State Street earns money by safeguarding and administering investments for institutions, managing investment funds, and helping clients trade currencies and borrow securities. In the second quarter of 2026, revenue grew 17% and profit after tax grew 56%, as higher fees and lower funding costs more than covered increased spending. Last year’s unusual charges made the profit comparison easier, but substantial improvement remained after removing them. That gives State Street more capacity to modernize its systems, provided it also preserves enough cash and capital to support its expanding client business.
Analysis period: April–June 2026, with January–June comparisons. Research cutoff: October 22, 2026, New York date. The subsequent-results update uses the company’s October 14 earnings materials.
Source: State Street second-quarter 2026 Form 10-Q, financial highlights, Table 1 and consolidated financial statements, pp. 8–9 and 45–49.
1. Profit improved substantially even after allowing for last year’s charges
Revenue grew faster than costs on both the reported and adjusted comparisons. State Street earned more from servicing investments, managing funds, foreign-exchange trading and securities lending. Together, higher fees supplied $469 million of the quarter’s $600 million revenue increase. Net interest income—the interest earned after paying depositors and other lenders—supplied the remaining $131 million.
| Consolidated reported results; USD millions except percentages and EPS | Second quarter 2025 | Second quarter 2026 | First half 2025 | First half 2026 |
|---|---|---|---|---|
| Revenue | 3,448 | 4,048 | 6,732 | 7,844 |
| Expenses, excluding the separately reported credit-loss provision | 2,529 | 2,659 | 4,979 | 5,470 |
| Credit-loss provision | 30 | 0 | 42 | 16 |
| Profit before income tax | 889 | 1,389 | 1,711 | 2,358 |
| Net income: profit after tax | 693 | 1,084 | 1,337 | 1,848 |
| Profit before tax as a share of revenue | 25.8% | 34.3% | 25.4% | 30.1% |
| Diluted earnings per common share, USD | 2.17 | 3.65 | 4.21 | 6.14 |
Source: Second-quarter 2026 Form 10-Q, Table 1, p. 8; consolidated income statement, p. 45; Note 16, p. 79. Percentages are rounded as reported.
Last year’s charges made the reported expense increase of 5.1% look unusually small. A year earlier, State Street recorded workforce-reduction costs and losses associated with changes to a client engagement. Removing management’s identified unusual items from both periods raises expense growth to 10.2%. Nevertheless, profit before tax still increased 35.2% against that adjusted comparison. The full revenue, expense and tax reconciliation appears in Calculation note A.
The lower credit-loss provision also helped. Its decline from $30 million to zero added $30 million to the $500 million improvement in quarterly pretax profit. The tax rate changed little, from about 22.0% to 21.9%, so tax was not the main explanation for the earnings jump. The first half provides a broader check: reported net income rose 38.2%, despite new restructuring and client-related costs in the first quarter.
Sources: Second-quarter 2026 Form 10-Q, “Notable Items,” p. 9, credit-loss discussion, p. 17, and income taxes, p. 18; July 16 earnings addendum, “Reconciliations of Non-GAAP Financial Information.”
Both business divisions contributed. Investment Servicing, which includes custody, administration, trading and much of the lending business, earned $1.080 billion before tax, against $819 million a year earlier. Investment Management earned $309 million, against $208 million. These are management’s segment allocations; the prior-year consolidated result also included $138 million of net costs outside the two divisions. Comparing the segment sums without that separate amount would overstate the prior-year consolidated profit.
Source: Second-quarter 2026 Form 10-Q, Tables 13–14, pp. 19–20, and Note 17, pp. 79–81.
2. New client money helped, but rising markets did more to lift managed assets
The fee expansion combines stronger client business with a substantial market lift. Servicing fees rose from $1.304 billion to $1.468 billion. Management attributed this to higher average market values, client activity and flows, and net new business. Management fees rose from $600 million to $772 million, supported by higher average asset values and net inflows.
Half of second-quarter servicing fees came from outside the United States, compared with 23% of management fees. Overseas operating and currency conditions therefore matter especially to servicing.
These businesses respond differently to markets. Many management fees are tied directly to the value of clients’ investments. Servicing fees also depend on transaction counts, the services supplied and negotiated prices. A rise in the assets State Street handles therefore does not translate into the same percentage increase in fees.
