Financial Data and Key Metrics Changes - Full year fee and total revenue increased by 79% from 2023, with notable items excluded, fee revenue, net interest income, and total revenue each increased by 6% year over year in 2024 [13][14] - Earnings per share (EPS) was $8.21 compared to $5.58 in 2023, with a year-over-year EPS growth of 13% excluding notable items [14] - Pre-tax margin expanded by more than 100 basis points, and return on average tangible common equity was 19% [14] Business Line Data and Key Metrics Changes - Investment Services generated strong assets under custody and administration (AUCA) wins of over $2.3 trillion in 2024, with significant year-over-year increases in new servicing fee revenue wins [14][15] - State Street Alpha solution accounted for approximately 50% of the new AUCA wins, with seven new Alpha mandates achieved [15] - Investment Management franchise achieved record levels of management fees, generating $146 billion of net new assets in 2024 [17] Market Data and Key Metrics Changes - Despite lower average FX volatility in 2024, FX trading services generated double-digit revenue growth supported by strong client volumes [18] - The cash business generated $32 billion of inflows, while the institutional business also had positive inflows driven by U.S. defined contributions [17] Company Strategy and Development Direction - The company focused on driving revenue growth, improving sales performance, and enhancing its operating model, which led to strong financial performance and business momentum [12] - Strategic investments in capabilities and client value proposition have positioned the company to compete better and win [12][22] - The company aims to return about 80% of earnings to shareholders in 2025, subject to market conditions [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the rapidly evolving operating environment and emphasized the importance of creating better outcomes for investors [11] - The company expressed strong conviction in its strategy and ability to serve clients well, despite current operating environment challenges [22] Other Important Information - The State Street Foundation invested nearly $22 million in 2024, focusing on education and workforce readiness initiatives [20] - The company announced the appointment of John F. Woods as the new Chief Financial Officer, expected to join in late August [21] Q&A Session Summary Question: Experience in the level of trust between first line managers and their teams - The board regularly reviews employee engagement scores, which include trust metrics, and has seen year-on-year improvement in these scores [48][50] Question: Why has State Street rebranded its ESG committee instead of eliminating it? - The company clarified that it does not have an ESG committee at either the board or management level, focusing instead on attracting and retaining talent through various management committees [53]

Financial Performance - Total revenue for Q1 2025 was $3,284 million, a 5% increase compared to $3,138 million in Q1 2024[39]. - Total fee revenue increased by 6% to $2,570 million in Q1 2025, driven by higher management fees and servicing fees[49]. - Net income available to common shareholders rose 43% to $597 million in Q1 2025, compared to $418 million in Q1 2024[39]. - Earnings per share (EPS) increased by 49% to $2.04 in Q1 2025, primarily due to higher total revenue and lower total expenses[41]. - Total expenses decreased by 3% to $2,450 million in Q1 2025, reflecting the absence of a prior-year notable item[39]. - Return on average common equity improved to 10.6% in Q1 2025, up from 7.7% in Q1 2024[41]. Assets and Management - As of March 31, 2025, State Street Corporation reported total assets of $372.69 billion and total deposits of $272.06 billion[12]. - The company manages $46.73 trillion in assets under custody/administration (AUC/A) and $4.67 trillion in assets under management (AUM) as of March 31, 2025[11]. - Total assets under custody and/or administration (AUC/A) reached $46.733 trillion as of March 31, 2025, up from $46.557 trillion as of December 31, 2024[73]. - Assets under management (AUM) increased by 9% to $4.67 trillion as of March 31, 2025[49]. - Total fixed-income AUM increased to $633 billion as of March 31, 2025, from $616 billion as of December 31, 2024[82]. Revenue Sources - Servicing