The analyst asked about the rationale for re-entering the RIA custody business, given intense competition, and how capital allocation (specifically the lower payout ratio) supports this and other initiatives like Prime Services.

Ron O'Hanley explained the move into RIA custody is driven by the shift towards customized wealth management, proliferation of distribution channels, and leveraging State Street's core custody and Charles River capabilities. John Woods added that the updated payout ratio approaching 80% reflects a strong capital return plan, including a significant ramp in Q4 buybacks, while organic investments in client support and strategic areas like RIA custody are prioritized for their attractive returns. “when you look at where money is going and the need for wealth managers to have the support of a wealth services provider like us, we see this as a very attractive long-term strategic opportunity, not just in the U.S. but in other wealth markets.”

The analyst noted that year-to-date servicing sales were below the previously discussed $350M+ target and asked about the reasons for the shortfall, timing, and the broader outlook for organic ex-market revenue growth in servicing.

Management expressed confidence in sales momentum, expecting Q4 sales to be strong and full-year sales to exceed $300 million for the fourth consecutive year, despite some lumpiness. They emphasized that organic growth in servicing fees (7% in Q3) is also driven by high retention rates and the organic growth of their premier client base, projecting mid-single-digit growth even without market levels. “we're expecting the fourth year in a row of sales over $300 million. And we think that is -- that drives that net new business engine that we expect to continue not only through the rest of this year, but out over the medium term from that standpoint.”

The analyst asked about the potential for digital assets and tokenization to offset or dilute traditional servicing revenue, given the build-out of new infrastructure.

Ron O'Hanley stated that State Street anticipates a long period where traditional and digital finance operate alongside each other. Their role as an infrastructure provider is to enable the on-ramp/off-ramp between the two, and they do not foresee a significant risk to revenue in the short or medium term. He noted that the market structure and regulatory clarity still need to evolve. “We really don't see in the -- certainly in the short term, but even in the medium term, a tremendous risk to revenue. What we do see though is you still have a market that needs to work itself out.”

STT

State Street (STT) Q3 FY26 earnings call: guidance and Q&A

Earnings call· Sep 2026 (Q3 FY26)· Financials· Oct 14, 2026

Source: earnings call transcript

Executive summary

State Street Q3 FY26 — Strong Performance Driven by Core Businesses and Strategic Initiatives

State Street delivered a strong third quarter, marked by robust growth across its core businesses and continued execution of strategic initiatives in alternatives, digital assets, and wealth. The company achieved its 11th consecutive quarter of positive operating leverage, driven by record servicing and management fees, and strong NII expansion. Management expressed confidence in its ability to meet medium-term financial targets, emphasizing disciplined execution and strategic investments for long-term value creation.

Highlights

Earnings per share increased 33% year-over-year to $3.69.
Total revenue grew 13% year-over-year to $4 billion, with fee revenue up 11% and NII up 21%.
Achieved 11th consecutive quarter of positive operating leverage, expanding by 530 basis points.
Record quarterly servicing fees and management fees, with AUC/A reaching $59.2 trillion and AUM reaching $6.3 trillion.
Pretax margin expanded 350 basis points year-over-year to 35%, and ROTCE increased over 4 percentage points to 25%.