Source: Second-quarter 2026 Form 10-Q, Table 2 and servicing- and management-fee discussions, pp. 10–12.
Managed assets rose by $658 billion during the quarter. The bridge below shows why this was much larger than the money clients added.
| Change in reported assets under management; USD billions | Second quarter 2025 | Second quarter 2026 |
|---|---|---|
| Assets at March 31 | 4,665 | 5,620 |
| Net client inflows | 82 | 114 |
| Market and currency changes | 370 | 544 |
| Assets at June 30 | 5,117 | 6,278 |
Market and currency changes supplied about 83% of the second-quarter 2026 increase. The first half tells a similar, less extreme story: clients added $163 billion, while market and currency changes added $450 billion. This is meaningful new business, but much of the enlarged fee base remains exposed to investment prices.
The strongest second-quarter inflows were into index strategies and cash products. Index strategies received $81 billion, including $66 billion into exchange-traded funds. Cash products received $35 billion. Active, alternative and other strategies had $2 billion of net outflows. State Street’s growth was therefore broad across major passive and liquidity products, rather than equally strong across every investment strategy.
Source: Second-quarter 2026 Form 10-Q, Tables 6–9, pp. 12–13. The reported assets-under-management measure includes certain gold products for which State Street acts as marketing agent rather than investment manager. Calculation note B reconciles the first-half change.
The servicing business has another source of future fees: client work already won but not yet operating on its systems. State Street brought $228 billion of servicing assets onto its platform during the quarter and ended June with $2.93 trillion awaiting installation. Management expected approximately 65% of that asset backlog to be installed during the rest of 2026, with most of the remainder during 2027 and 2028.
Installation matters because fees begin when State Street starts providing the service. The company says implementations can take 6–36 months, and industry pricing pressure continues. Winning a large mandate creates an opportunity; completing the work on time and at an acceptable cost determines its contribution to earnings. The backlog is a measure of client assets, not contracted revenue.
Source: Second-quarter 2026 Form 10-Q, “Net New Business” and “Pricing,” p. 11.
Competition provides useful context. BNY, another major custody bank, reported second-quarter fee revenue of $4.036 billion versus $3.641 billion, an increase of about 11%, and cited healthy client activity. That supports the interpretation that State Street benefited partly from favorable conditions across the industry. State Street’s faster total fee growth alone does not establish market-share gains because the companies have different product mixes.
Source: BNY second-quarter 2026 earnings release, July 15, “Consolidated Financial Highlights” and chief executive commentary.
3. Technology spending is rising before the next round of savings arrives
State Street is spending more to improve delivery while its software business faces uneven renewals. Software services revenue fell from $169 million to $166 million. Last year’s figure was already reduced by a $24 million client-related revenue charge; before that charge, the comparison was $193 million. Fewer renewals of software installed on clients’ own systems explain the weakness.
Management reported annual recurring software revenue of $433 million, up from a recast $381 million. This annualizes the final month’s qualifying recurring revenue; it is not revenue already earned for a full year. It provides counterevidence to the renewal decline, indicating that recurring services were expanding even as upfront license revenue weakened.
Sources: Second-quarter 2026 Form 10-Q, “Software Services,” p. 14; July 16 earnings presentation, slide 8 and endnotes 12–17.
State Street’s technology program aims to simplify systems, move more applications onto modern cloud platforms and use artificial intelligence to improve staff productivity. Management targets about $750 million of annual productivity savings and $250 million of annual revenue benefits by 2029. Its medium-term adjusted pretax-margin target is 35%, over three to five years, assuming a stable operating and equity-market environment and rates broadly consistent with June forward rates. These are targets; the revenue component is not an equal amount of additional profit.
Source: July 16 earnings presentation, slides 15–17 and endnote 35.
The present cost is visible. Quarterly information-systems and communications expense rose from $523 million to $589 million, reflecting transaction volumes, infrastructure investment and modernization. Employee numbers fell by about 3%, but incentive pay, salary increases and benefits kept compensation expense rising. Productivity savings and lower staffing helped absorb growth and investment costs, while the total expense bill continued to rise.
