State Street Reports Q3 EPS of $3.69, Revenue Rises 13%

State Street (NYSE: STT ) released third-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

69 and a 13% rise in total revenue to $4 billion. 3 trillion, highlighting robust growth across its core businesses. Strategic initiatives include the acquisition of Santander Caceis’s Latin American securities services business and investments in digital assets and wealth management, aiming to drive long-term growth and enhance client engagement. State Street's pre-tax margin expanded to 35%, and ROTCE improved to 25%, reflecting positive operating leverage for the 11th consecutive quarter.

The company maintained a strong capital position, with a CET1 ratio of 11% and planned to increase its share buybacks to approach a total payout ratio of 80% for the year. Future outlook anticipates continued growth in fee revenue and net interest income, with an expectation of delivering over 500 basis points of positive operating leverage for 2026. Full Transcript OPERATOR Good morning and welcome to State Street Corporation's third quarter 2026 earnings conference call and webcast. Today's call will be hosted by Elizabeth Lynn, Head of Investor Relations at State Street.

We ask that you please hold all questions until the completion of the formal remarks, at which time you'll be given instructions for the question-and-answer session. com. This conference call is also being recorded for replay. State Street's conference call is copyrighted and all rights are reserved.

This call may not be recorded, rebroadcast, or distributed in part or in whole without the express written authorization of State Street Corporation. The only authorized broadcast of this call will be housed on the State Street website. Now I would like to hand the call over to Elizabeth Lynn. Elizabeth Lynn, Head of Investor Relations Good morning, and thank you all for joining us on our call today.

Our CEO, Ronald O'Hanley, will speak first. com. Afterward, we'll be happy to take questions. Before we get started, I'd like to remind you that today's presentation will include results presented on a basis that excludes or adjusts one or more items from GAAP.

Reconciliations of these non-GAAP measures to the most directly comparable GAAP or regulatory measure are available in the Earnings Release Addendum. In addition, today's call will contain forward-looking statements. Actual results may differ materially from those statements due to a variety of important factors such as those referenced in our discussion today and in our SEC filings, including the Risk Factors section in our Form 10-K. Our forward-looking statements speak only as of today, and we disclaim any obligation to update them, even if our views should change.

With that, let me turn it over to Ron. Ronald O'Hanley, Chairman and Chief Executive Officer Thank you, Liz, and good morning, everyone. I want to begin with some context. The world's investors today face a dynamic, complex, and interconnected environment requiring them to manage a wide range of risks and opportunities.

Fiscal and sovereign debt pressures, credit, geopolitics, inflation uncertainty, the accelerating opportunities and risks of AI, and advanced cyber threats all require investors to manage through a broad range of forces that are reshaping markets, operating models, and the broader financial system. At times like these, clients are seeking trusted and essential partners, not just service providers.

Our ability to combine the strengths and quality of asset servicing, investment management, and markets as One State Street allows us to effectively help clients navigate change, manage risk, and pursue their objectives with greater confidence, creating better outcomes for the people they serve. We believe this environment reinforces the importance of the role we play, the value of the relationships we have built with many of the world's leading investors, and the strength of the One State Street model.

Amid this rapidly evolving backdrop, our positive momentum carried into the third quarter, during which we delivered another period of strong financial and business performance, as highlighted on slide 2. Driven by clear strategic priorities, State Street's results again demonstrated the earnings power of our franchise and the momentum we continue to build across the firm. We generated our 11th consecutive quarter of positive year-over-year operating leverage, excluding notable items, reflecting both the strength of our operating model and our continued focus on disciplined execution.

69 increased 33% year over year, supported by double-digit growth in fee revenue, NII, and total revenue. I am particularly pleased by the momentum we are seeing in our core businesses during the quarter. We generated record quarterly servicing and management fees and delivered record FX client volumes, demonstrating our ability to capture client activity and benefit from the scale and breadth of our platform. Combined with a pre-tax margin of 35% and a return on tangible common equity of 25%, these results reflect both the strength of our franchise today and the investments we are making to position State Street for long-term growth.

