State Street's 2 divisions (1) Investment Servicing, and (2) Investment Management, are expected to contribute roughly $9.8 billion (84%) and $21.9billion (16%) to its Total Revenue estimate of $11.6 billion for full-year 2019
2019E Revenue Breakdown:
Investment Servicing = 84%Investment Management = 16%
State Street's Business Model
What Does State Street Offer?
Investment Management: This division provides retail and institutional investors with a broad range of equity, fixed income, cash and alternative investment products
Investment Servicing: It could be sub-divided in 3 segments:Asset Servicing–
Includes the fee earned by the bank for serving as the custodian of financial assets on behalf of institutional investorsForeign Exchange & Other Trading–
It refers to the revenue from Trading Services and Securities FinancingSecurities Finance & Other–
It consists of fees revenue from structured products business, software licensing and maintenance, among others.
Who Are The Clients?
State Street provides Investment Servicing (e.g. asset servicing, foreign exchange & other trading, fund services, liquidity services, securities lending) and Investment Management services to:
Mutual fundsRetirement plansInsurance companiesMutual fund investorsInstitutional investorsPrivate investors High net-worth individuals
What Are The Alternatives?
State Street faces stiff challenges and competition from offerings by its competitors such as:
Although revenues have grown 16% from $10.3 billion in 2016 to $12 billion in 2018, we expect it to drop 3% in 2019 due to weaker interest rate forecast couple with asset management headwinds
Further, we expect revenues to remain unchanged over the next two years due to challenging industry conditions.
Total Revenues [=A+B]
YOY change in total revenues