Cash spending also accelerated. First-half purchases of premises and equipment, net, reached $945 million, versus $545 million. From December to June, the balance-sheet value of premises and equipment increased from $3.174 billion to $3.854 billion. These purchases are separate from the technology expenses recorded in earnings. The disclosures do not divide the cash spending into maintenance and expansion, so the full amount cannot be labeled growth investment.
Over the same period, acquired intangible assets moved in the opposite direction, falling from $935 million to $816 million, mainly through the scheduled recognition of acquisition costs as expense. Goodwill fell from $8.159 billion to $8.106 billion, mainly because of currency translation. Goodwill represents value recorded in earlier acquisitions. It is largely excluded from the capital regulators count as protection against losses.
Source: Second-quarter 2026 Form 10-Q, expense discussion, pp. 17–18; consolidated balance sheet and cash-flow statement, pp. 47 and 49; Note 5, pp. 63–64.
Geographic expansion adds another demand on execution. On July 28, State Street announced an initial agreement to acquire the Santander CACEIS securities-services joint venture in Brazil, Mexico and Colombia. Management’s purpose is to combine its global network with local teams, licenses and expertise. The business reported approximately $470 billion of assets under custody and $225 billion under administration; these measures can overlap and should not be added together as unique client assets.
The announcement expected closing in 2027, subject to definitive documentation, regulatory approvals and other conditions. It did not disclose a purchase price. The business opportunity is a broader local service offering for global and regional clients; a quantified cash cost or profit contribution is not yet supported by that announcement.
Source: State Street’s Latin America transaction announcement, July 28, 2026.
4. Lower funding costs strengthened interest earnings
Lower funding costs more than offset a decline in interest income. Interest income fell by $212 million from the prior-year quarter, but interest expense fell by $343 million. The larger saving on funding increased net interest income by $131 million, to $860 million.
Clients’ deposits helped replace more expensive borrowing. Average interest-bearing client deposits increased from $236.6 billion to $240.8 billion, while their average annualized cost fell from 2.87% to 2.45%. Average other short-term borrowings fell from $10.2 billion to $4.2 billion. State Street attributes the reduced wholesale borrowing to sustained higher client deposits.
The amount of assets earning interest was almost unchanged. The improvement came largely from earning more after funding costs on each dollar deployed: net interest margin rose from 0.96% to 1.13%. Management also identified a better investment mix and a smaller cost from previously terminated hedges—contracts formerly used to manage interest-rate exposure.
Sources: Second-quarter 2026 Form 10-Q, Tables 2 and 10 and discussion, pp. 10 and 15–17; July 16 earnings presentation, slide 9.
This leaves an identifiable interest-rate exposure. In management’s June model, an immediate one-percentage-point reduction across relevant interest rates reduced the following 12 months’ net interest income by $368 million. Of that modeled reduction, $291 million came from non-U.S.-dollar exposures. The model holds deposit balances and mix consistent with its baseline and assumes no corrective management action. It is a sensitivity test, not a forecast, but it shows that lower rates could remove a meaningful part of the current earnings improvement.
Source: Second-quarter 2026 Form 10-Q, Table 28 and assumptions, p. 32.
The securities portfolio carries a different rate risk. Bonds classified as held to maturity had a carrying value of $35.290 billion but a fair value of $31.104 billion. The $4.186 billion gap was slightly larger than the $4.005 billion gap at December 2025. These market-value declines are not charged through earnings merely because market rates change, but they matter if State Street needs to sell the securities. About 95% of the total investment portfolio was rated AA or higher; high credit quality reduces default concerns but does not remove this sale-price risk.
Source: Second-quarter 2026 Form 10-Q, Tables 15–17, p. 21; consolidated balance sheet, p. 47; Note 3, investment securities.
5. Client funding explains the expanding balance sheet and much of the cash use
The bank’s large operating cash outflow primarily reflects financial transactions and collateral movements. It does not by itself measure how much cash the fee businesses earned. State Street’s cash-flow statement classifies client deposit inflows as financing, while substantial collateral movements appear in operating activities.
