State Street Corporation (STT) delivered a robust Q2 2025, showcasing a well-balanced performance anchored by record assets, double-digit fee growth, and continued strategic progress. Earnings per share came in at $2.17 (GAAP), up 1% year-over-year, while adjusted EPS surged 18% to $2.53. Total revenue climbed to $3.45 billion, up 8%, or 9% excluding notable items, as strength in fee-based businesses helped offset a slight 1% decline in net interest income (NII).

Fee revenue reached $2.72 billion, up 11%, with notable contributions from investment servicing, investment management, and markets. Fee operating leverage was a standout at 526 basis points (ex-notables), marking the fourth consecutive quarter of positive fee leverage. GAAP pre-tax margin stood at 25.8%, rising to 30% on an adjusted basis, while ROTCE reached 17% (GAAP) and 19% (ex-notables), reflecting solid operational efficiency.

State Street’s asset metrics hit new highs, with Assets Under Custody/Administration (AUC/A) reaching a record $49.0 trillion, up 11%, and Assets Under Management (AUM) surging 17% to $5.1 trillion. These gains were underpinned by strong net inflows of $82 billion, including a record $68 billion from institutional clients. The ETF franchise also shone, reaching a record $1.7 trillion in AUM, leading the U.S. industry in equity and commodity trading volumes.

Investment servicing generated $145 million in new servicing fee wins and secured $1.1 trillion in new AUC/A mandates, of which $380 billion came via State Street Alpha. The Alpha platform continues to scale, with 2 new mandates and 3 clients going live, bringing the total to 28 live clients. The backlog of uninstalled servicing fees hit a record $444 million, tied to $4.0 trillion in future AUC/A, positioning the firm for future growth.

The Markets segment delivered strong results, with FX trading revenue up 28% to $431 million, driven by record client volumes and April volatility. Securities finance revenue grew 17% to $126 million, while prime services saw fee revenue increase 29%. In Software and Data, revenue rose 7% to $230 million, and ARR expanded 10% to $379 million, aided by growing adoption of front office solutions.

On the cost side, total expenses rose 11% YoY to $2.53 billion, or 6% ex-notables, largely due to performance-linked compensation, FX impacts, and ongoing tech investments. However, State Street delivered over $150 million in YoY productivity savings in Q2, contributing to $250 million year-to-date, well on track to meet its $500 million target for 2025. A $100 million repositioning charge related to a workforce reduction of approximately 900 employees is expected to yield incremental savings in 2026.

Capital return remained a priority, with $517 million returned to shareholders during the quarter—$300 million via share repurchases and $217 million in dividends. The firm also announced an 11% dividend increase to $0.84 per share for Q3 2025, pending board approval. The CET1 ratio stood at 10.7%, within its target range, and LCRs remained healthy at 107% for the corporation and 136% for the bank.

Looking ahead, management raised its full-year 2025 guidance for fee revenue growth to 5–7%, up from 3–5%, and modestly increased its expense outlook to 3–4%, citing higher revenue-related costs. NII is expected to be roughly flat vs. 2024, with sensitivity to rate moves and deposit mix. State Street reaffirmed expectations for positive total and fee operating leverage for the year and reiterated its ~80% capital return target, including progressive buybacks and a higher dividend.

CEO Ron O’Hanley emphasized the firm’s momentum despite market volatility, citing the strength of its diversified business model, consistent execution, and technology-led transformation. Strategic initiatives—including expansion of the Alpha platform, a new wealth-focused “super app” with the University of California, and advancements in tokenization—signal the company’s forward-looking posture in both institutional and retail finance.

In sum, Q2 2025 marked a compelling quarter for State Street, with record asset levels, strong fee growth, and a clear trajectory of operational and strategic progress—all while maintaining capital discipline and enhancing shareholder returns.