Fidelity Financial Services (FFS) announced Thursday an increase of 19.5% in operating income in 2016 to $3.5 billion on a 3.4% increase in revenue to $15.9 billion. The private company’s report to shareholders said its ability to “contain expenses due to careful cost management” resulted in a 0.4% decrease in expenses to $12.4 billion, and lauded its revenue growth “in the face of headwinds from industry-wide pricing pressures, the emergence of new financial technology competitors, and shifting customer preferences.”
As for the part of FFS that serves broker-dealers and registered investment advisors directly, the company said that Fidelity Institutional (FI) had a “solid year,” ending 2016 with $2.21 trillion in assets under administration, up 9.7% from 2015, and $575 billion in AUM.
The company said FI benefited from the first full year after the reorganization “into a more unified structure” of its clearing and custody and Fidelity Institutional Asset Management distribution businesses. In 2016, Fidelity Clearing & Custody Solutions (FCCS) generated $112.1 billion in net new client flows, bringing overall client assets on the FCCS platform to $1.67 trillion.
The company said it also “benefited from large client conversions in clearing and custody, which drove growth in assets, trading and margin balances; new asset management products, such as factor exchange-traded funds (ETFs); and changes to asset management fee and distribution policies, which made it more desirable for large broker-dealer and insurance clients to use Fidelity products for their customers.”
In its clearing business, FI said it completed in June 2 a project that converted 42 former JPMorgan correspondent clearing clients to its platform, bringing with them “more than “$70 billion in assets across more than 170,000 accounts.”