STATE STREET CORPORATION QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2025
State Street Corporation reported its quarterly financial results for the period ended March 31, 2025. The company’s net income was $1.23 billion, a 4% increase from the same period last year. Revenue rose 3% to $3.45 billion, driven by growth in investment servicing fees and asset management fees. The company’s operating expenses increased 5% to $2.23 billion, primarily due to higher compensation and benefits expenses. State Street’s return on equity (ROE) was 10.4%, and its return on assets (ROA) was 0.83%. The company’s assets under management (AUM) increased 2% to $3.53 trillion, and its cash and cash equivalents stood at $14.4 billion. State Street’s financial position remains strong, with a debt-to-equity ratio of 0.35 and a liquidity ratio of 1.23.
Overview of Financial Results
State Street Corporation reported strong financial results in the first quarter of 2025. Earnings per share (EPS) increased 49% compared to the same period in 2024, driven by higher total revenue and lower total expenses. Total revenue grew 5%, primarily due to a 6% increase in fee revenue. Total expenses decreased 3%, as savings and the absence of a prior-year notable item offset higher business investments.
The company’s pre-tax margin increased to 25.0% and return on equity rose to 10.6%, reflecting the higher revenue and lower expenses. State Street returned $320 million to shareholders through common share repurchases and dividends in the quarter.
Revenue
Total fee revenue, which makes up the majority of State Street’s revenue, increased 6% year-over-year. This was driven by higher management fees, servicing fees, foreign exchange trading services revenue, and software and processing fees.
Servicing fees, which account for about half of total fee revenue, grew 4% as higher market levels, new business, and client activity offset normal pricing pressure. Management fees increased 10%, reflecting higher market levels and net inflows. Foreign exchange trading services revenue rose 9% due to higher client volumes.
Net interest income was flat compared to the prior year, as higher investment yields and loan growth were offset by lower short-term rates and a shift in deposit mix.
Expenses
Total expenses decreased 3% year-over-year. This was primarily due to the absence of a $130 million FDIC special assessment recorded in the prior-year quarter, which was related to the 2023 bank failures. Excluding this prior-year item, expenses increased as higher business investments were partially offset by productivity savings.
Compensation and benefits expenses rose 1%, driven by higher performance-based pay and salaries, partially offset by savings from the company’s operating model transformation. Information systems and communications costs increased 15% due to higher technology and infrastructure spending.
Asset Quality and Provision for Credit Losses
State Street recorded a $12 million provision for credit losses in the first quarter, down from $27 million in the prior-year period. The decrease was primarily due to an increase in loan loss reserves associated with certain commercial real estate loans.
The company’s allowance for credit losses represented 0.4% of total loans as of March 31, 2025, unchanged from the prior year-end. Allowance estimates may change in the future based on economic conditions and credit migration within the loan portfolio.
Assets Under Custody/Administration and Assets Under Management
Assets under custody and/or administration (AUC/A) grew 6% year-over-year to $46.73 trillion, driven by higher market levels and net new business. Assets under management (AUM) increased 9% to $4.67 trillion, also reflecting market appreciation and net inflows.
The company announced $182 billion of new AUC/A mandates in the first quarter, with $3.06 trillion of assets remaining to be installed in future periods.
Capital Management
State Street returned $320 million to shareholders in the first quarter through common share repurchases and dividends. The company increased its quarterly common stock dividend by 10% to $0.76 per share.
The company’s standardized Common Equity Tier 1 (CET1) capital ratio increased to 11.0% as of March 31, 2025, up from 10.9% at the end of 2024. The Tier 1 leverage ratio rose to 5.5% from 5.2%, driven by higher capital levels partially offset by balance sheet growth.
State Street issued $1.35 billion of 4.536% fixed-rate senior notes due 2028, $650 million of 4.729% fixed-rate senior notes due 2030, and $750 million of fixed-to-floating rate senior notes due 2036 during the quarter. The company also redeemed several tranches of outstanding senior notes.
Analysis and Outlook
State Street delivered strong financial performance in the first quarter, with robust revenue growth, expense discipline, and capital return to shareholders. The company’s diversified business model, with a mix of fee-based and net interest income, has proven resilient in the current environment.
The increase in EPS was particularly notable, driven by the absence of the prior-year FDIC special assessment charge. Excluding this one-time item, the underlying earnings growth was still solid, reflecting the company’s ability to generate higher revenues while managing expenses.
State Street’s fee revenue growth was broad-based, with increases across servicing, management, foreign exchange, and software/processing fees. This demonstrates the company’s success in expanding its product offerings and client relationships. The flat net interest income performance was reasonable given the interest rate and deposit mix headwinds.
On the expense side, State Street has maintained discipline, with savings offsetting higher business investments. The operating leverage of 7.2% points indicates the company’s ability to grow revenues faster than expenses. Fee operating leverage of 8.6% points was also strong.
The company’s asset quality metrics remain healthy, with the allowance for credit losses stable as a percentage of loans. While the provision increased modestly due to commercial real estate exposures, State Street appears to be proactively managing its loan portfolio risks.
State Street’s capital ratios continue to be well above regulatory minimums, providing ample cushion to support business growth and shareholder returns. The recent debt issuances and redemptions further optimize the company’s funding profile.
Looking ahead, State Street faces a number of strategic, financial market, compliance, and operational risks that could impact its performance. These include intense competition, pricing pressure, integration of new products and services, talent acquisition challenges, and various market and economic uncertainties.
However, the company’s diversified business model, strong risk management practices, and focus on efficiency and innovation position it well to navigate these challenges. State Street’s solid first-quarter results demonstrate its ability to deliver consistent financial performance and shareholder value, even in a complex operating environment.
