State Street Third-Quarter Profit Rises 27% To $1.09 Billion, With Pre-Tax Margin At 34.6%
Record servicing and management fees lifted results, and the bank will redeem $500 million of 2027 notes on November 18.
State Street earned $1.09 billion in the third quarter, up 27% from a year earlier, with diluted earnings per share up 33% to $3.69, according to the earnings release furnished with an 8-K on Wednesday. Revenue rose 13% to about $4.0 billion, and the release reports no notable items in the quarter.
What the results show
Total revenue was $4,004 million, versus $3,545 million a year earlier. Fee revenue rose 11% to $3,140 million, and net interest income rose 21% to $864 million as the net interest margin widened by 16 basis points (0.16 percentage points).
Servicing fees rose 10% and management fees rose 20% to $797 million, both quarterly records, according to the company. Foreign exchange trading services rose 17%, and other fee revenue fell 29%, which the company attributed mainly to market-related adjustments.
Expenses rose 8% to $2,620 million. Pre-tax margin reached 34.6%, from 31.1% a year earlier. Return on tangible common equity was 25.1%, against 20.9%.
Chairman and CEO Ron O'Hanley said the bank posted "record quarterly Servicing and Management fees as well as record FX client volumes." He added that it was the eleventh consecutive quarter of year-over-year positive operating leverage, excluding notable items.
Business wins and balance sheet
Assets under custody and administration rose 15% to a record $59.2 trillion. Assets under management rose 16% to a record $6.3 trillion.
New servicing wins covered $429 billion of assets under custody and administration, mostly from asset owners and asset managers, plus $68 million in new servicing fee revenue. The bank also said it won its first Wealth Services mandate, with a large U.S. registered investment advisor.
The standardized common equity tier 1 capital ratio was 11.0%, down 0.3 percentage points from a year earlier and up 0.2 points from the second quarter. State Street returned $651 million to common shareholders, including $400 million of buybacks and $251 million of dividends, or $0.92 per share.
Outlook, board and notes redemption
According to the presentation, the 2026 outlook now calls for fee revenue growth of about 13% to 14%, from 12% to 13%, and net interest income growth of about 15% to 16%, from 14% to 15%.
The 8-K also says the board elected Alexander Vollert as an independent director on October 9. He joins the Technology and Operations Committee and the Risk Committee.
State Street notified holders it will redeem all $500 million of its 1.684% fixed-to-floating rate senior notes due 2027 on November 18, at 100% of principal plus accrued interest, using cash on hand.
State Street expects to publish its updated regulatory capital disclosures by about November 9, and its liquidity coverage ratio disclosure by about November 14.
Sources
- 8-K Filing — STATE STREET CORP (STT) — SEC EDGAR
- Exhibit a3q26earningspressrelease.htm — STATE STREET CORP 8-K exhibit — SEC EDGAR
- Exhibit exhibit992-3q26earningsrel.htm — STATE STREET CORP 8-K exhibit — SEC EDGAR
- Exhibit stt3q26earningspresentat.htm — STATE STREET CORP 8-K exhibit — SEC EDGAR
