Oct 14, 2026 earnings call — Record fees and NII drive strong quarter
State Street reported EPS of $3.69, up 33% year-over-year, driven by fee revenue, NII and total revenue strength.
Revenue $4.0B (est $4.0B) · EPS $3.69 (est $3.68)
Key quotes
"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."
"I'm 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."
"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."
Analyst Q&A 11
Q4 NII outlook and RIA custody
Q (Glenn Schorr · Evercore): Analyst asked if the fourth-quarter NII should have been higher given asset sensitivity and balance-sheet growth. He also asked why the firm re-entered RIA custody and whether capital use (payout) supports services like Prime and tax-aware strategies.
A: Management said NII trends have been strong this year and they expect NII to grow sequentially again in Q4, likely toward the upper end of the guided range. They explained the RIA custody move is strategic—driven by client demand for customized wealth services and connectivity with Charles River—and that capital will be balanced between buybacks and investing to support clients.
"And I'd say that our view is that we would expect that again in the fourth quarter." — John Woods (CFO)
Organic servicing growth and sales pace
Q (Alexander Blostein · Goldman Sachs): Analyst asked why year-to-date gross new servicing wins are below prior targets and whether this is timing or a permanent change. He also asked for a refresher on how management sees organic (ex-market) servicing revenue growth.
A: Management said sales are lumpy and some deals may slip into Q1, but they feel good about current sales momentum and retention and pricing remain strong. They expect another year with sales north of $300 million, driving mid-single-digit organic servicing-fee growth over the medium term.
"So we're expecting the fourth year in a row of sales over $300 million." — John Woods (CFO)
Rate hikes, asset repricing, deposits
Q (Ebrahim Poonawala · BofA): Analyst wanted to know how further rate hikes would mechanically help NII via asset repricing and what to expect for deposit growth and mix. He also asked whether digital assets/tokenization revenue would offset any loss from traditional servicing.
A: Management said the firm is modestly asset-sensitive and rate hikes are a tailwind; reinvestment of the securities portfolio has already driven about one-third of NIM improvement and should continue to help NII over the medium term. On digital assets, they expect traditional and digital finance to coexist and do not see a medium-term revenue loss as their infrastructure enables on- and off-ramps.
"we've been endeavoring to stabilize our net interest margin range in that 1.10% to 1.15% area" — John Woods (CFO)
FX drop and servicing win targets
Q (Michael Mayo · Wells Fargo): Analyst asked why FX revenue was down 14% QoQ and whether it will rebound. He also asked what servicing win target is for 2026 given solid organic fee growth.
A: Management said the FX decline mostly reflects normalization after record volatility in APAC in Q2 and they expect growth into Q4; they urged focusing on volume trends. They said they expect a strong Q4 with north of $100 million in sales, which would make 2026 the fourth consecutive year north of $300 million, and servicing fees remain healthy.
"Secondly, adding on to John's point there, this was mostly in the APAC region where parts of APAC saw record high volatility in the second quarter, and that came back." — Ronald O’Hanley (CEO)
Deposit outlook and swap hedge impact
Q (Kenneth Usdin · Autonomous): Analyst asked whether average deposits will reach prior guidance near $270 billion and for the sequential benefit from terminated swap hedges to estimate Q4 NII exit.
A: Management said they expect Q4 average deposits around $275 billion to $280 billion, which would put the annual average very close to prior guidance. They said terminated hedges were worth about 5 basis points year-over-year and may contribute about 1 basis point moving into Q4.
"I think the outlook for the fourth quarter is maybe in that $275 billion to $280 billion range." — John Woods (CFO)
Buybacks and medium-term margin targets
Q (David Smith · Truist): Analyst asked whether the firm needs roughly $650 million of Q4 buybacks to reach its payout target and whether any headwinds could prevent reaching medium-term ROTCE and pretax-margin goals.
A: Management said Q3 buybacks were $400 million and Q4 buybacks to approach an 80% payout are likely closer to $700 million, plus or minus. They noted recent quarters put them near their medium-term targets and they see the drivers—NII growth, organic fees, and transformation/productivity—on track to support margins and ROTCE.
"Our updated and improved guide this quarter based on all of the trends would imply something closer to 33% margin for the year." — John Woods (CFO)
Noninterest-bearing deposit mix and liquidity rule
Q (Manan Gosalia · Morgan Stanley): Analyst asked why average noninterest-bearing (NIB) deposits fell this quarter and how NIB growth might behave as rates rise. He also asked whether upcoming liquidity-rule proposals would change balance-sheet mix.
A: Management said quarter-to-quarter NIB levels can move, and after an earlier surge they are down slightly but remain around the 10% range; client mix and asset-manager client growth should keep that mix constructive. On the liquidity-rule proposal, they are monitoring it but do not expect it to materially change how they manage the balance sheet given an already liquid position.
"So from a percentage standpoint, maybe coming off a little stronger earlier part of the year where we had some surge in the noninterest-bearing deposit levels, so down slightly but still in the 10% range." — John Woods (CFO)
Loan growth slowdown and outlook
Q (Brennan Hawken · BMO): Analyst asked why average loan growth slowed and end-of-period loans were down sequentially, and how to think about loan growth going forward.
A: Management said they are optimizing the loan book; some non-core loan categories have been running off, which flattened balances. They see healthy growth opportunities in subscription finance, AAA CLOs, and fund finance tied to custody relationships, and expect loan runoff to slow and growth to return into next year.
"We did have some categories of loans that were not quite as deep from a relationship perspective that have been in runoff throughout the year." — John Woods (CFO)
Noninterest income quarter and momentum
Q (Robert Scott Siefers · TD Cowen): Analyst asked how third-quarter broad fee income compared to expectations and whether the fee shortfall changes the full-year outlook, given management's prior update.
A: Management reaffirmed the full-year fee-growth outlook of about 13% to 14% and said a late-September mark-to-market adjustment hit the "other fee" line unexpectedly in the quarter. They said core fees—servicing, management fees and markets-related fees—were strong in Q3 and expected to grow into Q4.
"we did give an update earlier back in September that fees would come in for the year at around 13% to 14%." — John Woods (CFO)
NIM pickup from securities and deposit drivers
Q (Gerard Cassidy · RBC): Analyst asked how much NIM pickup this year came from reinvesting maturing securities and whether further Fed hikes would add pickup next year. He also asked how much deposit growth is from new business vs. markets.
A: Management said reinvestment of the investment securities portfolio contributed about 5 basis points of the 16 basis point NIM increase year-over-year and will remain a medium-term tailwind. They explained asset-sensitivity effects vary by currency (e.g., euro exposure gives about 1 basis point of NIM per 25 basis points), and deposit growth largely follows custody/new business wins plus market effects.
"about 5 basis points of that is from the turnover of the investment securities portfolio." — John Woods (CFO)
Expense drivers: revenue-related vs investments
Q (Benjamin Gerlinger · Citi): Analyst asked if the higher expenses are almost entirely revenue-related (higher compensation) or if the firm pulled forward 2027 investments into Q4.
A: Management said third-quarter expenses rose 8% year-over-year, with 5 percentage points driven by revenue-related costs and the remaining increase reflecting run-and-grow investments of roughly 3% to 4%. They said transformation and productivity should allow continued strategic investment while maintaining pretax margin trajectory.
"as we mentioned, 8% growth, 5 percentage points of that is revenue-related." — John Woods (CFO)