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 growth across multiple business lines:

• Servicing fees grew 4% due to higher market levels, new business, and client activity, partially offset by pricing pressure.
• Management fees increased 10% on higher market levels and net inflows.
• Foreign exchange trading services revenue rose 9% from higher client volumes.
• Securities finance revenue was up 19% due to increased client lending balances.
• Software and processing fees climbed 9%, led by growth in front office software and data.

Net interest income was flat as higher investment yields and loan growth were offset by lower short-term rates and a deposit mix shift.

Expenses

Total expenses declined 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 partially offset by higher business investments.

Compensation and benefits expenses increased 1%, while information systems and communications costs rose 15% to support technology and infrastructure investments. Transaction processing services expenses were up 4% due to higher market data and sub-custody costs.

Provision for Credit Losses

The provision for credit losses decreased to $12 million in the quarter, down from $27 million in the same period of 2024. This reflected an increase in loan loss reserves associated with certain commercial real estate loans.

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 due to market appreciation and net inflows.

Capital

State Street returned $320 million to shareholders in the quarter through common share repurchases and dividends. The common stock dividend was raised 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%, mainly driven by higher capital levels.

Analysis

State Street delivered an impressive financial performance in the first quarter, demonstrating the strength of its diversified business model. The company was able to grow revenue across multiple fee-based lines of business, while also managing expenses effectively.

The 49% increase in EPS was particularly noteworthy, driven by the combination of higher revenue and lower expenses. The absence of the prior-year FDIC special assessment was a significant factor, but State Street also achieved positive operating leverage of 7.2 percentage points, reflecting its focus on productivity and efficiency.

The growth in AUC/A and AUM indicates that State Street continues to win new business and benefit from favorable market conditions. This provides a strong foundation for future revenue growth, particularly in the higher-margin asset management business.

State Street’s capital position also remains robust, with the CET1 ratio and Tier 1 leverage ratio both well above regulatory minimums. This gives the company flexibility to continue returning capital to shareholders through dividends and share repurchases, while also investing in growth initiatives.

The company’s liquidity profile is also sound, with strong levels of high-quality liquid assets and stable funding sources. This positions State Street well to navigate any potential market disruptions or regulatory changes.

Overall, State Street’s first-quarter results demonstrate the company’s ability to execute on its strategic priorities and deliver value to shareholders. The diversified business model, disciplined expense management, and strong capital and liquidity provide a solid foundation for continued success.