State Street’s STT second-quarter 2026 earnings of $3.65 per share surpassed the Zacks Consensus Estimate of $3.30. The bottom line increased 68.2% from the prior-year quarter.
Results were aided by year-over-year growth in net interest income (NII) and fee revenues, along with nil provisions. Also, the company witnessed improvements in the total assets under custody and administration (AUC/A) and assets under management (AUM) balances to record levels. However, higher expenses acted as a spoilsport.
Net income available to common shareholders (GAAP basis) was $1.03 billion, surging 62.9% from the year-ago quarter.
STT’s Revenues Improve, Expenses Rise
Total revenues were a record $4.05 billion, which increased 17.4% year over year. The top line surpassed the Zacks Consensus Estimate of $3.89 billion.
NII was $860 million, up 18% year over year.
The net interest margin expanded 17 basis points year over year to 1.13%.
Total fee revenues increased 17.2% year over year to $3.19 billion. The rise was driven by an increase in all fee income components, except for software services fees.
Non-interest expenses were $2.66 billion, up 5.1% from the prior-year quarter. The rise was due to an increase in all cost components, except for occupancy costs.
The company did not record any provision for credit losses in the quarter, as against $30 million in the prior-year quarter.
The Common Equity Tier 1 ratio was 10.8% as of June 30, 2026, compared with 10.7% in the corresponding period of 2025. The return on average common equity was 16.7% compared with 10.8% in the year-ago quarter.
Asset Balances Increase for State Street to Record Levels
As of June 30, 2026, the total AUC/A was a record $57.86 trillion, up 18.1% year over year. The rise was driven by higher quarter-end equity market levels, client flows and net new business.
AUM was a record $6.28 trillion, up 22.7% year over year, led by higher quarter-end market levels and net inflows.
STT’s Share Repurchase Update
In the reported quarter, State Street repurchased shares worth $400 million.
Our Take on State Street
STT’s strategic buyouts, rising AUM balance and solid business servicing wins are expected to keep supporting its financials. However, persistently rising expenses and concentrated fee-based revenues are concerning.
State Street Corporation Price, Consensus and EPS Surprise
State Street Corporation price-consensus-eps-surprise-chart | State Street Corporation Quote
State Street currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
The Bank of New York Mellon Corporation’s BNY second-quarter 2026 adjusted earnings of $2.46 per share handily surpassed the Zacks Consensus Estimate of $2.20. The bottom line increased 26.8% from the year-ago quarter.
BNY’s results primarily benefited from a rise in fee revenues and NII. Also, the company recorded a provision benefit in the quarter, which was a tailwind.
Bank of America’s BAC second-quarter 2026 earnings of $1.21 per share handily surpassed the Zacks Consensus Estimate of $1.13. The bottom line grew 34.4% year over year.
BAC recorded an improvement in trading numbers for the 17th straight quarter. The company’s investment banking performance was solid this time as well. These, along with higher NII, drove Bank of America’s total revenues. While provisions declined in the quarter on a year-over-year basis, non-interest expenses increased, which hurt the results to some extent.
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This article originally published on Zacks Investment Research (zacks.com).