fee revenue increased by 4% in Q1 2025 compared to Q1 2024, driven by higher average market levels and client activity, with approximately 47% of total servicing fees generated outside the United States[55]. - Management fee revenue increased by 10% in Q1 2025 compared to Q1 2024, primarily due to higher average market levels and net inflows from prior periods[76]. - Foreign exchange trading services revenue increased by 9% in Q1 2025 compared to Q1 2024, driven by higher client volumes[89]. - Securities finance revenue rose by 19% in Q1 2025 compared to Q1 2024, mainly due to higher client lending balances[93]. - Software and processing fees revenue increased by 9% in Q1 2025 compared to Q1 2024, primarily due to higher front office software and data revenue[96]. Capital and Liquidity - The CET1 capital ratio rose to 11.0% as of March 31, 2025, from 10.9% as of December 31, 2024, while the Tier 1 leverage ratio increased to 5.5% from 5.2%[56]. - The company expects its CET1 capital ratio and Tier 1 leverage ratio to remain within target ranges of 10-11% and 5.25-5.75%, respectively[56]. - The average daily Liquidity Coverage Ratio (LCR) for the Parent Company was 106% for the quarter ended March 31, 2025, compared to 107% for the quarter ended December 31, 2024[194]. - The average High-Quality Liquid Assets (HQLA) for the Parent Company was $148.04 billion for the quarter ended March 31, 2025, up from $142.34 billion for the quarter ended December 31, 2024[195]. - The company maintained an NSFR above the 100% minimum requirement as of March 31, 2025[196]. Employee and Operational Metrics - Consolidated total shareholders' equity stood at $26.69 billion, with approximately 53,000 employees[12]. - The number of employees increased by 15% to 52,711 as of March 31, 2025, compared to 45,871 in the same period of 2024[130]. - Compensation and employee benefits increased by 1% to $1,262 million in Q1 2025, primarily due to higher performance-based incentives[129]. - Information systems and communications expenses rose by 15% to $497 million in Q1 2025, driven by higher technology investments[131]. Risk and Competition - The company faces intense competition, which could negatively impact profitability and lead to significant pricing pressure[29]. - The company is subject to various risks, including financial market risks, operational risks, and compliance and regulatory risks[30][31]. - Management's expectations regarding business growth and financial condition are influenced by geopolitical and economic factors[26]. Credit Quality and Provisions - The provision for credit losses was $12 million in Q1 2025, down from $27 million in Q1 2024, indicating improved credit quality[45]. - Provision for credit losses decreased by 56% to $12 million in Q1 2025 from $27 million in Q1 2024[141]. - The allowance for credit losses increased to $186 million as of March 31, 2025, compared to $146 million as of March 31, 2024, reflecting a year-over-year increase of 27.4%[178]. - The charge-offs for the first quarter of 2025 were $9 million, primarily related to leveraged loans[179]. Investment Portfolio - As of March 31, 2025, the total carrying value of available-for-sale securities increased to $67.444 billion from $58.895 billion as of December 31, 2024, representing a growth of approximately 14.5%[153]. - The total carrying value of held-to-maturity securities decreased to $45.505 billion as of March 31, 2025, down from $47.727 billion as of December 31, 2024, reflecting a decline of about 4.6%[153]. - Approximately 97% of the carrying value of the investment securities portfolio was rated "AA" or higher as of both March 31, 2025, and December 31, 2024[156]. - The investment portfolio's asset class composition as of March 31, 2025, included 34% U.S. Agency Mortgage-backed securities and 28% U.S. Treasuries[157].

1 NYSE: STT April 17, 2025 All comparisons are to corresponding prior year period unless otherwise noted | Investment Servicing | | | | | | --- | --- | --- | --- | --- | | and AUC/A yet to be installed of $3.1T1 | • | AUC/A of $46.7T at quarter-end; AUC/A wins of $182B | | | | primarily related to back office wins2 | • | New servicing fee revenue wins of | $55M | new State Street Alpha® mandate1 | | • | Reported 1 | Business | | | | • | Prior investments provide ability to proactively address client needs w ...