The balance sheet shows the scale of those movements. The trillions of dollars of investments held for clients are separate from State Street’s own assets below.
| Consolidated financial position; USD billions | December 31, 2025 | June 30, 2026 |
|---|---|---|
| Cash and due from banks | 4.433 | 4.290 |
| Interest-bearing deposits placed with banks | 126.930 | 145.223 |
| Investment securities, combined carrying value | 105.325 | 107.587 |
| Loans after credit-loss allowance | 46.589 | 51.901 |
| Other assets | 58.468 | 81.846 |
| Total assets | 366.047 | 418.381 |
| Client deposits | 274.350 | 319.547 |
| Accrued expenses and other liabilities | 34.051 | 40.095 |
| Long-term debt | 25.143 | 25.704 |
| Total liabilities | 338.206 | 390.113 |
| Shareholders’ equity | 27.841 | 28.268 |
Source: Second-quarter 2026 Form 10-Q, consolidated statement of condition, p. 47. Selected components do not constitute a complete asset or liability subtotal; totals include all reported accounts.
Clients left $45.2 billion more in deposits at June than at December. A large part of the asset expansion was matched by more money placed with other banks, principally central banks, and by securities-financing activity. Within “other assets,” securities borrowed increased by $13.893 billion and net derivative assets increased by $4.651 billion. These two categories explain most of that account’s increase. They represent financial claims and collateral-related business. On the liability side, collateral received in principal securities-financing transactions rose from $20.17 billion to $22.15 billion, contributing to the increase in accrued expenses and other liabilities.
The securities portfolio also changed shape: available-for-sale securities increased by $5.143 billion while held-to-maturity securities declined by $2.881 billion. Purchases and maturities therefore changed both the size and the accounting composition of the investment book.
Source: Second-quarter 2026 Form 10-Q, Table 15, p. 21; liquidity discussion, pp. 26–28; Notes 6 and 9, pp. 64 and 71; cash-flow statement, p. 49.
The cash-flow comparison makes the funding relationship clearer.
| Consolidated cash flows; USD billions | First half 2025 | First half 2026 |
|---|---|---|
| Cash used in operating activities | -6.045 | -14.469 |
| Cash used in investing activities | -14.991 | -30.169 |
| Cash provided by financing activities | 21.911 | 44.495 |
| Net change in cash and due from banks | 0.875 | -0.143 |
| Opening cash and due from banks | 3.145 | 4.433 |
| Closing cash and due from banks | 4.020 | 4.290 |
Source: Second-quarter 2026 Form 10-Q, consolidated cash-flow statement, p. 49. This cash measure excludes the separately classified interest-bearing deposits with banks.
Within operating activities, the change in collateral deposits used $13.578 billion, similar to the $13.138 billion use a year earlier. A foreign-exchange derivative adjustment changed much more sharply: it subtracted $4.820 billion in 2026 after adding $5.909 billion in 2025. This removes a noncash valuation effect from the profit-to-cash calculation. It should not be read as a separate $4.820 billion trading loss or necessarily as a payment of that amount.
Clients and other counterparties had not yet paid all the interest and fees recorded. The increase in accrued interest and fees receivable used $472 million of cash, compared with $555 million a year earlier. Separately, receivables arising from customer contracts rose from $3.51 billion to $3.91 billion; those contracts are generally billed monthly or quarterly. The evidence shows cash tied up awaiting collection, but does not establish a deterioration in payment quality.
Source: Second-quarter 2026 Form 10-Q, cash-flow statement, p. 49; Note 18, “Contract balances,” p. 83. Calculation note C reconciles net income to operating cash flow.
Investing cash use included $18.293 billion placed in interest-bearing bank deposits and a $6.268 billion net increase in loans before separately reported loan-sale proceeds. Financing supplied $45.195 billion of net customer deposit inflows. These are core banking funding and deployment activities, which is why subtracting equipment spending from operating cash flow would be a poor measure of cash available to distribute here.
There is also an important restriction on the closing cash figure. Approximately $2.5 billion of accounts included in cash and due from banks were subject to sanctions restrictions, versus $2.4 billion at December. The $4.290 billion total is therefore not all freely accessible. Liquidity must be assessed using accessible bank balances, securities, funding facilities and regulatory measures together.
Source: Second-quarter 2026 Form 10-Q, cash-flow statement, p. 49; Note 1, “Cash and Cash Equivalents,” p. 51.
