State Street Delivers Strong Q2 Results Amid Market Volatility
State Street Corporation's recent Q2 2025 earnings conference call provided a snapshot of the company's resilience and adaptability in the face of significant financial market volatility. Despite geopolitical and economic uncertainty, State Street's diversified franchise demonstrated its power by advancing and leveraging technology and investment services capabilities.
CEO Ron O'Hanley acknowledged the devastating floods in Texas, expressing solidarity with those affected before highlighting the company's strong Q2 results. This marks the fourth consecutive quarter of positive fee operating leverage and the sixth consecutive quarter of positive total operating leverage, excluding notable items. New business was robust, with a near-record quarter for sales and investment services, surpassing $5 trillion in assets under management (AUM) at State Street Investment Management, and record foreign exchange (FX) trading volumes.
These positive momentum indicators reflect the company's strategic operating and technology foundation built over the past several years to support long-term growth. As Ron O'Hanley emphasized, disciplined execution against this strategy will continue to drive consistent growth for shareholders and maintain operational excellence in serving clients.
The financial performance of State Street was equally impressive, with reported earnings per share (EPS) reaching $2.17 compared to $2.15 in the year-ago period. Excluding notable items, fee revenue increased by 12% year-over-year, while total revenue grew by 9%. The company delivered positive fee and total operating leverage, a pretax margin of nearly 30%, and achieved a 19% return on tangible common equity.
Within the Investment Services segment, State Street recorded a very strong sales performance, securing over $1 trillion in new AUC/A asset servicing wins. This generated $145 million in related new servicing fee revenue wins, including two new State Street Alpha mandates. The company remains confident in its ability to meet its full-year servicing fee revenue win target of $350 million to $400 million for the second consecutive year.
The rebranded State Street Investment Management business marked an important milestone in Q2, with a focus on delivering better outcomes for investors and the people they serve. This strategic approach, coupled with disciplined execution, has positioned State Street as an essential partner for clients, driving positive results and strong business momentum."