Core Viewpoint - State Street's first-quarter 2025 earnings exceeded expectations, driven by growth in fee revenues and lower provisions, despite challenges from higher adjusted expenses and lower net interest income [1][2][4]. Financial Performance - Earnings per share were $2.04, surpassing the Zacks Consensus Estimate of $1.98, and increased by 20.7% year over year [1] - Net income available to common shareholders was $644 million, up 39.1% from the previous year, exceeding projections of $569.9 million [3] - Total revenues reached $3.28 billion, a 4.7% increase year over year, but fell short of the Zacks Consensus Estimate of $3.30 billion [4] - Net interest income (NII) was $714 million, a slight decline year over year, attributed to lower average short-end rates and a shift in deposit mix [4] - The net interest margin (NIM) contracted by 13 basis points to 1%, below the expected 1.09% [5] Revenue Breakdown - Total fee revenues increased by 6.1% year over year to $2.66 billion, driven by growth in nearly all components except other fee revenue [5] - Non-interest expenses were $2.45 billion, down 2.5% from the prior year, primarily due to the absence of notable items from the previous year [6] - Provision for credit losses was $12 million, down 55.6%, significantly lower than the projected $27.1 million [6] Asset Management - As of March 31, 2025, total assets under custody and administration (AUC/A) were $46.73 trillion, up 6.4% year over year, although slightly below the projected $46.86 trillion [8] - Assets under management (AUM) reached $4.67 trillion, an 8.5% increase year over year, driven by higher market levels and net inflows, but also below the estimate of $4.82 trillion [8] Shareholder Actions - In the reported quarter, State Street repurchased shares worth $100 million [9] Strategic Outlook - The company is expected to benefit from relatively higher interest rates, strategic buyouts, and rising AUM, although concerns remain regarding rising expenses and concentrated fee-based revenues [10]

Financial Data and Key Metrics Changes - In Q1 2025, fee revenue increased by 6% year over year, while total revenue rose by 5% [11] - The pre-tax margin reached 30% excluding seasonal expenses, with EPS at $2.04 compared to $1.37 in Q1 last year, marking a 21% growth year over year [12][27] - Year over year, expenses increased by just 3%, contributing to strong fee and total operating leverage [21][42] Business Line Data and Key Metrics Changes - New asset servicing AUCA wins totaled $182 billion in Q1, with new servicing fee revenue wins of $55 million [12][31] - Management fees increased by 10% year over year, despite net outflows driven by an anticipated client transition [15][34] - FX trading revenue grew by 9% year over year, while securities finance revenues increased by 19% [37] Market Data and Key Metrics Changes - Period end AUCA and AUM increased by 6% and 9% year over year, respectively, reflecting higher market levels and positive flows [28] - Daily average global equity market levels were roughly flat, while daily average FX volatility declined slightly [29] Company Strategy and Development Direction - The company is focused on creating better outcomes for investors and enhancing its investment services, markets, software, and asset management capabilities [9][10] - Strategic progress in investment management is emphasized, particularly in low-cost ETFs, with a record AUM of $256 billion in low-cost ETFs [16][18] - The company aims for $350-400 million in new servicing fee revenue wins for the year, while being mindful of market variability [14][34] Management's Comments on Operating Environment and Future Outlook - Management acknowledges notable uncertainty in the operating environment, including trade policy, taxes, and interest rates [8][24] - Despite challenges, the company expresses confidence in its strategy and ability to deliver solid financial returns [25] - The company is prepared for various scenarios and is focused on maintaining expense discipline while investing in client capabilities [22][45] Other Important Information - The company returned $320 million to shareholders through common share repurchases and dividends [20][46] - The search for a permanent CFO is advanced, with an announcement expected soon [23] Q&A Session Summary Question: How does the company view the current market volatility? - Management highlighted that the current environment presents both challenges and opportunities, emphasizing their strong capital position to support clients [19][20] Question: What are the expectations for new servicing fee revenue wins? - The company maintains its target of $350-400 million in new servicing fee revenue wins for the year, despite potential market variability [14][34]

