State Street's Q2 2026 revenue rose 17% to a record $4.05B and EPS jumped 68% to $3.65, driven by market-lifted fees, an 18% rise in net interest income on a wider margin, and the absence of last year's $138M in one-off charges.
Net interest income
$860M
+18.0% YoY
Net interest margin
1.13%
Net income
$1.1B
+56.4% YoY
Diluted EPS
$3.65
+68.2% YoY
CET1 capital ratio
10.8%
Return on tangible common equity
25.5%
Net interest margin (NIM): what a bank earns on its loans and securities minus what it pays for deposits and borrowing, as a share of those assets. Efficiency ratio: operating costs per dollar of revenue (lower is better). Net charge-off (NCO) ratio: loans written off as unrecoverable, net of recoveries, as a share of average loans. CET1: the bank's core capital cushion against losses, as a share of risk-weighted assets.
Record revenue, a wider interest margin and a flat expense base lifted Q2 2026 EPS 68%
State Street is a custody bank: its core job is safekeeping and record-keeping for other people's investments — holding the securities owned by pension funds, mutual funds, ETFs and insurers, settling their trades, pricing their funds and doing the accounting. It also runs one of the world's largest asset managers (State Street Investment Management, formerly State Street Global Advisors, home of the SPDR ETFs). Most of its revenue therefore comes from fees charged on the size of the assets it looks after, not from lending.
In the second quarter of 2026 (April–June), total revenue rose 17.4% to a record $4.05 billion, net income rose 56% to $1.08 billion, and diluted earnings per share rose 68% to $3.65. Three things did the work: rising stock markets lifted the asset values that fees are charged on, net interest income grew 18%, and expenses grew only 5% — partly because the year-ago quarter carried $138 million of one-off charges that did not recur.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Total revenue
$4,048M
$3,448M
+17.4%
Total fee revenue
$3,188M
$2,719M
+17.2%
Net interest income
$860M
$729M
+18.0%
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Return on tangible common equity (ROTCE, non-GAAP)
25.5%
16.7%
+8.8 pts
CET1 ratio (standardized)
10.8%
10.7%
+0.1 pts
Assets under custody and/or administration (AUC/A)
$57.9T
$49.0T
+18%
Assets under management (AUM)
$6.28T
$5.12T
+23%
Pre-tax margin is the share of revenue left after all expenses and credit provisions, before income tax. AUC/A and AUM are quarter-end figures.
First half 2026: revenue $7,844M (+17%), net income $1,848M (+38%), diluted EPS $6.14 vs. $4.21 (+46%), pre-tax margin 30.1% vs. 25.4%.
The two scale numbers: AUC/A and AUM
AUC/A (assets under custody and/or administration) is the total value of client assets State Street holds or keeps the books for. It is not State Street's money and does not sit on its balance sheet; it is the base that servicing fees are charged on. AUC/A reached a record $57.86 trillion, up 18% from $49.0 trillion a year earlier, which the 10-Q attributes "primarily [to] higher market levels, client flows and net new business." By product, collective funds including ETFs grew 20% to $20.1 trillion and insurance and other products grew 23% to $12.2 trillion. During the quarter State Street won new mandates covering $384 billion of AUC/A, onboarded about $228 billion, and had $2.93 trillion of already-won assets still waiting to be moved onto its platform — a pipeline of future servicing fees.
AUM (assets under management) is money State Street actively invests on clients' behalf, where it earns management fees. AUM hit a record $6.28 trillion, up 23%. The quarter's own roll-forward shows how much of that is markets rather than new money: of the $658 billion rise from March 31, $551 billion came from market appreciation, $114 billion from net client inflows, and FX shaved off $7 billion. ETFs were the strongest channel, with $68 billion of net ETF inflows in the quarter (vs. $15 billion in Q2 2025), taking ETF AUM to $2.20 trillion.
Fee revenue: management fees and trading led, software lagged
Fee line
Q2 2026
Q2 2025
YoY
What the filing says drove it
Servicing fees
$1,468M
$1,304M
+12.6%
"organic growth and higher average market levels"
Management fees
$772M
$600M
+28.7%
"higher average market levels and quarterly net inflows of $114 billion"
FX trading services
$494M
$393M
+25.7%
"higher client volumes mostly in Asia-Pacific"
Securities finance
$150M
$126M
+19.0%
"higher client lending balances in both Agency Lending and Prime Services"
Software services
$166M
$169M
-1.8%
lower on-premises revenue vs. "elevated renewal activity in the year-ago period"
Other fee revenue
$138M
$127M
+8.7%
"FX-related and market-related adjustments"
Total fee revenue
$3,188M
$2,719M
+17.2%
Two things are worth separating out:
Software is weaker than it looks. The year-ago software line was reduced by a $24 million client-rescoping charge. Stripping that out, software services fell 14% ($166M vs. an adjusted $193M). The recurring part of the business is still growing — annual recurring revenue (ARR) rose to $433 million from $381 million — but the lumpy one-time licence revenue from on-premises renewals dropped.
Currency barely mattered. Translation added only $14 million to revenue year over year, so the 17% growth is not an FX artefact.
Net interest income: the margin widened because funding got cheaper
Net interest income (NII) — what State Street earns on the cash and securities it holds, minus what it pays on client deposits and borrowings — rose 18% to $860 million. The 10-Q says this was "primarily driven by an increase of 17 bps in NIM." Net interest margin (NIM) is that NII expressed as a percentage of interest-earning assets; it went from 0.96% to 1.13%. (A NIM near 1% is low by bank standards because State Street parks most client cash at central banks and in high-grade bonds rather than making loans.)
