01—Abstract
Summary
Summary of the 10-Q filed July 30, 2026. Cited figures are marked; the original filing is the authoritative source.
State Street Corporation (STT) reported strong financial performance for the second quarter and first half of 2026, with total revenue increasing by 17%a year-over-year driven by robust growth in both fee revenue and net interest income.
Fee revenue was bolstered by higher management fees, servicing fees, and foreign exchange trading services, while net interest income benefited from an improved net interest margin. The company saw significant increases in net income, up 56%b for the quarter and 38% for the six months, leading to a substantial rise in earnings per share. Assets under custody/administration (AUC/A) and Assets Under Management (AUM) also showed healthy growth, indicating strong client engagement and positive market conditions.
Operationally, total expenses increased at a more moderate pace of 5%c for the quarter and 10% for the six months, which, combined with revenue growth, resulted in significantly improved profitability metrics, including pre-tax margin and return on equity. The company continued to return capital to shareholders through share repurchases and dividends, with a notable 11% increase in declared dividends per common share. Despite a slight decrease in capital ratios (CET1 and Tier 1 leverage) compared to year-end 2025, they remain well above regulatory minimums, demonstrating continued capital strength.
02—Key points
Key Highlights
- Total revenue increased 17% year-over-year for the second quarter of 2026, driven by strong performance in fee revenue and net interest income.
- Net income surged by 56% in the second quarter of 2026 compared to the prior year, with earnings per diluted share rising 68% to $3.65.
- Assets Under Custody/Administration (AUC/A) grew 18% to $57.86 trillion, and Assets Under Management (AUM) increased 23% to $6.28 trillion as of June 30, 2026.
- Total expenses increased by a manageable 5% in the second quarter, leading to significantly improved profitability metrics like pre-tax margin (34.3% vs. 25.8%) and return on equity (16.7% vs. 10.8%).
- The company returned $631 million to shareholders in Q2 2026 through share repurchases ($400 million) and dividends ($231 million), increasing the common stock dividend per share by 11%.
- While capital ratios slightly decreased from year-end 2025 (CET1 to 10.8%, Tier 1 leverage to 5.3%), they remain comfortably above regulatory requirements.
03—Questions
Frequently Asked Questions
What drove the significant increase in State Street's revenue?
State Street's total revenue increased by 17% in the second quarter of 2026 compared to the same period in 2025. This growth was primarily driven by a 17% increase in fee revenue, fueled by higher management fees, servicing fees, and foreign exchange trading services. Additionally, Net Interest Income (NII) grew by 18%, supported by a 17 basis point increase in the Net Interest Margin (NIM).
How did State Street manage its expenses in the quarter?
Total expenses increased by 5% in the second quarter of 2026, a slower pace than revenue growth. This increase was mainly due to higher revenue-related costs and strategic investments, partially offset by the absence of notable items from the prior year. The controlled expense growth contributed significantly to the improved profitability metrics.
What is the outlook for Assets Under Custody/Administration (AUC/A) and Assets Under Management (AUM)?
State Street reported strong growth in both AUC/A and AUM. AUC/A increased by 18% year-over-year to $57.86 trillion as of June 30, 2026, driven by higher market levels, client flows, and new business. AUM grew by 23% to $6.28 trillion, primarily due to increased market levels and net inflows. The company also has a substantial pipeline of investment servicing mandates yet to be installed, totaling approximately $2.93 trillion of AUC/A, with significant conversion expected over the next 24 months.
How is State Street returning capital to shareholders?
State Street returned $631 million to shareholders in the second quarter of 2026 through $400 million in common share repurchases and $231 million in common stock dividends. The declared common stock dividend per share increased by 11% to $0.84 compared to the same period in 2025. Furthermore, the company declared a third quarter dividend of $0.92 per share, a 10% increase from the prior quarter.
How did the company's capital ratios perform?
State Street's standardized CET1 capital ratio decreased to 10.8% as of June 30, 2026, from 11.6% at December 31, 2025. The Tier 1 leverage ratio also decreased to 5.3% from 5.5%. These decreases were primarily attributed to a normalization in risk-weighted assets and continued capital returns, partially offset by capital generated from earnings. The company noted that these ratios remain above regulatory minimums and reflect a strong capital position.
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