July marked an important milestone for State Street as we introduced new medium-term financial targets and outlined the strategic growth initiatives and transformation agenda that we believe will drive our next phase of growth. As I look across our franchise, I see a company executing with discipline, investing for future growth, and increasingly operating as One State Street. That combination is strengthening our platform, enhancing how we serve clients, and positioning us to deliver sustainable growth and long-term value for shareholders.

Our integrated global franchise across investment services, investment management, and markets provides a powerful foundation for continued growth. Importantly, many of our most attractive opportunities lie within businesses where we already have established leadership positions and meaningful scale. When combined with the breadth of our platform, the depth of our client relationships, and the increasing connectivity across our franchise, we believe this positions us uniquely well to serve clients end to end, deepen engagement, and drive sustainable growth over time.

Within Investment Services, we continue to leverage the scale and capabilities of our franchise, generating record quarterly servicing fee revenue while assets under custody/administration reached a record $59 trillion at quarter end. These results were supported by strong year-over-year organic growth and reflect the value we deliver to clients and our ability to continue growing alongside them as an essential strategic partner. Also during the quarter, we announced an initial agreement to acquire Santander Caceis’s Latin American securities services business, which is expected to close in 2027, subject to regulatory approvals and closing conditions.

The transaction will create a leading asset servicing platform across Brazil, Mexico, and Colombia, adding scale, local expertise, and expanded capabilities, including custody and fund administration, in some of the region's most important and fastest-growing institutional markets. Within Investment Management, the quality of our platform, our continued innovation, our global distribution capabilities, and the trust clients place in our franchise continue to drive strong results. 3 trillion of assets under management. We had record ETF flows in the quarter, and 3Q also marked our sixth consecutive quarter of organic net inflows.

And in Markets, we generated record FX client volumes, supported by strong activity across both EMEA and APAC. These results reflect the benefits of investments in our capabilities and strong product mix and demonstrate our ability to support clients when opportunities emerge across markets and geographies. Importantly, they also underscore the relevance of our client franchise. We were pleased to see that recognized through five awards at Euromoney's 2026 FX Awards, including the World's Best FX Bank for Real Money Clients.

Next, let me spend a few moments on the progress we are making across our three strategic growth initiatives, which focus on segments of the market undergoing some of the most significant shifts across our industry today. Alternatives is changing where capital is being invested while also expanding the universe of investable assets for the world's investors. Digital assets is shaping how assets will transact, move, and be serviced in the future. And wealth is transforming how individuals and advisors access investment opportunities and channels, navigate increasingly complex markets, and build long-term financial outcomes.

While each opportunity is distinct, all three build on and leverage capabilities we already possess across our franchise, are extensions of our core franchises, and are strengthened by our One State Street approach. Together, these initiatives align us with some of the most attractive long-term growth opportunities in financial services while deepening our strategic relevance to clients. Increasingly, clients are seeking integrated solutions. Our ability to bring capabilities together through our One State Street model is an important differentiator.

While still early in Digital Assets and Wealth, we are encouraged by the client engagement, commercial traction, and momentum. We are beginning to see in Alternatives. We continue to build on our leadership position in one of the most significant secular growth opportunities in our industry. Alternative servicing fees grew at a double-digit rate year over year in the third quarter, reflecting solid growth across private markets and strong client activity.

More broadly, the alternatives ecosystem is evolving. As investment strategies expand and operating models become more complex, clients increasingly need partners that can help them operate and apply technology to that complexity while improving transparency, efficiency, and access. For investors, this plays directly to our strengths. Whether helping clients scale their businesses, enhance the investor experience, or develop new market infrastructure, we are working alongside them to support the continued evolution of private markets.

A recent example is our work with Apollo to support the expansion of daily pricing across private credit strategies, helping advance the transparency and infrastructure needed to bring private markets closer to the experience investors have long expected in public markets. By leveraging the breadth of our platform, the depth of our client relationships, and expertise developed over decades of serving alternative investors, we believe we are well positioned to benefit from the continued growth of alternatives while creating value across multiple parts of our franchise.

In Digital Assets, we are positioning the firm and our clients for the evolving market structure and investment ecosystems by building on the tech-led capabilities that have long differentiated our firm, including our client relationships, global reach, and deep expertise across financial markets. As tokenization and digital technologies continue to gain traction, we are investing thoughtfully and working closely with clients to help shape the future of market infrastructure.

