State Street Sees Positive Growth-Operating Revenues, FX Trading & Brokerage Fees in the Green
by
Adil Siddiqui
State Street has reported operating metrics for the third quarter of 2014. The bank saw an uptake in its revenue compared to 2013 figures, in its FX trading division its earnings increased 11%.
One of the world’s largest financial banking institutes has reported its third-quarter earnings. The financial services company saw strong revenue growth of $2.58 billion, an increase in figures reported a year earlier. In addition, the firm saw an uptake in its FX trading revenues from YoY figures taking it to $161 million. The overall figures are in line with industry peers and highlight the power of Volatility in driving activity and income.
The bank reported its third-quarter 2014 operating revenues, with a Gaap-Basis EPS Of $1.26 on strong revenue of $2.58 billion compared to the third-quarter of 2013. The third- quarter operating-basis EPS was $1.35, up 13.4%, in addition the bank saw strong revenue of $2.7 billion, an increase of 8.5% compared to the third-quarter of last year.
The firm’s chairman, president and chief executive officer, Joseph L. Hooley, spoke about the company’s earnings in a statement, he said: "Our third-quarter results demonstrated good growth in asset servicing and asset management fees, which together were up 9 percent from the third-quarter of 2013, reflecting improved equity markets and new business. Our market-driven revenues also performed well in a traditionally seasonally slow quarter.
We won new business commitments of $302 billion of assets to be serviced and had $3 billion of net new assets to be managed during the quarter demonstrating the continued strength of our business."
In its official notification, the company outlined income and revenue from all of its key divisions, its FX trading revenues were up to $161 million from $144 million in the second quarter of this year, thus showing an uptake of 11.8%. The firm also saw an increase of 9% on a year-on-year basis, with revenues reaching $147 million in 2013.
At the same time, the bank reported its income from its brokerage business. It reported that from brokerage and other fees it earned $117 million in the third-quarter of 2014, with figures generally flat both on a QOQ and YoY basis.
Mr. Hooley added: "Despite the current challenges we face from low interest rates, we have leveraged our strong market positions and capabilities to generate profitable top-line growth."
State Street’s FX Dilemma
State Street, along with other leading custodian banks, has been scarred with the post recession bank pension disputes, which saw the bank face regulatory investigations and possible litigation. The banks were blamed by their clients for overcharging them on FX transaction fees. The US securities watchdog, the SEC, has investigated the matter.
In its latest earnings report, State Street mentioned that it included a $53 million charge relating to its FX investigations. The report stated: “We announced a $53 million net after-tax third-quarter 2014 charge (due to a $70 million pre-tax legal accrual recorded in that quarter) reflecting our intention to seek to resolve some, but not all, of the outstanding and potential claims arising out of our indirect FX client activities. We have reported on these matters in our previous public filings with the SEC.
With respect to that legal accrual: (1) we are engaged in discussions with some, but not all, of the governmental agencies and civil litigants that we have described in connection with these matters regarding potential settlements of their outstanding or potential claims; (2) there can be no assurance that we will reach a Settlement in any of these matters, that the cost of such settlements would not materially exceed such accrual, or that other claims will not be asserted; and (3) we do not currently intend to seek to negotiate settlements with respect to all outstanding and potential claims, and our current efforts, even if successful, will address only a portion of our potential material legal exposure arising out of our indirect FX client activities.”
The banks vs. pension fund fiasco brought light to the importance of transaction cost analysis, since the cases have come to light, banks and technology providers have increased their spending and development on ensuring systems and platforms are able to record, monitor and report on the exact price firms are paying for their FX transactions.
One of the world’s largest financial banking institutes has reported its third-quarter earnings. The financial services company saw strong revenue growth of $2.58 billion, an increase in figures reported a year earlier. In addition, the firm saw an uptake in its FX trading revenues from YoY figures taking it to $161 million. The overall figures are in line with industry peers and highlight the power of Volatility in driving activity and income.
The bank reported its third-quarter 2014 operating revenues, with a Gaap-Basis EPS Of $1.26 on strong revenue of $2.58 billion compared to the third-quarter of 2013. The third- quarter operating-basis EPS was $1.35, up 13.4%, in addition the bank saw strong revenue of $2.7 billion, an increase of 8.5% compared to the third-quarter of last year.
The firm’s chairman, president and chief executive officer, Joseph L. Hooley, spoke about the company’s earnings in a statement, he said: "Our third-quarter results demonstrated good growth in asset servicing and asset management fees, which together were up 9 percent from the third-quarter of 2013, reflecting improved equity markets and new business. Our market-driven revenues also performed well in a traditionally seasonally slow quarter.
We won new business commitments of $302 billion of assets to be serviced and had $3 billion of net new assets to be managed during the quarter demonstrating the continued strength of our business."
In its official notification, the company outlined income and revenue from all of its key divisions, its FX trading revenues were up to $161 million from $144 million in the second quarter of this year, thus showing an uptake of 11.8%. The firm also saw an increase of 9% on a year-on-year basis, with revenues reaching $147 million in 2013.
At the same time, the bank reported its income from its brokerage business. It reported that from brokerage and other fees it earned $117 million in the third-quarter of 2014, with figures generally flat both on a QOQ and YoY basis.
Mr. Hooley added: "Despite the current challenges we face from low interest rates, we have leveraged our strong market positions and capabilities to generate profitable top-line growth."
State Street’s FX Dilemma
State Street, along with other leading custodian banks, has been scarred with the post recession bank pension disputes, which saw the bank face regulatory investigations and possible litigation. The banks were blamed by their clients for overcharging them on FX transaction fees. The US securities watchdog, the SEC, has investigated the matter.
In its latest earnings report, State Street mentioned that it included a $53 million charge relating to its FX investigations. The report stated: “We announced a $53 million net after-tax third-quarter 2014 charge (due to a $70 million pre-tax legal accrual recorded in that quarter) reflecting our intention to seek to resolve some, but not all, of the outstanding and potential claims arising out of our indirect FX client activities. We have reported on these matters in our previous public filings with the SEC.
With respect to that legal accrual: (1) we are engaged in discussions with some, but not all, of the governmental agencies and civil litigants that we have described in connection with these matters regarding potential settlements of their outstanding or potential claims; (2) there can be no assurance that we will reach a Settlement in any of these matters, that the cost of such settlements would not materially exceed such accrual, or that other claims will not be asserted; and (3) we do not currently intend to seek to negotiate settlements with respect to all outstanding and potential claims, and our current efforts, even if successful, will address only a portion of our potential material legal exposure arising out of our indirect FX client activities.”
The banks vs. pension fund fiasco brought light to the importance of transaction cost analysis, since the cases have come to light, banks and technology providers have increased their spending and development on ensuring systems and platforms are able to record, monitor and report on the exact price firms are paying for their FX transactions.
Institutional FX Demand Continues to Climb in April
Network, Learn, Grow | FMAS:24
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
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From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
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Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
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The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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