A month has gone by since the last earnings report for State Street Corporation (STT Quick QuoteSTT - Free Report) . Shares have added about 6.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is State Street due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important catalysts.

State Street's Q2 Earnings Top as Fee Income Rises Y/Y

State Street’s second-quarter 2025 adjusted earnings of $2.53 per share surpassed the Zacks Consensus Estimate of $2.36. The bottom line also increased 17.7% from the prior-year quarter.

Results were aided by growth in fee revenues. Also, the company witnessed improvements in total assets under custody and administration and assets under management balances. However, higher adjusted expenses, a jump in provisions and lower net interest income acted as spoilsports.

The results excluded certain notable items. Including those, net income available to common shareholders was $693 million, down 2.5% from the year-ago quarter. Our projection for the metric was $680.9 million.

Revenues Improve, Adjusted Expenses Rise

Total quarterly revenues of $3.45 billion increased 8.1% year over year. Moreover, the top line surpassed the Zacks Consensus Estimate of $3.38 billion.

NII was $735 million, down marginally year over year. The fall was due to lower average short-end rates and a deposit mix shift, partially offset by securities portfolio repricing and loan growth. Our estimate for the metric was $735.2 million. Net interest margin contracted 17 basis points year over year to 0.96%. We expected NIM to be 1.01%.

Total fee revenues increased 6.8% year over year to $2.72 billion. The growth was driven by an increase in almost all the components except lending-related and other fees. We estimated the metric to be $2.64 billion.

Non-interest expenses were $2.53 billion, up 11.5% from the prior-year quarter. The rise was mainly due to an increase in all the components except occupancy costs and amortization of other intangible assets. Excluding one-time costs, adjusted expenses rose 6.3% to $2.41 billion. Our estimate for the metric was $2.36 billion.

Provision for credit losses was $30 million, up significantly from $10 million in the prior year quarter. We had projected the metric to be $15.2 million.

The Common Equity Tier 1 ratio was 10.7% as of June 30, 2025, compared with 11.2% in the corresponding period of 2024. The return on average common equity was 10.8% compared with 11.9% in the year-ago quarter.

Asset Balances Increase

As of June 30, 2025, the total AUC/A was $49 trillion, up 10.6% year over year. The rise was driven by higher quarter-end equity market levels, client flows and the impact of currency translation. We had projected the metric to be $47.81 trillion.

AUM was $5.12 trillion, up 17.1% year over year, primarily led by higher quarter-end market levels and net inflows. Our estimate for the metric was $4.74 trillion.

Share Repurchase Update

In the reported quarter, State Street repurchased shares worth $300 million.

2025 Outlook

Management expects to generate $350-$400 million in new servicing fee revenues. Excluding notable items, total fee revenues are anticipated to increase 5-7% year over year, up from the prior guidance range of 3-5%.

Excluding notable items, NII is expected to be roughly stable compared with 2024, with the potential for some variability driven by global monetary policy and changes in deposit mix.

Management expects average deposit balances to remain elevated relative to its expectation of $230-$240 million.

Driven by the productivity and optimization savings initiatives that the company has been undertaking, it has delivered $250 million in savings, moving toward its full-year target of productivity savings of $500 million.

However, given the projected rise in revenue-related costs because of improved top-line expectations, 2025 adjusted expense growth is anticipated to be 3-4%, up from the prior outlook of 2-3%.

The company targets a total payout ratio of 80% in 2025.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a flat trend in estimates review.

VGM Scores

Currently, State Street has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for value investors.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

State Street has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.