Concerns

Other fee revenue was lower by approximately $30 million year-over-year due to market-related gains on strategic investments in the prior year.
FX trading services revenue decreased sequentially due to moderation in FX volatility, particularly in APAC, after an exceptionally strong Q2.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Fee Revenue Growth	13% to 14% high materiality	FY26	High
Full-year 2026 NII Growth	15% to 16% high materiality	FY26	High
Full-year 2026 Expense Growth	roughly 8% to 8.5% medium materiality	FY26	High
Full-year 2026 Positive Operating Leverage	over 500 basis points high materiality	FY26	High
Full-year 2026 Effective Tax Rate	approximately 22% low materiality	FY26	High
Full-year 2026 Total Payout Ratio	approaching 80% high materiality	FY26	High
NII Sequential Growth	growth medium materiality	Q4 · FY26	High
Servicing Fee Sales	over $300 million medium materiality	FY26	Medium
Q4 FY26 Buybacks	closer to $700 million high materiality	Q4 · FY26	High
Average Deposits	$275 billion to $280 billion medium materiality	Q4 · FY26	Medium
Loan Growth	growth low materiality	FY27	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Investment Services Record quarterly servicing fee revenue driven by strong organic growth and higher average market levels. AUC/A reached a record high, reflecting market levels, net new business, and client flows. Sales activity included traditional back-office mandates, alternatives, and early traction in Wealth Services. Organic Growth: 7%AUC/A: $59.2TAUC/A Growth YoY: 15%Servicing Fee Sales: $68M	$1.5B	10%	—	—
Investment Management Record quarterly management fee income supported by organic growth and higher average market levels. AUM reached a record high, marking the sixth consecutive quarter of positive organic AUM growth. Strong long-term net inflows, particularly in index funds and ETFs, with significant product innovation. Organic Growth: 8%AUM: $6.3TAUM Growth YoY: 16%Net Inflows: $7BLong-term Net Inflows: $69BETF AUM: $2.3TNew Products/Solutions Launched: 38ETFs Launched: 13	$797M	20%	—	—
Markets Healthy year-over-year revenue growth. FX trading services benefited from record client volumes despite moderated volatility. Securities finance revenue grew, supported by increased assets on loan in Agency Lending and strong client balance growth in Prime Services. FX Trading Services Revenue: $427MFX Trading Services Revenue Growth YoY: 17%FX Client Volumes Growth YoY: >30%Securities Finance Revenue: $151MSecurities Finance Revenue Growth YoY: 9%	—	—	—	—
Software Services Revenue growth driven by increased software and data revenue, reflecting client adoption and migration to SaaS solutions. Strong growth in annual recurring revenue and new bookings from both new and expanded client relationships. Software and Data Revenue Growth: 10%Annual Recurring Revenue (ARR): $442MARR Growth YoY: 8%New Bookings: $14M	$175M	5%	—	—