Core Insights - State Street Corporation (STT) reported revenue of $3.28 billion for the quarter ended March 2025, reflecting a year-over-year increase of 4.7% [1] - Earnings per share (EPS) for the quarter was $2.04, up from $1.69 in the same quarter last year, indicating a positive trend in profitability [1] - The reported revenue was slightly below the Zacks Consensus Estimate of $3.3 billion, resulting in a revenue surprise of -0.57%, while the EPS exceeded the consensus estimate of $1.98 by 3.03% [1] Financial Metrics - The Tier 1 Leverage Ratio under Basel III Advanced Approaches was reported at 5.5%, matching the average estimate from four analysts [4] - The Net Interest Margin (FTE) was 1%, slightly below the average estimate of 1.1% from four analysts [4] - Total interest-earning assets averaged $289.52 billion, surpassing the three-analyst average estimate of $274.35 billion [4] - The Tier 1 Capital Ratio under Basel III Standardized Approach was 13.8%, exceeding the average estimate of 13.6% from three analysts [4] - Assets under Management (AUM) totaled $4,665 billion, falling short of the average estimate of $4,713.9 billion from three analysts [4] - The Total Capital Ratio under Basel III Standardized Approach was reported at 15.3%, above the average estimate of 14.6% from two analysts [4] - Assets under Custody and/or Administration (AUC/A) reached $46,733 billion, significantly higher than the average estimate of $39,950.61 billion from two analysts [4] - Net Interest Income was $714 million, slightly below the average estimate of $730.68 million from four analysts [4] - Total fee revenue was $2.57 billion, marginally below the average estimate of $2.58 billion from four analysts [4] - Software and processing fees were reported at $225 million, slightly above the average estimate of $221.52 million from three analysts [4] - Other fee revenue was $32 million, significantly lower than the average estimate of $62.76 million from three analysts [4] Stock Performance - Over the past month, shares of State Street have returned -11.7%, compared to a -6.3% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Earnings Performance - State Street Corporation (STT) reported quarterly earnings of $2.04 per share, exceeding the Zacks Consensus Estimate of $1.98 per share, and up from $1.69 per share a year ago, representing an earnings surprise of 3.03% [1] - The company posted revenues of $3.28 billion for the quarter ended March 2025, which was below the Zacks Consensus Estimate by 0.57%, but an increase from $3.14 billion year-over-year [2] Stock Performance and Outlook - State Street shares have declined approximately 18.9% since the beginning of the year, compared to a decline of 10.3% for the S&P 500 [3] - The company's earnings outlook is mixed, with a current Zacks Rank of 3 (Hold), indicating expected performance in line with the market in the near future [6] Future Earnings Estimates - The current consensus EPS estimate for the upcoming quarter is $2.39 on revenues of $3.34 billion, and for the current fiscal year, it is $9.37 on revenues of $13.34 billion [7] - The Zacks Industry Rank for Banks - Major Regional is in the top 36% of over 250 Zacks industries, suggesting a favorable outlook for the industry [8]

Revenue and Income - Total revenue for 2024 reached $13,000 million, a 8.8% increase from $11,945 million in 2023[4] - Net income available to common shareholders for 2024 was $2,483 million, compared to $1,821 million in 2023, reflecting a 36.4% increase[4] - Total revenue for Q1 2025 was $3,284 million, reflecting a 4.7% increase year-over-year, but a 3.8% decline sequentially from Q4 2024[42] - Net income available to common shareholders for Q1 2025 was $597 million, down from $728 million in Q4 2024[37] - Net income on a GAAP basis for Q1 2025 was $644 million, reflecting a 39.1% increase year-over-year but a 17.8% decline from the previous quarter[45] - The net income excluding notable items for Q1 2025 was $644 million, a 14.6% increase year-over-year, but a 21.8% decrease from Q4 2024[45] Assets and Management - Assets under custody and/or administration increased to $46.56 trillion in 2024, up from $41.81 trillion in 2023, marking a 11.7% growth[4] - Total assets increased to $337,291 million in Q1 2025, reflecting a 3.1% increase from Q4 2024 and a 13.0% increase year-over-year[8] - Total assets increased to $372.693 billion, reflecting a 10.3% year-over-year growth and a 5.5% increase from the previous quarter[11] - Total assets under custody and/or administration reached $46.733 billion in 1Q25, marking a 6.4% increase year-over-year[26] - Assets under management totaled $4,665 billion in Q1 2025, a decrease of 1.1% from Q4 2024 but an increase of 8.5% year-over-year[8] Earnings and Margins - The diluted earnings per common share for 2024 was $8.21, up from $5.58 in 2023, representing a 47.5% increase[4] - Basic earnings per share for Q1 2025 were $2.07, down 17.2% from Q4 2024 but up 50.0% from Q1 2024[8] - The pre-tax margin on a GAAP basis for Q1 2025 was 25.0%, a 5.9 percentage point increase from Q1 2024, but a 3.1 percentage point decrease from Q4 2024[47] - Return on average common equity for 2024 was 11.1%, consistent with the previous year[4] - Return on average