VALUATION HIGHLIGHTS

1. Investment Services (Asset Servicing, Forex & Other Trading, Securities Finance & Other) constitute 76% of the Trefis price estimate for State Street's stock.
2. Investment Management constitutes 24% of the Trefis price estimate for State Street's stock.

WHAT HAS CHANGED?

Latest Earnings: Fourth Quarter and Full Year 2025

State Street reported total revenue of $3.25 billion for the fourth quarter, representing a 7% increase year-over-year, while full-year 2025 revenue reached $13.1 billion. Earnings per share (EPS) for the quarter stood at $2.20, up 11% from the prior year period, driven by strong growth in servicing fees and a rebound in foreign exchange trading revenue. Management attributed the performance to record assets under custody and administration (AUC/A), which benefited from favorable market appreciation and significant new business installations throughout the fiscal year.

Note: State Street's FY'25 ended on December 31, 2025.

Strategic Expansion of Alpha Platform

The company accelerated the rollout of State Street Alpha, its integrated front-to-back investment servicing platform, securing several multi-year mandates with large institutional asset managers. This strategic pivot toward a software-as-a-service (SaaS) model is designed to increase "stickiness" with clients and transition revenue streams from transaction-based fees to more predictable, recurring annual subscription models. By integrating data management and analytics directly into the custody workflow, State Street is successfully capturing a larger share of the total wallet from its existing tier-one global bank and insurance clients.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of State Street's value that present opportunities for upside or downside to the current Trefis price estimate:

Investment Servicing

• Assets Under Custody Growth: Total AUC/A reached $44.5 trillion at the end of 2025. If global equity markets remain resilient and State Street maintains its 3% to 5% net new business win rate, there is significant upside to the current Trefis estimate for fee revenue. Conversely, a sharp market downturn would directly compress these asset-based fees.


• Net Interest Income (NII) Sensitivity: NII remains highly sensitive to central bank rate cycles and deposit beta behavior. While NII stabilized in late 2025, any unexpected shift in the federal funds rate or a faster-than-anticipated migration of non-interest-bearing deposits to interest-bearing products could lead to a 5% to 8% variance in total operating margin.

For additional details, select a division from the interactive Trefis split for State Street at the top of the page.

BUSINESS SUMMARY

State Street is a leading global provider of financial services to institutional investors, specializing in investment servicing, investment management, and data and analytics. The firm operates as a critical infrastructure provider for the global financial system, generating the majority of its income through recurring fees tied to the valuation and administration of trillions of dollars in client assets.

SOURCES OF VALUE

Investment Servicing remains the cornerstone of State Street's valuation due to its massive scale and the high switching costs associated with its core custody and accounting platforms.

Unrivaled Global Scale and Market Share

As one of the world's largest custodian banks, State Street benefits from immense economies of scale that allow it to process vast transaction volumes at lower unit costs than smaller competitors. This scale creates a formidable barrier to entry, as the technology investment required to compete globally in custody and clearing is measured in billions of dollars annually.

Institutional Stickiness and High Switching Costs

The integration of State Street's technology into the daily operations of pension funds, mutual funds, and sovereign wealth funds makes the client relationship extremely durable. Once a client adopts the Alpha platform for its end-to-end investment lifecycle, the operational risk and complexity of moving to a competitor become prohibitive, ensuring long-term revenue stability and high retention rates.

KEY TRENDS

Digitization of Private Markets

Institutional investors are increasingly shifting allocations toward private equity, real estate, and private credit. State Street is positioning itself as a leader in private market servicing by investing in specialized accounting tools and digital asset capabilities to support the complex reporting requirements of these non-traditional asset classes, which typically command higher fee margins than public market assets.

Operational Efficiency and Expense Management

State Street is undergoing a multi-year productivity program focused on automating manual back-office processes through artificial intelligence and cloud migration. This strategy aims to drive positive operating leverage by keeping expense growth below revenue growth, targeting a sustainable mid-to-high 20% pre-tax margin even in volatile market environments.