STT operating KPIs by quarter

STT operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Mar 2025 Q1 FY25	Sep 2025 Q3 FY25	Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	This call Sep 2026 Q3 FY26	Change vs prior quarter
Net new assets	$64B We generated $146 billion of net new assets in 2024, including $64 billion in 4Q. Source: earnings call transcript	-$13B For the quarter, net inflows -- net outflows totaled $13 billion and were primarily driven by an anticipated client transition within our institutional business. Source: earnings call transcript	$26B Net inflows totaled $26 billion for the quarter, reflecting solid momentum across ETFs, cash and institutional index fixed income. Source: earnings call transcript	$85B Management fees increased 15% year-over-year to a new quarterly record of $662 million, driven by higher average market levels and quarterly net inflows of $85 billion, supported by strong performance across our ETFs, cash and institutional segments. Source: earnings call transcript	$49M Net inflows totaled $49 million for the quarter, led by strength across index strategies and solutions, including ETFs and fixed income as well as our cash franchise. Source: earnings call transcript	$114B Net inflows totaled $114 billion in the quarter, marking our fifth consecutive quarter of positive organic growth. Source: earnings call transcript	$7B As Ron noted, we delivered our sixth consecutive quarter of positive organic AUM growth with net inflows of $7 billion. Source: earnings call transcript	-93.9%
Common equity tier 1 ratio (CET1)	10.9% As of quarter end, our standardized CET1 ratio of 10.9% was down approximately 70 basis points quarter-on-quarter. Source: earnings call transcript	11% As of quarter end, our standardized CET1 ratio of 11% was up approximately 10 basis points quarter-over-quarter. Source: earnings call transcript	11.3% Our standardized CET1 ratio was 11.3% at quarter end, up approximately 60 basis points quarter-over-quarter, reflecting capital generated from earnings and a decline in risk-weighted assets coming off of the elevated FX volatility of the prior quarter. Source: earnings call transcript	11.7% At quarter end, our standardized CET1 ratio was 11.7%, up approximately 40 basis points from the prior quarter, primarily reflecting a decline in risk-weighted assets with the largest driver being market dynamics in our FX trading and agency lending businesses. Source: earnings call transcript	10.6% At quarter end, our standardized CET1 ratio was 10.6%, down approximately 100 basis points from the prior quarter. Source: earnings call transcript	10.8% Our standardized CET1 and Tier 1 leverage ratios were 10.8% and 5.3%, respectively, broadly stable relative to the first quarter. Source: earnings call transcript	—	+0.2 pt
Backlog	~$350M One other thing I would -- one other way to think about the sustainability of our fee revenue growth, servicing fees is to also take a look at the backlog that we've been now disclosing over the last several quarters, which is roughly $350 million at the end of 2024. Source: earnings call transcript	—	~$400M This momentum is reflected in our third quarter servicing fee revenue backlog of approximately $400 million, up roughly 40% from the prior year. Source: earnings call transcript	—	—	—	—	—
Assets under management (AUM) gold ETFs	—	$100B+ Further, we saw strong ETF flows in EMEA, while the commodities ETF segment gained market share, benefiting from market volatility in our industry-leading gold ETFs, which exceeded $100 billion of AUM for the first time. Source: earnings call transcript	~$145B Our gold ETF suite further strengthened its market leadership, reaching a record AUM of approximately $145 billion. Source: earnings call transcript	—	—	—	—	—
Return on tangible common equity (ROTCE)	—	16%+ While we've seen uncertainty weigh on global equity markets in recent weeks, our first quarter results demonstrate the strength of our business with a nearly 2 percentage point expansion of our pretax margin year-over-year, excluding notable items and an ROTCE of over 16% for the quarter. Source: earnings call transcript	21% For example, 3Q marked our seventh consecutive quarter of positive total operating leverage, excluding notable items as we delivered total revenue growth of 9%, a pretax margin of 31% and return on tangible common equity of 21%. Source: earnings call transcript	—	—	~26% These results drove another quarter of improved profitability, with pretax margin expanding 470 basis points year-over-year to 34% and ROTCE increasing over 6 percentage points to approximately 26%. Source: earnings call transcript	25% Combined with a pretax margin of 35% and a return on tangible common equity of 25%, these results reflect both the strength of our franchise today and the investments we are making to position State Street for long-term growth. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline
Tokenized Fund Servicing Capability	roadmap	by year-end
State Street Galaxy Onchain Liquidity Sweep Fund	launch	Q3 FY26
Wealth Services Offering	launch	recent

Deals & partnerships

Santander CACEIS Acquisition of Latin American Security Services business.

Initial agreement to acquire Santander CACEIS Latin American Security Services business, subject to regulatory approvals and closing conditions. This will add custody and fund administration capabilities in important and fast-growing institutional markets.

Apollo Work to support the expansion of daily pricing across private credit strategies.

Leveraging State Street's platform and expertise to support the continued evolution of private markets.

Apex Fintech Solutions Partnership for Wealth Services offering.

The partnership is key to State Street's Wealth Services offering, expanding its reach into the wealth management market.

UC Investments Partnered to launch an endowment strategy ETF. $2.5B seed investment

This partnership highlights innovation in investment management and the strength of State Street's ETF franchise.

Risks & headwinds

Market-related gains on strategic investments Q3 FY26

$30 million lower year-over-year in other fee revenue

Mitigation:This is a non-recurring item from the prior year; stability expected in Q4.

FX volatility moderation Q3 FY26

FX trading services revenue down sequentially from Q2

Mitigation:Expected moderation after an exceptionally strong Q2, still strong YoY growth and record client volumes; expected growth from Q3 into Q4.

Interest rate impact on capital levels Ongoing

25 bps increase in rates could impact capital levels by ~10 bps (unmitigated)

Mitigation:Strong capital levels (CET1 at 11%), levers to optimize, and confidence in delivering significant buybacks despite rate headwinds.

