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Lines of business
 12 Months Ended
Dec. 31, 2019
Segment Reporting [Abstract]  
Lines of business Lines of business

We have an internal information system that produces performance data along product and service lines for our two principal businesses and the Other segment. The primary products and services and types of revenue for our principal businesses and a description of the Other segment are presented below.

Investment Services business
 
 
 
 
 
Line of business
 
Primary products and services
 
Primary types of revenue
Asset Servicing
 
Custody, accounting, ETF services, middle-office solutions, transfer agency, services for private equity and real estate funds, foreign exchange, securities lending, liquidity/lending services, prime brokerage and data analytics
 
- Asset servicing fees (includes securities lending revenue)
- Foreign exchange revenue
- Net interest revenue
- Financing-related fees
 
 
 
 
 
Pershing
 
Clearing and custody, investment, wealth and retirement solutions, technology and enterprise data management, trading services and prime brokerage
 
- Clearing services fees
- Net interest revenue
 
 
 
 
 
Issuer Services
 
Corporate Trust (trustee, administration and agency services and reporting and transparency) and Depositary Receipts (issuer services and support for brokers and investors)
 
- Issuer services fees
- Net interest revenue
- Foreign exchange revenue
 
 
 
 
 
Treasury Services
 
Integrated cash management solutions including payments, foreign exchange, liquidity management, receivables processing and payables management and trade finance and processing
 
- Treasury services fees
- Net interest revenue
 
 
 
 
 
Clearance and Collateral Management
 
U.S. government clearing, global collateral management and tri-party repo
 
- Asset servicing fees
- Net interest revenue

 
 
 
 
 
Investment Management business
 
 
 
 
 
Line of business
 
Primary products and services
 
Primary types of revenue
Asset Management
 
Diversified investment management strategies and distribution of investment products
 
- Investment management fees
- Performance fees
- Distribution and servicing fees
 
 
 
 
 
Wealth Management
 
Investment management, custody, wealth and estate planning and private banking services
 
- Investment management fees
- Net interest revenue
 
 
 
 
 
Other segment
 
Description
 
Primary types of revenue
 
 
Includes leasing portfolio, corporate treasury activities, including our securities portfolio, derivatives and other trading activity, corporate and bank-owned life insurance, renewable energy investments and business exits
 
- Net interest revenue
- Investment and other income
- Net gain (loss) on securities
- Other trading revenue


Business accounting principles

Our business data has been determined on an internal management basis of accounting, rather than the generally accepted accounting principles used for consolidated financial reporting. These measurement principles are designed so that reported results of the businesses will track their economic performance.

Business results are subject to reclassification when organizational changes are made. There were no significant organizational changes in 2019. The results are also subject to refinements in revenue and expense allocation methodologies, which are typically reflected on a prospective basis.
The accounting policies of the businesses are the same as those described in Note 1.

The results of our businesses are presented and analyzed on an internal management reporting basis.

•
Revenue amounts reflect fee and other revenue generated by each business. Fee and other revenue transferred between businesses under revenue transfer agreements is included within other revenue in each business.
•
Revenues and expenses associated with specific client bases are included in those businesses. For example, foreign exchange activity associated with clients using custody products is included in Investment Services.
•
Net interest revenue is allocated to businesses based on the yields on the assets and liabilities generated by each business. We employ a funds transfer pricing system that matches funds with the specific assets and liabilities of each business based on their interest sensitivity and maturity characteristics.
•
The provision for credit losses associated with the respective credit portfolios is reflected in each business segment.
•
Incentives expense related to restricted stock is allocated to the businesses.
•
Support and other indirect expenses, including services provided between segments that are not
subject to a revenue transfer agreement, are allocated to businesses based on internally developed methodologies and reflected in noninterest expense.
•
Recurring FDIC expense is allocated to the businesses based on average deposits generated within each business.
•
Litigation expense is generally recorded in the business in which the charge occurs.
•
Management of the securities portfolio is a shared service contained in the Other segment. As a result, gains and losses associated with the valuation of the securities portfolio are generally included in the Other segment.
•
Client deposits serve as the primary funding source for our securities portfolio. We typically allocate all interest revenue to the businesses generating the deposits. Accordingly, accretion related to the portion of the securities portfolio restructured in 2009 has been included in the results of the businesses.
•
Balance sheet assets and liabilities and their related income or expense are specifically assigned to each business. Businesses with a net liability position have been allocated assets.
•
Goodwill and intangible assets are reflected within individual businesses.