The average-balance table shows why the margin moved: average interest-earning assets were essentially flat ($305.41 billion vs. $304.65 billion), but the average rate paid on interest-bearing deposits fell to 2.45% from 2.87%, and higher-cost wholesale short-term borrowings fell to $4.18 billion on average from $10.18 billion, which the filing ties to "higher sustained client deposit levels." In other words, the gain came from a cheaper funding mix, not from a bigger balance sheet. Sequentially, NII was up only 3% and NIM slipped 3 bps to 1.13% from 1.16% in Q1.
The loan book is small relative to the balance sheet: total loans were $52.06 billion and total deposits $319.55 billion at June 30, 2026 (vs. $46.78 billion and $274.35 billion at December 31, 2025). Period-end deposits at custody banks swing with client activity; average deposits for the quarter were $270.35 billion. Credit costs were negligible — the provision for credit losses was zero (vs. $30 million a year ago), with $4 million of charge-offs related to $496 million of commercial loans sold.
Why profit grew three times faster than revenue
Q2 2026
Q2 2025
YoY
Total expenses (GAAP)
$2,659M
$2,529M
+5.1%
Notable items in expenses/revenue (pre-tax)
$0
$138M
—
Total expenses excluding notable items (non-GAAP)
$2,659M
$2,412M
+10.2%
EPS impact of notable items
$0.00
$(0.36)
—
The headline 5% expense growth flatters the underlying picture. Q2 2025 included a $100 million repositioning (mainly severance) charge and a $42 million client-rescoping charge; Q2 2026 had no such items. Excluding them, expenses rose 10%, driven by compensation (+9% ex-notables, on "higher performance-based incentive compensation, merit increases, and higher employee benefits") and information systems (+17% ex-notables, from "volume-related costs, infrastructure investments and tech modernization").
That base effect also inflates the EPS growth rate. Adding back the $0.36 of notable items to last year's EPS gives $2.53, so on a like-for-like basis EPS rose about 44% rather than 68%. The rest of the gap between net income growth (+56%) and EPS growth (+68%) comes from buybacks: diluted share count for the first half averaged 282.0 million vs. 291.6 million a year earlier (-3%), and State Street repurchased another $400 million of stock in Q2 (2.5 million shares at $159.63 average).
Even on the cleaner comparison, revenue (+16.7% ex-notables) outgrew expenses (+10.2% ex-notables) by about 645 basis points — what management calls positive operating leverage, and its tenth consecutive quarter of it by that measure.
Takeaway: The quarter's profit jump is real but leans on two tailwinds State Street doesn't control — rising markets, which drove $551 billion of the $658 billion quarterly AUM increase, and cheaper deposit funding, which widened NIM with a flat balance sheet — plus a year-ago base depressed by $138 million of one-off charges. Underlying expenses are growing 10%, so the margin gains depend on revenue continuing to grow in the mid-teens.
Line of business results (excluding notable items)
Q2 2026 revenue
YoY
Q2 2026 pre-tax margin
Q2 2025 pre-tax margin
Investment Servicing
$3,242M
+14%
33.3%
28.8%
Investment Management
$806M
+29%
38.3%
33.3%
Investment Management is the faster-growing, higher-margin segment this quarter: revenue up 29% against expenses up 19%. Investment Servicing — about four-fifths of revenue — grew 14% with expenses up 8%, and it captures all of the NII.
Capital and shareholder returns
The standardized CET1 ratio — a regulator-defined measure of loss-absorbing equity relative to risk-weighted assets — was 10.8%, up from 10.7% a year earlier but down from 11.6% at December 31, 2025, which the 10-Q attributes to "a normalization in RWA from episodically low levels at December 31, 2025 and continued capital return." State Street returned $631 million to common shareholders in Q2 ($400 million of buybacks plus $231 million of dividends at $0.84/share) and, after the Federal Reserve stress test, declared a Q3 dividend of $0.92, a 10% increase.
Outlook
Management's guidance (Q2 earnings presentation, full-year 2026, excluding notable items), raised from the April outlook:
Prior outlook
Updated outlook
Fee revenue
Up ~7–9%
Up ~12–13%
Net interest income
Up ~8–10%
Up ~14–15%
Expenses
Up ~5–6%
Up ~8% +/-
Management frames this as roughly 500 bps of operating leverage for the year. The key assumptions are explicit: global equity markets flat from the June 30 quarter-end and interest rates "broadly aligned with forward interest rates." State Street also set new medium-term (3–5 year) targets of a 35% pre-tax margin and mid-20s% ROTCE, with CET1 around 11% and a total payout ratio of about 80%.
Our read: The first half already delivered a 30.1% pre-tax margin and Q2 hit 34.3%, so the 35% target is close to today's run-rate at current market levels — the harder test is holding it if markets fall, since fee revenue follows asset values and the flat-markets assumption is doing a lot of work in the fee guidance. Three things to watch in the Q3 report (State Street has reported mid-month after quarter-end — April 17 and July 16 this year — so mid-October is the likely window): whether NII growth holds up now that NIM already slipped 3 bps sequentially, whether the $2.93 trillion installation backlog converts into servicing-fee growth that isn't just market-driven, and whether underlying expense growth stays near 10% or eases toward the ~8% full-year guide.
Source: State Street Form 10-Q for the quarter ended June 30, 2026 (filed July 30, 2026), plus the Q2 2026 earnings release and earnings presentation filed on Form 8-K on July 16, 2026. ROTCE, ex-notables figures and FTE NIM are non-GAAP measures as presented by the company.