• Revenue Growth: Total revenue increased by 5% year over year.
• Fee Revenue: Fee revenue rose by 6% year over year.
• Pre-Tax Margin: Pre-tax margin reached 30%, excluding seasonal expenses.
• Earnings Per Share (EPS): EPS was $2.04, a 21% increase year over year, excluding notable items.
• Asset Servicing AUC/A Wins: New wins totaled $182 billion in the first quarter.
• New Servicing Fee Revenue Wins: Totaled $55 million in Q1.
• Management Fees: Increased by 10% year over year.
• Low-Cost ETF AUM: Reached a record $256 billion at quarter end.
• FX Trading Revenue: Increased by 9% year over year.
• Securities Finance Revenue: Grew by 19% year over year.
• Expenses: Increased by 3% year over year, excluding notable items.
• Capital Return: $320 million returned to shareholders through share repurchases and dividends.
• Net Interest Income (NII): Flat at $714 million compared to the year-ago period.
• Return on Tangible Common Equity (ROTC): Over 16% for the quarter.
• Common Equity Tier 1 (CET1) Ratio: 11% at quarter end.

• Warning! GuruFocus has detected 4 Warning Sign with STT.

Release Date: April 17, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• State Street Corp (NYSE:STT) reported a strong start to the year with a 21% year-over-year EPS growth, excluding notable items.
• Fee revenue increased by 6% year over year, contributing to a 5% rise in total revenue.
• The company achieved positive fee and total operating leverage, resulting in margin expansion.
• New asset servicing AUC/A wins amounted to $182 billion, with new servicing fee revenue wins totaling $55 million.
• Management fees increased by 10% year over year, driven by higher average market levels and prior-period net inflows.

Negative Points

• The current environment presents uncertainty, with potential variability in the operating environment affecting future performance.
• Net outflows of $13 billion were primarily driven by an anticipated client transition within the institutional business.
• Non-interest-bearing deposits declined by 5% in Q1, which could impact net interest income if the trend continues.
• NII was relatively flat compared to the year-ago period, with a 5% sequential decrease due to changes in deposit mix and lower short-end rates.
• The company faces potential challenges from geopolitical tensions and regulatory changes, which could impact its global operations.

Q & A Highlights

Q: How does the current environment affect your capital return plans, and are there any changes to the expected pacing of capital returns? A: Mark Keating, Interim CFO, stated that they are on track with their plan to return capital at a progressive rate throughout the year, as communicated in January. They anticipate a step-up in Q2 and expect to return about 80% of earnings to shareholders, reflecting a range of scenarios given the current environment.

Q: Are there any changes in client behavior regarding new contracts and onboarding due to the current environment? A: CEO Ron O'Hanley noted that while clients are aware of the operating environment, there hasn't been a meaningful change in behavior regarding timing or onboarding. They remain confident in their new business wins projections.

Q: How much flexibility do you have in managing expenses if revenues are worse than expected? A: Ron O'Hanley explained that they have flexibility due to ongoing transformation efforts, allowing them to reprioritize investments and focus on productivity-based technology investments without harming long-term strategic goals.

Q: Can you provide more detail on the deposit trends, particularly between interest-bearing and non-interest-bearing deposits? A: Mark Keating mentioned that non-interest-bearing deposits declined by about $1 billion in Q1, which was expected. They are seeing elevated deposit levels and expect the high end of their $230 billion to $240 billion range to be a better estimate.

Q: What is the impact of the current market environment on your fee revenue guidance? A: Ron O'Hanley stated that despite market uncertainties, they are confident in their ability to deliver within the fee revenue guidance range due to strong business momentum, a robust pipeline, and investments in platforms and sales effectiveness.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.