The following consolidating schedules present the contribution of our businesses to our overall profitability.

For the year ended Dec. 31, 2019
Investment
Services

 
Investment
Management

 
Other

 
Consolidated

 
(dollars in millions)
Total fee and other revenue
$
8,894

 
$
3,466

(a)
$
888

 
$
13,248

(a) 
Net interest revenue (expense)
3,093

 
255

 
(160
)
 
3,188

 
Total revenue
11,987

 
3,721

(a)
728

 
16,436

(a) 
Provision for credit losses
(16
)
 
(1
)
 
(8
)
 
(25
)
 
Noninterest expense
8,049

 
2,643

 
208

 
10,900

 
Income before income taxes
$
3,954

 
$
1,079

(a)
$
528

 
$
5,561

(a)
Pre-tax operating margin (b)
33
%
 
29
%
 
N/M

 
34
%
 
Average assets
$
267,135

 
$
30,697

 
$
48,123

 
$
345,955

 
(a)
Total fee and other revenue includes net income from consolidated investment management funds of $30 million, representing $56 million of income and income attributable to noncontrolling interests of $26 million. Total revenue and income before income taxes are net of noncontrolling interests of $26 million.
(b)
Income before income taxes divided by total revenue.


For the year ended Dec. 31, 2018
Investment
Services

 
Investment
Management

 
Other

 
Consolidated

 
(dollars in millions)
Total fee and other revenue
$
8,926

 
$
3,781

(a)
$
85

 
$
12,792

(a)
Net interest revenue (expense)
3,372

 
303

 
(64
)
 
3,611

 
Total revenue
12,298

 
4,084

(a)
21

 
16,403

(a)
Provision for credit losses
1

 
3

 
(15
)
 
(11
)
 
Noninterest expense
8,058

 
2,818

 
334

 
11,210

(b)
Income (loss) before income taxes
$
4,239

 
$
1,263

(a)
$
(298
)
 
$
5,204

(a)(b)
Pre-tax operating margin (c)
34
%
 
31
%
 
N/M

 
32
%
 
Average assets
$
262,747

 
$
31,446

 
$
49,581

 
$
343,774

 
(a)
Total fee and other revenue include a net loss from consolidated investment management funds of $1 million, representing $13 million of losses and a loss attributable to noncontrolling interests of $12 million. Total revenue and income before income taxes are net of a loss attributable to noncontrolling interests of $12 million.
(b)
Noninterest expense and income before income taxes include a loss attributable to noncontrolling interests of $1 million related to other consolidated subsidiaries.
(c)
Income before income taxes divided by total revenue.


For the year ended Dec. 31, 2017
Investment
Services

 
Investment
Management

 
Other

 
Consolidated

 
(dollars in millions)
Total fee and other revenue
$
8,527

 
$
3,668

(a)
$
7

 
$
12,202

(a)
Net interest revenue (expense)
3,058

 
329

 
(79
)
 
3,308

 
Total revenue (loss)
11,585

 
3,997

(a)
(72
)
 
15,510

(a)
Provision for credit losses
(7
)
 
2

 
(19
)
 
(24
)
 
Noninterest expense
7,747

 
2,854

 
347

 
10,948

(b)
Income (loss) before income taxes
$
3,845

 
$
1,141

(a)
$
(400
)
 
$
4,586

(a)(b)
Pre-tax operating margin (c)
33
%
 
29
%
 
N/M

 
30
%
 
Average assets
$
254,646

 
$
31,450

 
$
57,752

 
$
343,848

 
(a)
Total fee and other revenue includes net income from consolidated investment management funds of $37 million, representing $70 million of income and income attributable to noncontrolling interests of $33 million. Total revenue and income before income taxes are net of noncontrolling interests of $33 million.
(b)
Noninterest expense and income before income taxes include a loss attributable to noncontrolling interest of $9 million related to other consolidated subsidiaries.
(c)
Income before taxes divided by total revenue.