Company Reports

State Street provides a range of asset servicing and ancillary servicing, including maintaining custody of assets, fund administration, record-keeping, securities lending, foreign-exchange trading services, and data services to institutional asset owners and asset managers. Although State Street is a market leader, its asset manager and asset owner clients are sophisticated on the pricing of its custody and ancillary services. In addition, as asset managers consolidate and face industrywide fee pressure, they are increasingly seeking operating expense savings. State Street saw pricing compression of 4% in 2018 and 2019, though it did moderate to about a 2% headwind in 2020-23 and then it ticked up slightly to a 3% headwind in 2024. The rapid rise in interest rates during 2022 helped the custody banks expand their net interest income but the benefit has moderated due to deposit costs. While net interest income may only make up about 20%-25% of State Street's revenue, there is little incremental operating cost to this revenue and thus net interest income is an important profitability driver.

State Street reported a very strong second quarter, with 17% revenue growth and 44% adjusted earnings per share growth. State Street also introduced new medium-term (3-5 year horizon) targets.

State Street provides a range of asset servicing and ancillary servicing, including maintaining custody of assets, fund administration, record-keeping, securities lending, foreign-exchange trading services, and data services to institutional asset owners and asset managers. Although State Street is a market leader, its asset manager and asset owner clients are sophisticated on the pricing of its custody and ancillary services. In addition, as asset managers consolidate and face industrywide fee pressure, they are increasingly seeking operating expense savings. State Street saw pricing compression of 4% in 2018 and 2019, though it did moderate to about a 2% headwind in 2020-23 and then it ticked up slightly to a 3% headwind in 2024. The rapid rise in interest rates during 2022 helped the custody banks expand their net interest income but the benefit has moderated due to deposit costs. While net interest income may only make up about 20%-25% of State Street's revenue, there is little incremental operating cost to this revenue and thus net interest income is an important profitability driver.

BNY, Citi, and JPMorgan reported strong quarterly results in their securities services. Ahead of State Street’s second-quarter earnings release, we are adjusting our model for State Street.

The Federal Reserve released its annual stress test results on June 24. With stronger results than last year, albeit in a less severe scenario, shares of the 32 tested banks generally traded upward, though the movement was muted.

State Street provides a range of asset servicing and ancillary servicing, including maintaining custody of assets, fund administration, record-keeping, securities lending, foreign-exchange trading services, and data services to institutional asset owners and asset managers. Although State Street is a market leader, its asset manager and asset owner clients are sophisticated on the pricing of its custody and ancillary services. In addition, as asset managers consolidate and face industrywide fee pressure, they are increasingly seeking operating expense savings. State Street saw pricing compression of 4% in 2018 and 2019, though it did moderate to about a 2% headwind in 2020-23 and then it ticked up slightly to a 3% headwind in 2024. The rapid rise in interest rates during 2022 helped the custody banks expand their net interest income but the benefit has moderated due to deposit costs. While net interest income may only make up about 20%-25% of State Street's revenue, there is little incremental operating cost to this revenue and thus net interest income is an important profitability driver.

State Street reported 16% revenue growth in the first quarter of 2026, an acceleration from 7% growth in the fourth quarter of 2025, and 4% above the FactSet consensus estimate. Coupled with an increase in the firm’s 2026 outlook, shares were up 5% in April 17 intraday trading.

State Street reported fourth-quarter revenue growth of 7% with fees up 8%. The firm’s initial 2026 outlook calls for fee revenue growth of 4%-6% and low-single-digit net interest income growth. Shares were down 5% intraday Jan. 16.

State Street provides a range of asset servicing and ancillary servicing, including maintaining custody of assets, fund administration, record-keeping, securities lending, foreign-exchange trading services, and data services to institutional asset owners and asset managers. Although State Street is a market leader, its asset manager and asset owner clients are sophisticated on the pricing of its custody and ancillary services. In addition, as asset managers consolidate and face industrywide fee pressure, they are increasingly seeking operating expense savings. State Street saw pricing compression of 4% in 2018 and 2019, though it did moderate to about a 2% headwind in 2020-23 and then it ticked up slightly to a 3% headwind in 2024. The rapid rise in interest rates during 2022 helped the custody banks expand their net interest income but the benefit has moderated due to deposit costs. While net interest income may only make up about 20%-25% of State Street's revenue, there is little incremental operating cost to this revenue and thus net interest income is an important profitability driver.

The Federal Reserve released a new proposal for the bank stress-test framework and 2026 stress-test scenarios on Oct. 24.