6. Earnings rebuilt equity, but business growth consumed regulatory capacity
State Street’s capital increased in dollars while its principal capital ratio fell. Common equity tier 1 capital, the core shareholder funding regulators recognize as available to absorb losses, increased from $14.812 billion to $15.425 billion. However, the assets and other exposures used in the regulatory risk calculation grew more quickly, from $127.263 billion to $143.406 billion. This measure gives more weight to exposures regulators judge riskier. The standardized capital ratio fell from 11.6% to 10.8%.
The change reflects higher derivative-related and other risk-weighted exposures, together with continued distributions to shareholders. Reported shareholders’ equity rose by $427 million, as earnings more than covered declared dividends, repurchases and other changes. Calculation note D separates retained earnings, repurchased shares and valuation changes.
| Consolidated capital and liquidity measures | December 2025 | June 2026 |
|---|---|---|
| Standardized common equity tier 1 ratio | 11.6% | 10.8% |
| Tier 1 leverage ratio | 5.5% | 5.3% |
| Quarterly average liquidity coverage ratio | 106% | 107% |
Source: Second-quarter 2026 Form 10-Q, Tables 29–32, pp. 34–40, and liquidity discussion, p. 26. The first two ratios are period-end measures; liquidity coverage uses daily averages for the respective quarters.
The June common-equity ratio remained above the disclosed 8.0% requirement including buffers. Liquidity coverage also remained above its minimum: the company averaged $111.55 billion of qualifying liquid assets after regulatory deductions against modeled cash needs during a 30-day stress. These are reassuring protections, but they also show why client growth and shareholder distributions must be considered together. A larger business can use capital even when it is profitable.
Refinancing is a recurring requirement. Approximately $3.95 billion of senior notes was due within 12 months of June 30. Another $3.5 billion of Federal Home Loan Bank funding sat in short-term borrowings, with initial maturities of approximately one year. State Street issued $1.5 billion of senior notes in April, and its banking subsidiary issued a further $1.25 billion in July. The new issues spread funding across later maturities, at a continuing interest cost detailed in Calculation note E.
Source: Second-quarter 2026 Form 10-Q, liquidity and funding, pp. 26–28; Table 29 and accompanying capital requirements, pp. 34–36; Note 20, p. 83.
Contracts can create additional liquidity demands. If specified derivative agreements were triggered by a credit rating falling below investment grade, the company estimated that it could have to post another $1.36 billion of collateral at June values. Subsidiary-to-parent dividend restrictions also mean that consolidated liquidity is not automatically available to the holding company. The holding company therefore needs its own liquidity arrangements alongside the bank’s funding.
Source: Second-quarter 2026 Form 10-Q, Note 7, “Credit Contingencies,” p. 68, and common-dividend restrictions, p. 42.
Management describes buybacks as a way to return excess capital after supporting dividends and business investment. Cash distributions remained substantial. First-half program buybacks used $800 million, cash dividends used $584 million, and purchases for employee tax withholding used another $107 million. Together with $945 million of premises-and-equipment purchases, these uses totaled $2.436 billion. Given the operating cash outflow, they must be assessed within the bank’s overall funding position rather than described as covered by operating cash flow.
Buybacks also helped reported earnings per share. Quarterly income available to common shareholders rose 62.9%, while diluted shares declined 3.2%; diluted EPS consequently rose 68.2%. Equity awards still added 4.912 million shares to the diluted calculation, up from 4.209 million. Repurchases reduced shares outstanding overall, but did not eliminate employee-award dilution. The issued share count stayed unchanged: the acquired shares were held in treasury, not retired.
Sources: Second-quarter 2026 Form 10-Q, consolidated financial statements, pp. 47–49; Note 12, pp. 74–75; Note 16, p. 79; July 16 earnings presentation, slide 18.
7. Lower total reserves do not mean every credit exposure improved
Commercial real estate required more protection even as the overall credit-loss allowance fell. Gross loans increased from $46.782 billion in December to $52.062 billion in June. Much of that increase came from client overdrafts, financing secured by investors’ commitments to funds, and loans to vehicles holding pools of corporate debt. Commercial loans declined, partly through sales.
