State Street Corporation (NYSE:STT) stock fell Friday after the bank posted quarterly results and outlined its outlook.

The company reported fourth-quarter adjusted earnings per share of $2.97, beating the analyst consensus estimate of $2.85.

Quarterly sales $3.667 billion (+7% year over year) outpaced the Street view of $$3.599 billion.

Investment Servicing AUC/A as of quarter-end increased 16% to a record $53.8 trillion, mainly due to higher market levels and flows.

Investment Management AUM as of quarter-end increased 20% to $5.7 trillion.

The company launched 37 new products in the quarter, including 16 ETFs.

Revenue Growth Driven by Fees

Fee revenue rose 8% on stronger servicing, management, FX trading, and securities finance results.

Servicing fees gained 8%, management fees climbed 15%, FX trading rose 13%, and securities finance increased 8%.

Software and processing fees fell 15%, partially offsetting the overall growth.

Quarterly Metrics

Net interest income in the quarter under review gained 7% to $802 million. This was primarily driven by an increase of 3 basis points in net interest margin and a 4% increase in average interest-earning assets.

Total provision for credit losses was $8 million in the quarter under review, down from $12 million a year ago, primarily reflecting increases in loan loss reserves associated with commercial real estate loans and the evolving macroeconomic environment.

Total expenses rose 12%, primarily driven by $206 million in net notable items recorded during the quarter.

State Street posted $226 million in net repositioning costs for the quarter, driven largely by $111 million tied to workforce streamlining and $69 million from efforts to optimize its real estate footprint.

Capital Position and Shareholder Returns

Standardized CET1 ended the quarter at 11.7%, up 0.8 points from the fourth quarter of 2024, driven by earnings and partly offset by capital returns.

It rose 0.4 points from the third quarter on earnings and lower RWAs, again partly offset by capital returns.

In the quarter under review, State Street returned a total of $635 million of capital to common shareholders, including $400 million of share repurchases and $235 million (or 84 cents per share) of declared dividends.

Outlook

“As we enter 2026, we will execute against our strategic priorities, including further embedding technology and artificial intelligence to drive further transformation across the franchise, continued growth of our core business, and expanding client solutions through innovation,” said CEO Ron O’Hanley.

For 2026, the company expects fee revenue to rise about 4% to 6% year over year.

It also forecasts net interest income to grow at a low single-digit percentage pace.

Management expects net interest margin to expand, supporting NII growth.

Expenses are expected to rise about 3%-4% year over year, reflecting investments in strategic growth initiatives and the ongoing transformation program.

STT Price Action: State Street shares were down 2.42% at $132.99 during premarket trading on Friday. The stock is approaching its 52-week high of $137.04, according to Benzinga Pro data.

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