common equity on a GAAP basis for Q1 2025 was 10.6%, an increase of 2.9 percentage points year-over-year, but a decrease of 2.1 percentage points from Q4 2024[47] Expenses - The total expenses for Q1 2025 were $2,450 million, a slight increase of 0.4% from $2,440 million in Q4 2024[6] - Total expenses for Q1 2025 amounted to $2,450 million, showing a 2.5% decrease compared to Q1 2024 and a slight increase of 0.4% from Q4 2024[42] - Compensation and employee benefits in Q1 2025 were $1,262 million, a 4.1% increase from $1,212 million in Q4 2024[51] Credit Losses and Provisions - The provision for credit losses in 1Q25 was $12 million, a significant decrease of 55.6% from $27 million in 1Q24[6] - The allowance for credit losses on loans rose to $176 million, a 30.4% increase year-over-year[11] - The total provision for credit losses in 1Q25 was $12 million, consistent with the previous quarter[24] - The total charge-offs for credit losses were $9 million in 1Q25, a decrease of 71.0% compared to the previous year[24] Deposits and Loans - Total deposits reached $243,036 million in Q1 2025, marking a 2.5% increase from Q4 2024 and an 11.0% increase from Q1 2024[8] - Total deposits reached $272.056 billion, an 8.0% increase year-over-year and a 3.9% rise from the previous quarter[11] - Loans, net increased to $44.509 billion, showing a 15.6% growth compared to Q1 2024[11] Investment and Securities - The average balance sheet for investment securities in 2024 was $104,784 million, down from $105,765 million in 2023[4] - Total investment securities amounted to $110.070 billion in Q1 2025, reflecting an average rate of 3.51%[17] - The fair value of mortgage-backed securities in the available-for-sale portfolio was $8.5 billion, with a net unrealized pre-tax MTM loss of $62 million[21] Capital and Ratios - Common equity tier 1 capital increased from $13,167 million in 1Q24 to $14,362 million in 1Q25, reflecting a growth of 9.1%[34] - The total risk-weighted assets rose from $112,161 million in 1Q24 to $130,208 million in 1Q25, an increase of 16.1%[34] - The common equity tier 1 risk-based capital ratio improved from 11.7% in 1Q24 to 12.5% in 1Q25[34] - The Tier 1 leverage ratio remained stable at 5.5% in 1Q25, consistent with the previous quarter[34] Fee Revenue - Total fee revenue for 1Q25 was $2,570 million, a 6.1% increase compared to $2,422 million in 1Q24[6] - Total fee revenue increased by 6.1% from 2,570 million in 1Q24 to 2,688 million in 1Q25, while it decreased by 3.5% compared to 4Q24[32] - Management fees for Investment Management increased by 10.2% from 510 million in 1Q24 to 562 million in 1Q25[32]

Core Insights - Analysts project State Street Corporation (STT) will report quarterly earnings of $1.98 per share, a 17.2% increase year over year, with revenues expected to reach $3.3 billion, up 5.2% from the same quarter last year [1] Earnings Estimates - The consensus EPS estimate has been revised downward by 2.8% over the past 30 days, indicating a collective reassessment by analysts [2] - Changes in earnings estimates are crucial for predicting investor reactions, with empirical studies showing a strong correlation between earnings estimate revisions and short-term stock performance [3] Key Financial Metrics - Analysts forecast the 'Basel III Advanced Approaches - Tier 1 Leverage Ratio' to be 5.5%, up from 5.4% a year ago [5] - The 'Average balance - Total interest-earning assets' is expected to reach $274.35 billion, compared to $254.33 billion in the same quarter last year [5] - The 'Basel III Standardized Approach - Tier 1 capital ratio' is estimated at 13.6%, down from 13.8% year over year [6] - 'Assets under Management (AUM)' is projected to be $4,713.90 billion, an increase from $4,336 billion a year ago [6] - The 'Assets under Custody and/or Administration (AUC/A)' is expected to reach $39,950.61 billion, down from $43,912 billion in the same quarter last year [7] Revenue Projections - 'Total fee revenue' is projected at $2.57 billion, compared to $2.42 billion in the same quarter last year [8] - 'Net Interest Income' is expected to be $729.81 million, up from $716 million year over year [7] - 'Software and processing fees' are estimated at $220.93 million, compared to $207 million a year ago [9] - 'Management fees' are projected to be $549.66 million, an increase from $510 million year over year [9] Stock Performance - State Street shares have decreased by 8.5% in the past month, while the Zacks S&P 500 composite has declined by 3.6% [11]

Founder of Dividend Mantra. Founder of Mr. Free At 33. Co-Founder of Dividends & Income. I started blogging about my journey to financial independence back in 2011. By living well below my means and intelligently investing my hard-earned capital, I went from below broke at age 27 to financially free at 33 years old. I regularly create content on dividend growth investing, living off of dividends, undervalued high-quality dividend growth stocks, high-yield situations, and other long-term investment opportuni ...