The total credit-loss allowance, including off-balance-sheet commitments and other covered assets, fell from $203 million to $175 million. The reconciliation is $203 million plus $16 million of new provision, less $44 million of charge-offs. Charge-offs remove loans or portions of loans judged unrecoverable; they are not new income. The falling balance therefore cannot be described simply as a release that boosted profit.
Commercial real estate moved against the overall trend. Its allowance rose from $120 million to $132 million even as that loan portfolio shrank from $2.471 billion to $2.291 billion. Office buildings represented approximately 39% of the portfolio. Across all loans, balances on which the bank stopped accruing interest increased from $258 million to $293 million. These figures show where credit pressure remained despite the quarter’s zero net provision.
Sources: Second-quarter 2026 Form 10-Q, Tables 21–22, p. 24, and Note 4, pp. 58–63; 2025 Form 10-K, loan descriptions, p. 77. The $175 million total allowance is broader than the $161 million allowance deducted from loans on the balance sheet.
Securities financing creates contingent obligations beyond the loan book. State Street promised to cover specified borrower failures on $395.860 billion of securities financing, supported by $418.633 billion of cash and securities collateral held as agent. Collateral provides substantial protection, but its value and the ability to realize it matter when a borrower defaults. The guarantee amount is neither an expected loss nor an amount to add mechanically to financing debt.
Source: Second-quarter 2026 Form 10-Q, Note 9, p. 71.
Legal and regulatory exposures also require room for adverse outcomes. At June, State Street had accrued approximately $52 million for legal, regulatory and related matters. For matters it could estimate, it disclosed up to another $70 million of reasonably possible losses above accruals. Some proceedings could not be estimated and were excluded from that range.
The disclosed matters include Currenex trading-platform litigation, pension risk-transfer fiduciary claims, a German dividend-withholding tax dispute and the Texas-led antitrust action concerning coal investment. Separately, tax benefits whose acceptance by tax authorities remained uncertain totaled $238 million, down from $248 million at December. These disclosures establish specific exposures, not a single combined expected-loss figure. The unestimated proceedings prevent the stated legal range from serving as a ceiling on possible costs.
Source: Second-quarter 2026 Form 10-Q, Note 10, pp. 71–73. These are the exposures and assessments disclosed in the selected filing.
8. October’s results support the earnings improvement, with a slower flow of new money
Third-quarter results sustained the stronger profit level without another jump in total revenue. The October 14 release reported the following subsequent-quarter results.
| Consolidated reported results; USD millions | Third quarter 2025 | Second quarter 2026 | Third quarter 2026 |
|---|---|---|---|
| Revenue | 3,545 | 4,048 | 4,004 |
| Profit before income tax | 1,102 | 1,389 | 1,388 |
| Net income | 861 | 1,084 | 1,090 |
Servicing and management fees increased sequentially, while foreign-exchange trading revenue declined. The later quarter therefore supports a higher earnings level, rather than a straight-line continuation of the second quarter’s revenue acceleration.
Source: October 14 third-quarter earnings addendum, “Consolidated Results of Operations.” These subsequent earnings materials do not replace the June 10-Q’s detailed balance-sheet and contingency analysis.
Managed-fund net inflows slowed to $7 billion: $69 billion entered long-term products, while cash products had $62 billion of outflows. The latter are investment-fund flows, not the bank’s deposit flows. The common equity tier 1 ratio recovered to 11.0%.
Management raised its 2026 outlook to approximately 13–14% fee-revenue growth and 15–16% net-interest-income growth, with expenses rising approximately 8–8.5%. These forecasts exclude management’s notable items. They assume equity markets remain flat from then-current levels and interest rates broadly follow forward-market expectations. The outlook continues to put revenue growth ahead of expense growth, but requires the market and business assumptions to hold.
Source: October 14 earnings presentation, slides 6, 11 and 12.
9. The business is stronger; the next test is delivery at a lower cost
State Street has improved its earning capacity while continuing to invest. The second-quarter result survives the adjustment for last year’s charges, and the subsequent quarter supports that conclusion. Its custody relationships, fund products and financing services produced several sources of growth, giving it more resources to improve systems and expand its reach.
The next stage depends on converting client mandates into functioning services and turning technology spending into lower delivery costs. Favorable markets have enlarged the fee base, and cheaper funding has lifted interest earnings; both can change faster than the technology program can be completed. The strongest evidence of further business progress would be continued fee growth from installed client work, realized productivity gains, and enough retained capital to support the associated deposits, collateral and lending. Persistent implementation delays, renewed property-credit losses or a reversal of market support would weaken that assessment.