Digital asset market structure and regulation Short to medium term

Not quantified

Mitigation:Working closely with clients to shape market infrastructure; enabling on-ramp/off-ramp between traditional and digital finance; not anticipating medium-term revenue loss.

What to watch in Q4 FY26

NII Sequential Growth

Q4 FY26

Current Grew sequentially in Q3

Target Sequential growth in Q4, towards upper end of FY guidance

Why it matters

NII is a key driver of profitability, and continued sequential growth would validate management's confidence in rate sensitivity and balance sheet management.

every quarter this year, NII has grown on a sequential quarter basis. And I'd say that our view is that we would expect that again in the fourth quarter. So -- and that probably implies that we would likely deliver NII towards the upper end of that range that we've delivered.

Find out whether STT delivers this. Inve re-checks your case every morning.

Q&A highlights

The analyst noted that the implied Q4 NII from the full-year guidance seemed lower than expected, despite the higher rate environment and balance sheet growth. He asked for clarification on the NII outlook.

Management clarified that NII trends have been very strong all year, with sequential growth every quarter. They expect NII to grow again in Q4, likely towards the upper end of the updated full-year guidance range, indicating strong confidence in NII trends.

“every quarter this year, NII has grown on a sequential quarter basis. And I'd say that our view is that we would expect that again in the fourth quarter. So -- and that probably implies that we would likely deliver NII towards the upper end of that range that we've delivered.”

asked by Glenn Schorr · answered by John Woods

2 min read 6 chapters

Detailed narrative

Strategic Priorities and One State Street Model

State Street emphasizes its 'One State Street' model, combining asset servicing, investment management, and markets to help clients navigate a complex environment of fiscal pressures, geopolitics, inflation, and AI. This integrated approach strengthens its platform, enhances client service, and positions the company for sustainable growth, leveraging established leadership positions and scale in key businesses.

Momentum in Core Businesses

The company reported record quarterly servicing and management fees, with assets under custody and administration (AUC/A) reaching $59.2 trillion and assets under management (AUM) hitting $6.3 trillion. FX client volumes also reached a new record, increasing over 30% year-over-year. These results demonstrate the firm's ability to capture client activity and benefit from its platform's scale and breadth.

Strategic Growth Initiatives: Alternatives, Digital Assets, and Wealth

State Street is focusing on three strategic growth initiatives: Alternatives, Digital Assets, and Wealth. Alternatives servicing fees grew double-digits year-over-year, reflecting strong private markets growth. In digital assets, the firm is on track to deliver a tokenized fund servicing capability by year-end and launched the State Street Galaxy Onchain Liquidity Sweep Fund.

The new Wealth Services offering is gaining traction, securing a servicing mandate from a large RIA, validating the market opportunity and the 'One State Street' approach.

Technology and AI-Enabled Transformation

The company continues to advance its technology and AI-enabled transformation agenda, aiming to simplify processes, improve execution, strengthen resilience, and allocate resources more effectively. These efforts are expected to enhance client experience, improve performance, reduce costs, and create capacity for growth investments, ultimately building a simpler, faster, and more scalable State Street.

Capital Allocation and Shareholder Returns

State Street maintains a strong capital position, with a standardized CET1 ratio of 11% and a Tier 1 leverage ratio of 5.5%. The company returned $651 million to shareholders in Q3, including $400 million in common share repurchases and $251 million in dividends, following a 10% dividend increase.

The total payout ratio was 63% for the quarter and approximately 70% year-to-date, with a full-year target approaching 80%.

NII and NIM Dynamics

Net interest income (NII) increased 21% year-over-year, driven by a 16 basis point expansion in net interest margin (NIM) to 112 basis points. This was supported by a favorable funding mix, continued investment portfolio repricing, and the runoff of terminated hedges. Management expects NII to continue growing sequentially in Q4 and sees investment portfolio reinvestment as a persistent tailwind for NIM over the medium term.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.