We remain on track to deliver a tokenized fund servicing capability by year-end, subject to regulatory approval, and our investment management business is expected to be an early adopter of the platform, providing another strong example of our One State Street approach in action. We are also continuing to bring investment products on-chain. In 3Q, an example of how we are helping bridge traditional financial and digital markets was the State Street—Galaxy On-Chain Liquidity Sweep Fund, which is now available on the Stellar Network, expanding access to a tokenized cash management solution designed to support 24/7 liquidity.

And in Wealth, the recent launch of our wealth services offering is resonating with clients, and we continue to build a strong pipeline of opportunities in partnership with Apex FinTech Solutions. During the third quarter, we secured a servicing mandate from one of the largest RIAs in the United States, an important validation of both the market opportunity and our value proposition. Just as importantly, the win demonstrates the power of our One State Street approach.

This client was already a user of Charles River's front office wealth platform, highlighting our ability to deepen relationships, connect capabilities across the firm, and create value beyond any single product or business. By targeting growth in Wealth, we are expanding our reach into one of the largest and fastest-growing pools of investor assets globally. We continue to see a compelling long-term opportunity as investor assets grow and distribution models evolve.

As advisors and investors increasingly seek integrated, technology-enabled solutions, we believe our combination of investment and software capabilities, wealth servicing expertise, and strategic partnerships positions us well to meet those needs. Beyond our strategic growth initiatives, we continue to make progress against our technology- and AI-enabled transformation agenda. Transformation is a strategic enabler of both growth and productivity.

Building on our ongoing transformation program, AI is helping us simplify processes, improve and accelerate execution and technology development, strengthen resilience, and allocate resources more effectively across the franchise. Over time, we expect these efforts to enhance the client experience, improve performance, reduce costs, and create additional capacity to invest in our most attractive growth opportunities. Ultimately, transformation is about building a simpler, faster, and more scalable State Street—one that is better positioned to deliver for clients, support our strategic priorities, and create long-term value for shareholders.

Turning to slide 3, and in closing, our third quarter results reflected the strength of our franchise, the benefits of our diversified business mix, and the consistency of our execution. We delivered strong financial performance, generated continued positive operating leverage, achieved records across multiple businesses, and made further progress against both our strategic growth initiatives and transformation agenda. Quarter after quarter, our results continue to validate that our strategy is working and delivering consistent, durable improvement in financial performance, excluding notable items.

The third quarter marked our 11th consecutive quarter of positive year-over-year operating leverage. Year to date, and excluding notable items, our pre-tax margin has expanded by 4 percentage points to 33%, and ROTCE achieved 24%, while earnings were up 39% compared to the prior-year period. Taken together, these results demonstrate the earnings power of our franchise, the value of our One State Street approach, and the momentum we are building across the company.

Underpinned by our key strategic pillars, we enter the final quarter of the year with strong momentum, a clear strategy, and confidence in our ability to deliver against our medium-term targets while continuing to create long-term value for shareholders. With that, I'll turn it over to John to walk through the quarter in more detail. John, Chief Financial Officer Thank you, Ron, and good morning, everyone. 69.

Revenue growth remained broad-based with continued strength across our core franchises, driving total revenue of $4 billion, up 13% year over year. Fee revenue increased 11% year over year, highlighted by record servicing and management fees supported by organic, ongoing organic growth and sustained momentum across markets, partially offset by lower other fee revenue. Other fee revenue was lower due to an approximately $30 million year-over-year impact primarily from market-related gains on strategic investments in the year-ago quarter. Excluding this impact, total fee revenue increased 12% year over year.

Net interest income increased 21% year over year, driven primarily by net interest margin expansion. 6 billion, reflecting higher revenue-related costs and continued investment in strategic growth initiatives. Taken together, we generated approximately 530 basis points of positive operating leverage in the quarter, marking our 11th consecutive quarter of positive operating leverage excluding notable items. Pre-tax margin expanded 350 basis points year over year to 35%, while ROTC increased more than 4 percentage points to 25%.

Turning to servicing fees on slide 5, client activity, flows, and net new business continued to support organic growth in the third quarter.