State Street Corporation (STT) Earnings & Analysis

Latest quarter

State Street reported adjusted EPS of $3.69 for the quarter to September 30, 2026, versus the consensus of $3.65, a 1.10% result above the consensus. The company reported revenue of $4.0 billion as the consensus counts it, versus consensus revenue of $4.0 billion, and said revenue was 0.90% below the consensus.

State Street’s filing said total revenue increased 13% from the year-earlier quarter, driven by higher fee revenue and net interest income. The filing attributed an 11% increase in total fee revenue primarily to higher servicing fees, management fees and foreign-exchange trading-services revenue, partly offset by lower other fee revenue. It said net interest income increased 21%, primarily reflecting a 16-basis-point increase in net interest margin.

The filing reported expenses increased 8%, mainly because of higher revenue-related costs and continued strategic investments. It reported a pretax margin of 34.6%, compared with 31.1% a year earlier, and EPS of $3.69, up 33%, primarily because of higher revenue and pretax-margin growth. State Street reported AUC/A of $59.17 trillion and AUM of $6.31 trillion at September 30, 2026.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

On State Street’s latest available earnings call, which covered Q2 2026, Ronald O’Hanley said the company saw momentum across Investment Services, Investment Management and Markets. He said client activity supported record foreign-exchange trading volumes and revenue in the second quarter, while securities lending also increased from a year earlier. O’Hanley said the company’s strategic priorities included alternatives, digital assets and wealth services, alongside a technology and AI-enabled transformation of its operating model.

John Woods said servicing-fee growth was supported by client activity, flows and net new business, while management-fee growth reflected net inflows and higher average market levels. Woods said the company expected continued organic growth in servicing and management fees in the second half, but its outlook assumed market levels would remain flat from the end of Q2 through year-end. He said State Street incorporated moderation from its record second-quarter Markets results into that outlook, while describing client volumes as resilient and citing international opportunities.

Woods said the company expected net interest income growth to reflect stronger average deposit balances. He said management expected net interest margin to remain in its stated range, and said a funding-mix shift toward deposits and away from short-term wholesale funding had supported the margin.

Analysts asked Woods about the path to State Street’s medium-term pretax-margin target and the transformation program. Woods said the company’s planning framework called for 100 to 150 basis points of positive operating leverage over the medium term, supported by organic growth across its businesses. He said the company expected approximately $1 billion of run-rate transformation benefits by 2029, with most coming from expense productivity and the remainder from revenue opportunities.

On transformation costs, Woods said the company estimated approximately $500 million of predominantly severance-related one-time costs. He said management expected net headcount to decline in the low-single-digit range after reinvesting capacity in strategic initiatives and franchise growth.

Guidance

State Street raised its FY2026 fee-revenue-growth outlook to 12.0%–13.0% from 7% to 9%. John Woods said the company raised expected FY2026 net-interest-income growth to 14% to 15% from 8% to 10%. He also said State Street expected FY2026 expenses to increase by roughly 8%, compared with its previous outlook of 5% to 6%.