Helped by rising markets, State Street reported year-over-year fee income growth of 8%. Net interest income declined 1% and the firm now expects State Street to be down slightly from 2023. Expenses were up 5% and State Street now expects 2025 adjusted expenses to be up 4.5%.

State Street provides a range of asset servicing and ancillary servicing, including maintaining custody of assets, fund administration, record-keeping, securities lending, foreign-exchange trading services, and data services to institutional asset owners and asset managers. Although State Street is a market leader, its asset manager and asset owner clients are sophisticated on the pricing of its custody and ancillary services. In addition, as asset managers consolidate and face industrywide fee pressure, they are increasingly seeking operating expense savings. State Street saw pricing compression of 4% in 2018 and 2019, though it did moderate to about a 2% headwind in 2020-23 and then it ticked up slightly to a 3% headwind in 2024. The rapid rise in interest rates during 2022 helped the custody banks expand their net interest income but the benefit has moderated due to deposit costs. While net interest income may only make up about 20%-25% of State Street's revenue, there is little incremental operating cost to this revenue and thus net interest income is an important profitability driver.

State Street provides a range of asset servicing and ancillary servicing, including maintaining custody of assets, fund administration, record-keeping, securities lending, foreign-exchange trading services, and data services to institutional asset owners and asset managers. Although State Street is a market leader, its asset manager and asset owner clients are sophisticated on the pricing of its custody and ancillary services. In addition, as asset managers consolidate and face industrywide fee pressure, they are increasingly seeking operating expense savings. State Street saw pricing compression of 4% in 2018 and 2019, though it did moderate to about a 2% headwind in 2020-23 and then it ticked up slightly to a 3% headwind in 2024. The rapid rise in interest rates during 2022 helped the custody banks expand their net interest income but the benefit has moderated due to deposit costs. While net interest income may only make up about 20%-25% of State Street's revenue, there is little incremental operating cost to this revenue and thus net interest income is an important profitability driver.

State Street’s second-quarter revenue grew 8% to $3.45 billion, driven by fee revenue growth of 11% year over year as net interest income declined 1%. The firm took a $100 million restructuring charge, leading to 11% expense growth. Excluding notable items, expenses were up 6% year over year.

The Federal Reserve released its annual stress test results on Friday, June 27. With significantly stronger results compared with a year ago, the shares of the 22 tested institutions traded slightly higher in after hours trading.

The Federal Reserve, with the support of the Office of the Comptroller of the Currency and the Federal Deposit Insurance, released draft changes to the enhanced supplemental leverage ratio today. The Morningstar US Banks Index rose by 0.6% on the news, while the broader market was flat.

With total revenue up 5%, State Street reported a first quarter that was mostly in line with market expectations. The firm maintained its 2025 revenue and expense outlook despite a more uncertain macroeconomic environment, which sent the company's shares higher.

State Street provides a range of asset servicing and ancillary servicing, including maintaining custody of assets, fund administration, record-keeping, securities lending, foreign-exchange trading services, and data services to institutional asset owners and asset managers. Although State Street is a market leader, its asset manager and asset owner clients are sophisticated on the pricing of its custody and ancillary services. In addition, as asset managers consolidate and face industrywide fee pressure, they are increasingly seeking operating expense savings. State Street saw pricing compression of 4% in 2018 and 2019, though it did moderate to about a 2% headwind in 2020-23 and then it ticked up slightly to a 3% headwin in 2024. The rapid rise in interest rates during 2022 helped the custody banks expand their net interest income but the benefit has moderated due to deposit costs. While net interest income may only make up about 20%-25% of State Street's revenue, there is little incremental operating cost to this revenue and thus net interest income is an important profitability driver.

State Street reported a decent finish to 2024. However, the stock had a strong run during the last six months of the year, and we believe investor expectations may have been elevated as a result. Relative to our model, the firm's fee revenue outlook for 2025 came in more favorably than our expectations, while the company's net interest income outlook was a bit soft. As we incorporate these results, we expect to maintain our wide moat rating and $84 per share fair value estimate. We regard shares as modestly overvalued right now.

We are maintaining our wide moat rating and $84 fair value estimate on State Street. As we calibrate our uncertainty ratings across our coverage universe, we are decreasing our Morningstar Uncertainty Rating to Medium from High. State Street’s asset-based revenue is sensitive to market movements, and net interest income can be difficult to value. That said, State Street has consistently generated high returns on tangible equity in a variety of operating environments, and we believe a Medium rating is more appropriate.