State Street Q4 Earnings Call Highlights

Core Insights - State Street reported a strong performance in 2025, with record total revenue of approximately $14 billion, up more than 7% year over year, and record fee revenue of $11 billion, up 9% [2] - The company achieved record assets under custody and/or administration (AUCA) of $53.8 trillion, reflecting a 16% year-over-year increase [1] - The firm emphasized growth in private markets, with servicing fees growing at a double-digit pace, specifically 12% for the year, now representing about 10% of servicing fees [5] Financial Performance - Fourth quarter servicing fees increased by 8% year over year, driven by higher market levels and net new business [1] - Notable items in the fourth quarter totaled $206 million pre-tax, impacting earnings per share (EPS) by $0.55 after tax [2] - Full-year EPS was reported at $10.30, a 19% increase year over year, with a return on tangible common equity (ROTCE) of 20% [3] Revenue and Expenses - Management fees in investment management rose 15% year over year to a record $662 million in the fourth quarter, attributed to higher market levels and net inflows of $85 billion [6] - Total expenses for the year were $9.8 billion, up 5%, primarily due to strategic investments and technology transformation [2] - Fourth quarter net interest income (NII) was $802 million, up 7% year over year, with net interest margin (NIM) expanding to 1.10% [9] Capital Return and Balance Sheet - The company returned $635 million to common shareholders in the fourth quarter, including $400 million in share repurchases and $235 million in dividends, resulting in a payout ratio of over 90% [11] - The standardized CET1 ratio was reported at 11.7%, an increase of about 40 basis points from the prior quarter [12] 2026 Outlook - For 2026, fee revenue is expected to rise by 4% to 6%, driven by servicing and management fees [16] - NII is projected to increase in low single digits, with an improvement in NIM relative to 2025 [16] - Operating leverage is anticipated to be positive, exceeding 100 basis points, implying a pre-tax margin of roughly 30% [16]