Reporting basis and calculation notes
Reporting basis: State Street Corporation, CIK 0000093751, consolidated with its subsidiaries under U.S. GAAP. The selected filing is Form 10-Q for the quarter ended June 30, 2026, accession 0000093751-26-000397, filed July 30, 2026. Quarterly income covers April 1–June 30; first-half income and cash flow cover January 1–June 30. Balance-sheet comparisons use December 31, 2025. The interim statements are unaudited and were reviewed by Ernst & Young.
The filing recast prior-year fee categories: distribution and marketing revenue moved into management fees, and lending-related fees moved into other fee revenue. Comparisons here use those recast figures. Custody and managed assets belong to clients or funds and are not added to the bank’s consolidated assets. The research cutoff is October 22; the latest operating results examined are the October 14 earnings materials. Legal and detailed accounting assessments remain dated as identified beside each claim.
Sources: SEC filing index; selected Form 10-Q, cover, Note 1 and independent accountants’ review, pp. 50 and 84; SEC company facts. XBRL cross-checks used the selected accession, consolidated U.S. GAAP facts, USD or share units, and the actual start and end dates rather than relying on the “Q2” label alone.
Calculation notes A — removing identified unusual items. This table checks whether the profit improvement remains after management’s adjustments. All amounts are USD millions. The adjustment column is the signed amount added to the reported figure.
| Measure | Second quarter 2025 reported | Adjustment | Second quarter 2025 adjusted | Second quarter 2026 reported and adjusted |
|---|---|---|---|---|
| Revenue | 3,448 | 21 | 3,469 | 4,048 |
| Expenses | 2,529 | -117 | 2,412 | 2,659 |
| Profit before tax | 889 | 138 | 1,027 | 1,389 |
| Income tax expense | 196 | 35 | 231 | 305 |
| Net income | 693 | 103 | 796 | 1,084 |
The 2025 pretax adjustment removes $100 million of restructuring costs and $42 million of client-rescoping effects, then removes $4 million of benefits. The client item comprises $24 million of lost revenue and $18 million of expense. The benefits comprise $3 million of revenue and a $1 million expense release. The disclosed $35 million tax effect makes the after-tax adjustment $103 million. No notable items were identified in the second quarter of 2026. Adjusted results still include ordinary market effects, credit provisions and investment costs; they are not a forecast of recurring earnings.
Adjusted pretax growth is $1,389 ÷ $1,027 − 1 = 35.2%. Adjusted expense growth is $2,659 ÷ $2,412 − 1 = 10.2%. The reported profit bridge is prior-year pretax profit of $889 million + $600 million more revenue − $130 million more expenses + $30 million less credit provision = $1,389 million. The first half of 2026 includes $89 million of repositioning costs and $41 million of client-rescoping costs incurred in the first quarter; the statement that there were no notable items applies only to the second quarter.
Sources: Form 10-Q, Tables 1–2 and Note 17, for reported results and pretax adjustments; July 16 earnings addendum, “Reconciliations of Non-GAAP Financial Information,” for the tax effect and adjusted-result cross-check.
Calculation notes B — distinguishing client inflows from market gains. In USD billions, first-half managed assets reconcile as $5,665 opening assets + $49 first-quarter inflows + $114 second-quarter inflows − $94 first-quarter market/currency changes + $544 second-quarter market/currency changes = $6,278. For the second quarter, market/currency changes supplied $544 ÷ ($6,278 − $5,620) = 82.7% of the increase. This is a share of the asset increase, not a share of fee growth.
Source: Form 10-Q, Table 9, p. 13.
