“State Street Corporation announced a 5% year-over-year drop in fourth-quarter net income for 2025, totaling $747 million, even as total revenue climbed 7% to $3.667 billion, bolstered by gains in fee revenue and net interest income. Adjusted EPS reached $2.97, reflecting operational strength amid higher expenses.”
State Street Corporation, a leading provider of financial services to institutional investors, disclosed its fourth-quarter results for 2025, highlighting a mixed performance where revenue growth was offset by a dip in profitability.
Financial Highlights
The company achieved record quarterly total revenue of $3.667 billion, marking a 7% increase from the same period in the previous year. This growth was primarily driven by an 8% rise in fee revenue to $2.862 billion, which benefited from higher servicing fees and management fees amid expanding assets under custody and administration. Net interest income also contributed positively, advancing 7% to $802 million, supported by favorable interest rate environments and improved deposit balances.
However, total expenses rose 12% year-over-year to $2.741 billion, influenced by investments in technology, regulatory compliance, and employee compensation. Excluding notable items such as restructuring charges, expenses increased at a more moderate 6% pace.
On the profitability front, net income attributable to common shareholders fell 5% to $747 million compared to the prior year’s fourth quarter. This decline was attributed to elevated operating costs and certain one-time adjustments. Diluted earnings per share (EPS) stood at $2.42, representing a 2% decrease year-over-year. When adjusted for notable items, EPS improved to $2.97, underscoring underlying business resilience.
Business Segment Performance
| Metric | Q4 2025 Amount | YoY Change |
|---|---|---|
| Total Revenue | $3.667B | +7% |
| Fee Revenue | $2.862B | +8% |
| Net Interest Income | $802M | +7% |
| Total Expenses | $2.741B | +12% |
| Net Income | $747M | -5% |
| Diluted EPS | $2.42 | -2% |
| Adjusted EPS | $2.97 | N/A |
In the Investment Servicing segment, which forms the core of State Street’s operations, revenue grew by 6% to $3.012 billion. This was fueled by a 5% uptick in assets under custody and administration, reaching $53.8 trillion, as the firm onboarded new clients and benefited from market appreciation. Servicing fees alone increased 4%, reflecting steady demand from asset managers and pension funds.
The Investment Management arm, through State Street Global Advisors, saw revenue climb 10% to $655 million. Assets under management hit a record $5.7 trillion, up 15% year-over-year, driven by strong inflows into exchange-traded funds and alternative investments. Management fees rose accordingly, contributing to the overall fee revenue expansion.
Key Operational Metrics
Return on Equity (ROE): 11.3%, down 1.4 percentage points from the prior year.
Return on Tangible Common Equity (ROTCE): 17.5%, a decrease of 2.8 percentage points.
Pre-tax Margin: 25.0%, contracting by 3.1 percentage points year-over-year.
These metrics indicate pressure on profitability margins despite top-line gains, as the company continues to navigate a competitive landscape and invest in digital transformation initiatives.
Strategic Initiatives and Outlook
State Street emphasized progress in its strategic priorities, including the expansion of its front-to-back servicing platform and enhancements to alpha-generating tools for clients. The firm also highlighted cost discipline efforts, aiming for positive operating leverage in future periods through efficiency programs and headcount optimization.
Disclaimer: This news report is for informational purposes only and does not constitute investment advice or recommendations. Sources are publicly available financial disclosures.