BlackRock generated securities lending revenue of $140 million in the three months to 30 June, down from $210 million in the second quarter of 2020. This primarily reflects lower spreads and is partially offset by higher average balances of securities on loan.
Quarter-on-quarter, the asset manager’s securities lending revenues rose $13 million from a Q1 2021 figure of $127 million.
BlackRock’s revenue from investment advisory, administration fees and securities lending revenue increased $791 million YoY, primarily driven by the positive impact of market volatility and foreign exchange movements on average AUM and strong organic base fee growth.
Looking at quarter-on-quarter, investment advisory, administration fees and securities lending revenue increased $165 million from the first quarter of 2021, driven by overall business growth and the positive impact of market volatility and foreign exchange movements on average AUM — plus the effect of one additional day in the quarter. Revenues were partially offset by higher yield-related fee waivers on certain money market funds.
On the whole, the asset manager saw $81 billion of quarterly total net inflows into its investment fund products, driven by continued momentum across its fund platform. This figure takes into account a $58 billion low-fee institutional index outflow from a single client. The fund house experienced $63 billion in net inflows during Q2 into its actively-managed products.
BlackRock said that a 32 per cent increase in its revenue year-over-year reflects strong organic growth, higher performance fees and a 14 per cent increase in technology services revenue.
BlackRock chairman and CEO Laurence Fink says: “Our longstanding approach to invest for the future positions our platform to better serve clients and generate more consistent organic
growth. In sustainability, we are investing in products, data and analytics and technology to help investors capture the opportunity and manage the risks presented by sustainable factors. This is resonating with our clients and we generated $35 billion of sustainable net inflows in the quarter.”
State Street’s securities finance revenue increased 10 per cent quarter-on-quarter to $109 million and was up 18 per cent YoY, primarily driven by higher client balances and partially offset by lower spreads. These figures reflect the firm’s wider business — net income was up 10 per cent YoY from $694m to $763m and sequentially [QoQ], revenue was up 47 per cent, from $519m to $763m.
State Street chairman and CEO Ron O'Hanley says: "Our second quarter results reflect the successful execution of our strategic priorities. We delivered record fee revenue with continued expense discipline, driving considerable pre-tax margin expansion and earnings growth in the second quarter, thus demonstrating meaningful progress toward our medium-term targets.”
For BNY Mellon, the bank’s market value of securities on loan at period end, which represents the total amount of securities on loan in the agency securities lending programme managed by the Investment Services business, was up 19 per cent YoY to $456bn — and up 2 per cent compared to the previous quarter to $456bn.
BNY Mellon’s clearance and collateral management business, as part of its investment services business, saw a year-over-year decrease — from $295m to $283m — which primarily reflects lower net interest revenue, intraday credit fees and clearance volumes, but is partially offset by higher tri-party collateral management balances. The sequential increase — $281m to $283m — largely reflects higher tri-party collateral management balances, although this is partially offset by lower clearance volumes.
BNY Mellon CEO Todd Gibbons says: “Fee revenue was up 4 percent, or 10 percent excluding the impact of money market fee waivers, reflecting the benefit of higher market levels as well as continued organic growth, driven by higher client activity levels and net new business momentum.”
