State Street (STT) kicked off Q1 2025 with a strong financial performance, underscored by broad-based fee revenue growth, improved margins, and disciplined expense control. Total revenue rose 5% year-over-year to $3.28 billion, while total fee revenue grew 6% to $2.57 billion, reflecting gains across servicing, management, and front-office software and data. Notably, management fees jumped 10%, and front-office revenue also advanced 10%, highlighting sustained client demand and product relevance.

While net interest income held steady at $714 million, a 3% drop in total expenses—driven by the absence of a prior FDIC special assessment—helped lift profitability. On an adjusted basis, expenses rose 3%, primarily due to continued investment in technology and business growth initiatives. The efficiency gains were evident in the 25.0% pre-tax margin, up 5.9 percentage points from the prior year, and in the positive operating leverage of 7.2 percentage points (1.8 points excluding notable items).

These tailwinds translated to a sharp rise in earnings, with net income increasing 39% YoY to $644 million and diluted EPS climbing 49% to $2.04. Return metrics also improved significantly, with ROE reaching 10.6% (up from 7.7%) and ROTCE expanding to 16.4%, up 4 percentage points from Q1 2024.

By business line, Investment Servicing posted $1.98 billion in revenue, up from $1.88 billion a year earlier, with a modest rise in pre-tax income and a 24.5% margin. Fee revenue rose 5%, supported by strong AUC/A growth to $46.7 trillion—a 6% YoY increase. The bank won $182 billion in new mandates, with $3.1 trillion still to be installed, and recorded $55 million in new servicing fees, primarily from back-office contracts.

Meanwhile, Investment Management (State Street Global Advisors) delivered a standout quarter with $596 million in revenue (up 8% YoY), and pre-tax income rising to $165 million, driving margin expansion to 27.7%. AUM ended the quarter at $4.7 trillion, up 9%, driven by ETF inflows across fixed income, gold, and EMEA strategies, underscoring its competitive positioning in low-cost product categories.

Capital levels remained strong, with a CET1 ratio of 11.0%, a Tier 1 leverage ratio of 5.5%, and an LCR of 106% at the corporate level (and 139% at State Street Bank and Trust). The firm returned $320 million to shareholders through $100 million in share repurchases and $220 million in dividends.

Chairman and CEO Ron O’Hanley emphasized the company’s cross-firm growth and reinforced confidence in State Street’s long-term strategy. Management continues to guide for 3–5% net core fee revenue growth in 2025, with expectations of steady loan growth and elevated deposit levels. Investment in AI and automation remains a priority, especially within fund accounting and client service, further solidifying the company’s digital edge.

In summary, State Street began 2025 on solid footing, combining solid top-line growth, cost efficiency, and technological investment to drive shareholder value. With healthy capital returns, scalable platforms like State Street Alpha, and strong client engagement, the firm remains well-positioned to navigate ongoing macroeconomic uncertainties while pursuing sustainable long-term growth.