State Street (STT) Stock: Slides 5.6% as Q4 Revenue Hits Record and Costs Surge

TLDR

• Record Q4 revenue impressed, but expense growth dragged profits lower
• Strong fee, FX, and interest income gains couldn’t offset rising costs
• Shares slid 5.6% as margins narrowed despite clear business momentum
• AUM and AUC/A surged on market gains, reinforcing long-term growth outlook
• Heavy tech and digital investment weighed on earnings but supports scale

State Street (STT) shares dropped 5.62% to $128.63 after the company reported strong fourth-quarter revenue but sharply higher expenses.

State Street Corporation, STT

The report showed rising business momentum, yet cost pressures reduced quarterly profit. The update created a mixed picture as revenue set a new high while earnings weakened.

Record Revenue Supports Core Business Growth

State Street reported total fourth-quarter revenue of $3.67 billion, which rose 7% from last year. The gain came from higher servicing fees, stronger management fees, and firm FX trading activity. The company also posted a 7% increase in net interest income as margins improved.

Fee revenue reached $2.86 billion, driven by broad performance across Investment Services, Investment Management, and Markets. Servicing fees rose 8%, while management fees advanced 15% due to higher global market levels. FX trading services also expanded as client activity continued to strengthen.

The firm registered new servicing fee revenue wins of $87 million and secured $484 billion in new AUC/A. The company ended the quarter with future installations of $320 million in servicing revenue. It also held $2.5 trillion in upcoming AUC/A installations, supporting forward revenue visibility.

Costs Rise Sharply as Strategic Investments Expand

Expenses climbed 12% to $2.74 billion due to notable items and higher operating spending. Excluding those items, costs increased 6% as the company expanded technology capabilities and adjusted for incentive-based pay. Currency translation added further pressure across expense categories.

Compensation and employee benefits rose 10% as the firm continued to support new initiatives. Information systems costs increased 16% because of expanded digital programs and platform improvements. Occupancy costs rose sharply due to specific notables, although underlying costs declined.

The quarter also included higher transaction processing and general operating expenses. These changes reflected broader investment in growth areas and expanding client services. The structure positioned the company to scale newer offerings, although margins narrowed during the period.

AUM and AUC/A Strengthen as Market Levels Improve

State Street ended the quarter with $53.8 trillion in assets under custody and administration. The increase of 16% reflected higher market valuations and steady flows across major client groups. Assets under management reached $5.7 trillion after advancing 20%.

The company expanded its product lineup with 37 new offerings in the quarter. It launched 134 products in 2025, which supported strategy execution across active and passive platforms. It also recorded gains in its U.S. Low Cost ETF suite and saw strong demand for SPY and Gold products.

State Street advanced digital initiatives as it introduced its new digital asset platform. The system supports tokenized funds, assets, and cash, and it strengthens the firm’s position in emerging market infrastructure. Partnerships in private markets and India’s digital sector also expanded the company’s reach.

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