (STT) has seen a marginal YoY (year-over-year) rise in its service revenues, from $1.3 billion in 3Q16 to $1.4 billion in 3Q17. It was mostly due to new business and favorable equity markets. A weakness in the US dollar has also been a major contributor to the YoY rise.
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State Street has a book value per share of $50.45. However, its peers (XLF) JPMorgan Chase (JPM), the Bank of New York Mellon (BK), and GAIN Capital Holdings (GCAP) have book values per share of $66.06, $35.26, and $6.12, respectively.
State Street reported management fees of $419 million in 3Q17 compared to $368 million in 3Q16, thus implying a YoY rise of 13.9%. It was helped by new business and favorable equity markets. Favorable ETF inflows also contributed to the rise.
Trading services revenues and other components
The two components of trading services revenue are foreign exchange trading and brokerages. State Street has witnessed a marginal fall in its total trading service revenues, from $267 million in 3Q16 to $259 million in 3Q17, implying 3% fall.
The YoY fall in total trading services revenue is mostly due to less volatility in foreign exchange. The company has witnessed a rise in volumes.
State Street has also witnessed a YoY rise of 8.1% in securities finance revenue, from $136 million in 3Q16 to $147 million in 3Q17, thanks to enhanced custody.
Finally, processing fees and other revenues in 3Q17 were $145 million, compared to $139 million in 3Q16, implying 4.3% rise.
In the next part of this series, let’s take a look at State Street’s total expenses.