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State Street Stock Falls Despite Q3 Earnings Beat & Record AUM Levels
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Key Takeaways
State Street shares fell pre-market despite Q3 earnings rising 33% y/y, beating estimates.
STT's net inflows plunged to $7B from $114B, while revenues missed estimates and expense outlook rose.
State Street's AUM hit a record $6.31T, while AUC/A reached $59.17T, driven by market gains.
State Street’s (STT - Free Report) third-quarter 2026 earnings of $3.69 per share surpassed the Zacks Consensus Estimate of $3.65. The bottom line increased 33% from the prior-year quarter.
Despite the earnings beat, shares of State Street declined 9% in pre-market trading, primarily reflecting weaker-than-expected revenues and a sharp slowdown in net asset inflows. Net inflows declined significantly to $7 billion from $114 billion in the preceding quarter, as substantial cash outflows largely offset robust ETF inflows. Investor sentiment was further dampened by management’s upward revision to its 2026 expense growth outlook to 8-8.5%, raising concerns about persistent cost pressures.
While the reported quarter’s results were hurt by higher operating expenses, year-over-year growth in net interest income (NII) and fee revenues, along with a reversal of provisions for credit losses, provided support. Assets under custody and administration (AUC/A) and assets under management (AUM) reached record levels, which was a major positive for STT.
Net income available to common shareholders (GAAP basis) was $1.03 billion, up 28.4% from the year-ago quarter.
STT’s Revenues Improve, Expenses Rise
Total revenues were $4 billion, which increased 12.9% year over year. However, the top line missed the Zacks Consensus Estimate of $4.04 billion.
NII was $864 million, up 20.8% year over year.
The net interest margin expanded 16 basis points year over year to 1.12%.
Total fee revenues increased 11% year over year to $3.14 billion. The rise was driven by an increase in all fee income components, except for other fee revenues.
Non-interest expenses were $2.62 billion, up 7.6% from the prior-year quarter. The rise was due to an increase in all cost components, except for occupancy costs.
The company recorded a negative provision for credit losses of $4 million in the quarter against provisions of $9 million in the prior-year quarter.
The Common Equity Tier 1 ratio was 11% as of Sept. 30, 2026, compared with 11.3% in the corresponding period of 2025. The return on average common equity was 16.4% compared with 13.4% in the year-ago quarter.
Asset Balances Increase for State Street to Record Levels
As of Sept. 30, 2026, the total AUC/A was a record $59.17 trillion, up 14.5% year over year. The rise was driven by higher quarter-end equity market levels, client flows and net new business.
AUM was a record $6.31 trillion, up 15.8% 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
Business servicing wins, a global footprint and continued rising AUM balance, along with State Street’s buyouts, collaborations and product launches, will likely support fee income growth. Amid a favorable rate regime, decent loan growth and stabilizing funding costs will keep driving NII growth. However, persistently rising expenses and concentrated fee-based revenues are concerning.
State Street Corporation Price, Consensus and EPS Surprise
Truist Financial (TFC - Free Report) is slated to announce third-quarter 2026 results on Oct. 16.
Over the past seven days, the Zacks Consensus Estimate for TFC’s quarterly earnings has been unchanged at $1.17. The figure implies 12.5% growth from the prior-year quarter’s actual.
KeyCorp (KEY - Free Report) is slated to announce third-quarter 2026 results on Oct. 20.
Over the past seven days, the Zacks Consensus Estimate for KEY’s quarterly earnings has been unchanged at 46 cents. The figure implies 12.2% growth from the prior-year quarter’s actual.
View the Zacks #1 Rank List
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State Street Stock Falls Despite Q3 Earnings Beat & Record AUM Levels
Key Takeaways
State Street’s (STT - Free Report) third-quarter 2026 earnings of $3.69 per share surpassed the Zacks Consensus Estimate of $3.65. The bottom line increased 33% from the prior-year quarter.
Despite the earnings beat, shares of State Street declined 9% in pre-market trading, primarily reflecting weaker-than-expected revenues and a sharp slowdown in net asset inflows. Net inflows declined significantly to $7 billion from $114 billion in the preceding quarter, as substantial cash outflows largely offset robust ETF inflows. Investor sentiment was further dampened by management’s upward revision to its 2026 expense growth outlook to 8-8.5%, raising concerns about persistent cost pressures.
While the reported quarter’s results were hurt by higher operating expenses, year-over-year growth in net interest income (NII) and fee revenues, along with a reversal of provisions for credit losses, provided support. Assets under custody and administration (AUC/A) and assets under management (AUM) reached record levels, which was a major positive for STT.
Net income available to common shareholders (GAAP basis) was $1.03 billion, up 28.4% from the year-ago quarter.
STT’s Revenues Improve, Expenses Rise
Total revenues were $4 billion, which increased 12.9% year over year. However, the top line missed the Zacks Consensus Estimate of $4.04 billion.
NII was $864 million, up 20.8% year over year.
The net interest margin expanded 16 basis points year over year to 1.12%.
Total fee revenues increased 11% year over year to $3.14 billion. The rise was driven by an increase in all fee income components, except for other fee revenues.
Non-interest expenses were $2.62 billion, up 7.6% from the prior-year quarter. The rise was due to an increase in all cost components, except for occupancy costs.
The company recorded a negative provision for credit losses of $4 million in the quarter against provisions of $9 million in the prior-year quarter.
The Common Equity Tier 1 ratio was 11% as of Sept. 30, 2026, compared with 11.3% in the corresponding period of 2025. The return on average common equity was 16.4% compared with 13.4% in the year-ago quarter.
Asset Balances Increase for State Street to Record Levels
As of Sept. 30, 2026, the total AUC/A was a record $59.17 trillion, up 14.5% year over year. The rise was driven by higher quarter-end equity market levels, client flows and net new business.
AUM was a record $6.31 trillion, up 15.8% 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
Business servicing wins, a global footprint and continued rising AUM balance, along with State Street’s buyouts, collaborations and product launches, will likely support fee income growth. Amid a favorable rate regime, decent loan growth and stabilizing funding costs will keep driving NII growth. 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 #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Dates of STT’s Peers
Truist Financial (TFC - Free Report) is slated to announce third-quarter 2026 results on Oct. 16.
Over the past seven days, the Zacks Consensus Estimate for TFC’s quarterly earnings has been unchanged at $1.17. The figure implies 12.5% growth from the prior-year quarter’s actual.
KeyCorp (KEY - Free Report) is slated to announce third-quarter 2026 results on Oct. 20.
Over the past seven days, the Zacks Consensus Estimate for KEY’s quarterly earnings has been unchanged at 46 cents. The figure implies 12.2% growth from the prior-year quarter’s actual.