State Street Corp Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Alexander Blostein - Goldman Sachs Group Inc - Analyst : Hi. Good morning, everybody. Thank you for the questions. John. Welcome to the call. I wanted to maybe get your thoughts as you kind of get your feet wet with the new business here for State Street. How are you thinking about both the balance sheet management and sort of operating dynamics in the company. Any additional steps you're looking to pursue as far as just kind of your early observations across the business go either on the capital management, expense management, NII? Any other thoughts would be helpful just to get your first impressions.

Question: Alexander Blostein - Goldman Sachs Group Inc - Analyst : Great. That's helpful. Thank you. And then just as a follow-up related to NII, your point just now around NII improving in the fourth quarter relative to the third quarter, is it a function of just the balances being higher and know they tend to pick up seasonally? Or is there something more specific that you guys are already starting to work through to drive NII higher from here?

Question: Alexander Blostein - Goldman Sachs Group Inc - Analyst : Great. Awesome. Thank you very much.

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : Hi. Can you hear me?

Question: Mike Mayo - Wells Fargo Securities LLC - Analyst : Hey. So John, back to that fresh set of eyes, State Street stock for the last five years has underperformed the bank index by about 10 percentage points. And one of your big competitors by over 100 percentage points. So recently, State Street showed better fee growth, better operating leverage, innovation. And clearly, you wouldn't have come to State Street if you didn't see some potential to provide greater shareholder value than has been delivered for the last five years. So with that -- and especially with less credit risk compared to your old firm, too. So what do you think is not understood about the State Street story and what would you do to help change that? And then kind of separate but related, Ron, I was just wondering kind of how many more years you're thinking about staying on as CEO. Thank you.

Question: Ken Usdin - Autonomous Research - Analyst : Sorry about that. I was trying to find the button. On the fee side, guys, I just wanted to ask, we saw another 350-plus of wins this quarter, good underlying strength on the services side. Can you just talk about any update to your expected trajectory of how that comes on, especially now that we're towards the year with 40-ish this year, and just more importantly, how are those installations going? Just still some talk in the market about whether things are going as smoothly as we wanted to see on Alpha or not. So I just kind of want to talk -- ask to kind of talk through the installation cycle and the timing of those, that win base.

Question: Ken Usdin - Autonomous Research - Analyst : Okay. Got it. And second question, just completely understanding the leak up in the expenses, FX translation and also better revenues. And it's obviously been a really good -- still being able to put up good operating leverage. Kind of want to triangulate what you're saying about NII back up in the fourth, and we'll see what happens with the curves and all next year. How do you think about the magnitude of operating leverage that the company is capable of? And how -- and maybe, John, a question for you, how are you starting to triangulate the save and spend balance as you think about what the right expense growth rate is for State Street. Thank you.

Question: Jim Mitchell - Seaport Global - Analyst : Hey, good morning. You talked about strength in -- on the Market side. I think relative to some of your peers, it was stood out, particularly on the FX side. So can you just talk about the environment versus what you're doing to grab share and how you're thinking about the growth outlook in those businesses from kind of elevated levels here?

Question: Jim Mitchell - Seaport Global - Analyst : Okay. Yeah, that's helpful. And just maybe a follow-up on the expenses for next year on operating leverage. It seems like you -- John, you feel like there's an opportunity to even maybe accelerate expense saves and then you have to balance that with investment. So is the message that you have a good amount of flex if the revenue environment doesn't come out as good as you might think? Can you flex downward to maintain positive operating leverage? Just how should we think about your flexibility next year and beyond? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2025 / 3:00PM, STT.N - Q3 2025 State Street Corp Earnings Call

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Hey, good morning. Maybe just following up on the capital piece. So it sounds like everything you said; we are setting up for some version of a franchise efficiency plan on the expense side as well as how you can tap into growth even in a much better way than you've done so far. Similarly, from a capital standpoint, are there opportunities to do things differently when we think about just the balance sheet management, I think the capital return has been about 80% payout. I would love your thoughts there, John. Thanks.

Question: Ebrahim Poonawala - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Thanks. And just maybe sticking with that. You mentioned strategic investments as the third sort of capital priority. Given the regulatory backdrop that we are seeing, does that allow for something more larger as opposed to bolt-on acquisitions that could strategically put the firm on a much better growth trajectory or just step into businesses? I mean, obviously, we had the acquisition from a few years ago with BBH. But would love to hear in terms of appetite for larger deal making, is there an opportunity? And if so, where would that make more sense? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2025 / 3:00PM, STT.N - Q3 2025 State Street Corp Earnings Call

Question: David Smith - Truist Securities - Analyst : Thank you. On the topic about the Apex investment and overall, your integrated model. You spoke some about the investment services opportunities with wealth providers that this investment creates for State Street. Does that also create potential opportunities on the investment management side of the house?

Question: David Smith - Truist Securities - Analyst : Thank you.

Question: Vivek Juneja - JPMorgan Chase & Co - Analyst : Thanks. John, just a quick question on your loans that are very much in the spotlight right now and the NDFI -- or whatever you want to call them. You've got -- what is your exposure there? From what we can see seems like over 60% of it is to BDCs. Any thoughts on that? Any color on sort of what's the strategic rationale for that higher percentage going to BDCs?.

Question: Vivek Juneja - JPMorgan Chase & Co - Analyst : Okay. When I said BDCs, I meant BDCs from the data we could pull looks like 60% half year and --

Question: Vivek Juneja - JPMorgan Chase & Co - Analyst : Ron, a question for you maybe. What are you seeing as regards to Charles River with the fixed income clients. Obviously, there's been the issue with Invesco. But beyond that, are you seeing more outflows in the fixed income order management systems? Or any color, any update you can give us there, because there have been some questions on that.

Question: Vivek Juneja - JPMorgan Chase & Co - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 17, 2025 / 3:00PM, STT.N - Q3 2025 State Street Corp Earnings Call

Question: Brennan Hawken - Bank of Montreal - Analyst : Hi, there. Thanks for taking my question. So I'd like to follow up on the Vivek's last question actually. I know that you spoke to a sustained optimism on the software and processing side. But within the marketplace, it does, at least in the minds of a lot of investors seem to suggest that Aladdin is picking up some momentum. And so -- and from what we hear it's not purely in the fixed income side, there's some equity -- decent sized equity managers who are considering the shift as well. When you think about how the progress is positioned in the marketplace, what adjustments are you looking to make in order to better position competitively and maybe recapture some of the solid momentum you've had previously? Thanks.

Question: Brennan Hawken - Bank of Montreal - Analyst : Great, thanks for that color, Ron. John, love to drill down on reinvestment rates. So could you speak to where the investment rates versus roll-off rates are and how much you're picking up? And doing the math on the deposit beta in the US dollar, which is clearly your largest base of deposits running around maybe low to mid-70s depending year-over-year versus quarter-over-quarter. Is that what gets -- is the roll-off rates, what gets to the US rate neutrality? Or do you think you're rate neutral even before we account for the roll-off benefit? Thanks.