Calculation notes C — reconciling profit to operating cash. All amounts below are USD millions and cover the first half.
| Profit-to-cash item | 2025 | 2026 |
|---|---|---|
| Net income | 1,337 | 1,848 |
| Deferred tax, depreciation/amortization, securities gains, credit provision and “other, net” adjustments | 465 | 860 |
| Change in trading assets | -22 | -29 |
| Change in accrued interest and fees receivable | -555 | -472 |
| Change in collateral deposits | -13,138 | -13,578 |
| Change in unrealized foreign-exchange derivative losses | 5,909 | -4,820 |
| Change in other assets | -2,680 | -2,614 |
| Change in accrued expenses and other liabilities | 2,639 | 4,336 |
| Operating cash flow | -6,045 | -14,469 |
For 2026, the combined adjustments are $100 deferred tax + $112 intangible amortization + $305 other depreciation, amortization and accretion − $1 securities gain + $16 credit provision + $328 other, net = $860. For 2025, the inputs are −$64 deferred tax + $110 intangible amortization + $95 other depreciation, amortization and accretion + $0 securities gains + $42 credit provision + $282 other, net = $465. Closing 2026 cash checks as $4,433 − $14,469 − $30,169 + $44,495 = $4,290. Closing 2025 cash checks as $3,145 − $6,045 − $14,991 + $21,911 = $4,020. Sanctions-restricted accounts remain within the reported cash scope.
Source: Form 10-Q, consolidated cash-flow statement, p. 49, and Note 1, p. 51.
Calculation notes D — checking shareholders’ equity and the balance sheet. All amounts are USD millions. Retained earnings increased by $1,848 profit − $464 declared common dividends − $116 declared preferred dividends = $1,268. Paid-in surplus, a component of contributed shareholder capital, increased $5. The deduction for shares the company bought back and holds in treasury increased $711. Accumulated other comprehensive loss—the running balance of specified valuation and currency changes recorded outside net income—increased $135. Preferred stock and issued common-stock capital were unchanged. Together, $27,841 opening equity + $1,268 + $5 − $711 − $135 = $28,268 closing equity.
The $135 other comprehensive loss comprises $90 of currency-translation losses and $59 of securities losses, offset by $13 of hedge gains and $1 of retirement-plan gains, all after tax. Treasury accounting includes $808 of common-stock acquisitions and $97 of net releases/other movements. The $808 equity entry differs from $800 of program cash repurchases; cash dividends of $584 also differ from $580 of dividends declared. The cash analysis uses the paid amounts rather than replacing them with equity entries.
The balance sheet checks at both dates: June assets of $418,381 = liabilities of $390,113 + equity of $28,268; December assets of $366,047 = liabilities of $338,206 + equity of $27,841.
Source: Form 10-Q, consolidated comprehensive-income, condition, equity and cash-flow statements, pp. 46–49.
Calculation notes E — debt maturities, interest and leases. The older annual maturity schedule is shown with its date; the June disclosure of $3.95 billion due within 12 months is the more current near-term measure.
| Contractual long-term debt, excluding finance leases and equipment financing; USD millions | Schedule at December 31, 2025 |
|---|---|
| Due in less than one year | 3,846 |
| Due in 1–3 years | 6,590 |
| Due in 4–5 years | 5,775 |
| Due after five years | 8,810 |
| Total | 25,021 |
At December 2025, future operating-lease payments totaled $1,058 million and finance-lease payments $114 million before discounting them to present value; $208 million combined was due in 2026. Recorded operating- and finance-lease liabilities were $863 million and $106 million. These are dated commitments, not updated June balances.
Source: 2025 Form 10-K, Table 26, “Long-Term Contractual Cash Obligations,” and Notes 9 and 20.
| New note issuance; USD millions | Principal | Initial annual interest rate | Maturity |
|---|---|---|---|
| Parent, April 24, 2026 | 800 | 4.558% | 2032 |
| Parent, April 24, 2026 | 700 | 5.094% | 2037 |
| Bank, July 23, 2026 | 750 | 4.701% | 2029 |
| Bank, July 23, 2026 | 500 | 5.217% | 2034 |
The April notes later change to floating rates; the July notes are fixed-rate. At the stated initial rates, annual contractual interest is $72.1 million on the April issues and $61.3 million on the July issues, before hedges, issuance costs and any later rate resets. These calculations are principal multiplied by coupon, not forecasts of reported interest expense. Actual consolidated long-term-debt interest expense in the second quarter was $296 million, versus $322 million a year earlier.
Source: Form 10-Q, Table 10, p. 15; “Long-Term Funding,” p. 28; Note 20, p. 83.
This analysis is for general information and is not investment advice.
