State Street Corp Q2 2025 Earnings Call Highlights: Record AUM, Dividend Increase, and Strong Revenue Growth Amidst Challenging Economic Environment.

State Street Corp reported a 12% increase in fee revenue and a 9% increase in total revenue YoY, exceeding $5 trillion in AUM and achieving a near-record quarter for sales and investment services. The company announced an 11% increase in its quarterly dividend and generated over $80 billion in net inflows during the quarter. However, expenses increased 6% YoY, and net interest income was down 1% YoY.

State Street Corp (STT) reported robust financial performance for the second quarter of 2025, with fee revenue and total revenue both showing significant year-over-year (YoY) growth. The company achieved a 12% increase in fee revenue and a 9% increase in total revenue, exceeding $5 trillion in assets under management (AUM). This strong performance was highlighted by a near-record quarter for sales and investment services [1].

The company announced an 11% increase in its quarterly dividend, bringing the new dividend to $0.84 per share. This increase is subject to approval by the Board of Directors and is scheduled to take effect in the third quarter of 2025 [2]. Additionally, State Street generated over $80 billion in net inflows during the quarter, reflecting strong demand for its services.

However, expenses increased by 6% YoY, which was partially offset by a 1% YoY decrease in net interest income. The company cited various factors, including higher performance and revenue-related costs, as contributing to the expense increase. Despite this, the company maintained a positive pretax margin of nearly 30% and a return on tangible common equity of approximately 19%, both excluding notable items [1].

State Street's management expressed confidence in the company's ability to generate both positive fee and total operating leverage for the year. The company now expects 2025 total fee revenue growth in the 5% to 7% range, an improvement from the prior 3% to 5% outlook. Full year net interest income (NII) is expected to be roughly flat to last year's record performance, with variability possible due to global monetary policy and deposit mix changes [1].

In terms of strategic initiatives, State Street announced plans to rebrand its asset management business as State Street Investment Management, aiming to leverage collaboration across the firm and expand product offerings. The company also highlighted the successful installation of approximately half of its $440 million fee backlog, with plans to complete the rest by the end of the year [1].

Looking ahead, State Street will continue to focus on scaling the Alpha platform, expanding in private markets, and launching the University of California partnership. The company remains vigilant regarding external risks, such as geopolitical and economic uncertainty, and potential headwinds from global monetary policy and deposit mix changes [1].

References:
[1] https://seekingalpha.com/news/4467605-state-street-signals-5-percent-7-percent-fee-revenue-growth-outlook-announces-1t-in-new-asset
[2] https://www.businesswire.com/news/home/20250701805986/en/State-Street-Corporation-Announces-Planned-11-Dividend-Increase-and-Preliminary-Stress-Capital-Buffer-Requirement