State Street reports Q2 2026 EPS of $3.65 on record revenue and raises full-year guidance

State Street Corporation reported second-quarter earnings per share of $3.65, up 68% year on year, on total revenue of $4.0 billion, and raised its full-year 2026 guidance for fee and net interest income growth, the Boston-based custody bank said on Thursday.

Revenue rose 17% from the same period a year earlier, and pre-tax margin expanded 850 basis points to 34.3% (470 basis points excluding prior-year notable items). The company also highlighted a 10% increase in its third-quarter common stock dividend, declared on 14 July after the Federal Reserve stress test.

MARGIN EXPANSION DRIVES THE BEAT

The 850 basis point expansion in pre-tax margin to 34.3% came as revenue rose 17% while total expenses rose 5% (10% excluding notable items), producing total operating leverage of 1,226 basis points (645 basis points excluding notable items). Chairman and chief executive Ron O'Hanley said it was the tenth consecutive quarter of positive operating leverage excluding notable items.

Assets under custody and/or administration rose 18% to a record $57.9 trillion and assets under management rose 23% to a record $6.3 trillion, mainly reflecting higher market levels, flows and net new business. Excluding notable items in the prior-year quarter, EPS rose 44%.

GUIDANCE RAISED FOR THE FULL YEAR

State Street raised its full-year 2026 outlook for fee revenue growth to about 12-13% from about 7-9%, and for net interest income growth to about 14-15% from about 8-10%, according to its earnings presentation.

O'Hanley said the dividend increase, to $0.92 per share, reflected "the resilience of our franchise and our continued focus on returning capital to shareholders". In the second quarter State Street returned $631 million to common shareholders, including $400 million of share repurchases.

O'Hanley said State Street was "entering our next phase of growth, defined by new medium-term financial targets"; the earnings presentation set medium-term targets of a pre-tax margin of 35% and a return on tangible common equity in the mid-20s per cent.