State Street (NYSE:STT) reported third-quarter 2026 earnings per share of $3.69, up 33% from a year earlier, as growth in servicing, investment management, markets and net interest income lifted total revenue 13% to $4 billion.
Chief Executive Officer Ron O’Hanley said the company’s results reflected continued momentum across its integrated investment services, investment management and markets businesses. Excluding notable items, the quarter marked State Street’s 11th consecutive period of positive year-over-year operating leverage.
Fee Revenue, Assets Reach Records
Chief Financial Officer John Woods said fee revenue increased 11% year over year, or 12% excluding an approximately $30 million year-over-year impact largely tied to market-related gains on strategic investments recorded in the prior-year quarter. Net interest income rose 21% to $864 million, supported by net interest margin expansion and higher average interest-earning assets.
Servicing fees rose 10% to about $1.5 billion, driven by approximately 7% organic growth and higher average market levels. Assets under custody and/or administration ended the quarter at a record $59.2 trillion, up 15% from a year earlier, reflecting market appreciation, net new business and client flows.
Servicing fee sales totaled $68 million during the quarter, with most wins coming from traditional back-office servicing mandates. Alternatives contributed to sales activity, while wealth services showed early traction, Woods said.
In investment management, management fees climbed 20% to $797 million, benefiting from approximately 8% organic growth and higher average market levels. Assets under management reached a record $6.3 trillion, up 16% year over year, while the company posted its sixth consecutive quarter of positive organic AUM growth.
- Total net inflows were $7 billion in the third quarter.
- Long-term asset gathering generated $69 billion of net inflows, following $79 billion in the previous quarter.
- ETF assets under management reached a record $2.3 trillion.
- State Street Investment Management introduced 38 products and client solutions, including 13 ETFs.
Among the new offerings, State Street partnered with UC Investments to launch an Endowment Strategy ETF with a $2.5 billion seed investment. Woods described it as the largest U.S.-listed ETF launch on record.
Markets, Software and Interest Income Growth
State Street’s markets business also posted higher revenue. FX trading services revenue increased 17% to $427 million, while client volumes rose more than 30% year over year to a quarterly record. The company cited activity in Europe, the Middle East and Africa, as well as Asia-Pacific, although Woods said foreign-exchange activity moderated sequentially after a particularly strong second quarter.
Securities finance revenue increased 9% to $151 million, supported by higher assets on loan in agency lending and continued client balance growth in prime services.
Software services revenue rose 5% to $175 million. Software and data revenue increased 10%, while annual recurring revenue rose 8% to $442 million. New software bookings were $14 million, coming from both new clients and expanded existing relationships.
Net interest margin increased 16 basis points from a year earlier to 112 basis points. Woods attributed the improvement to a more favorable funding mix, investment portfolio repricing and the runoff of terminated hedges. Average interest-earning assets rose 3% to $305 billion as deposit growth was partly offset by lower short-term borrowings.
During the question-and-answer session, Woods said the company expects net interest income to rise sequentially again in the fourth quarter and indicated that results would likely fall toward the upper end of State Street’s updated full-year outlook. He said investment portfolio turnover should remain a medium-term contributor to margin expansion.
Investment, Expansion and Capital Returns
Third-quarter expenses increased 8% to $2.6 billion. About five percentage points of the increase stemmed from revenue- and performance-related costs, according to Woods, while the remaining growth primarily reflected regional expansion and investment in strategic initiatives. Productivity savings largely offset underlying operating-cost growth.
State Street announced an initial agreement during the quarter to acquire Santander CACEIS’ Latin American Securities Services business. The transaction, expected to close in 2027 subject to approvals and conditions, would expand the company’s asset-servicing presence in Brazil, Mexico and Colombia.
The company also highlighted its strategic efforts in alternatives, digital assets and wealth services. Alternative servicing fees grew at a double-digit year-over-year rate. O’Hanley cited State Street’s work with Apollo on daily pricing for private-credit strategies as an example of efforts to improve private-market infrastructure and transparency.
In digital assets, State Street remains on track to deliver a tokenized fund-servicing capability by year-end, subject to regulatory approval. Its investment-management business is expected to be an early platform adopter. The company also said its State Street Galaxy on-chain liquidity sweep fund became available on the Stellar network during the quarter.
State Street’s wealth-services initiative, developed in partnership with Apex Fintech Solutions, secured a servicing mandate from one of the largest registered investment advisers in the U.S. O’Hanley said the client already used Charles River’s wealth platform, illustrating the company’s aim to cross-sell capabilities across its businesses.
State Street returned $651 million to shareholders in the third quarter, including $400 million in share repurchases and $251 million in declared common dividends. Its standardized CET1 ratio was 11%, while its Tier 1 leverage ratio was 5.5%.
Updated 2026 Outlook
For the full year, excluding notable items, State Street raised its fee revenue growth outlook to 13% to 14%, from 12% to 13% previously. It now expects net interest income growth of 15% to 16%, compared with prior guidance of 14% to 15%.
The company expects expenses to rise approximately 8% to 8.5% for the year and anticipates more than 500 basis points of positive operating leverage. State Street also forecast an effective tax rate of about 22% and a total payout ratio approaching 80%, subject to market conditions and other factors.
About State Street (NYSE:STT)
State Street Corporation (NYSE: STT) is a financial services company that provides institutional investors, asset managers, asset owners, insurance companies, official institutions and other organizations with investment servicing, investment management and related financial services. Its offerings include custody and fund administration, accounting, transfer agency, collateral management, securities lending, foreign exchange, trading and other capital markets services.
Through State Street Investment Management, the company manages investment strategies and offers products such as exchange-traded funds, index strategies, active strategies and other portfolio solutions.
