NII Reversal and Outlook
Q: Will the $80 million loss reverse over the next five quarters?
A: Yes, the $80 million loss will reverse within the next five quarters, becoming a positive for the company. This stems from restructuring $4–5 billion of securities in a $100 billion investment portfolio, mainly treasuries and international sovereigns, to manage Net Interest Income (NII). "

Succession Planning
Q: Can you update us on the CEO succession plan?
A: Succession is regularly discussed at the Board level, and there is a plan in place for when the time comes. "

NII Sustainability
Q: How sustainable is the current NII run rate going forward?
A: While it's early, we believe we're in a nice zone with NII, expecting stabilization and some growth after a few quarters, despite modest headwinds from deposit rotation. "

Impact of Rate Cuts on NII
Q: Is a slower pace of rate cuts better for State Street?
A: Yes. Given our slight asset sensitivity, we'd have slightly better NII if rates didn't fall as quickly. Rate reductions have a slight impact on NII but are not dramatic. "

Repo Activity and NII
Q: How does repo activity affect your NII expectations?
A: Increased repo activity added about a percentage point of NII this quarter. With more cash in the market and borrowers seeking cash with collateral, we're serving clients on both sides, enhancing NII. "

Profitability Amid CFO Transition
Q: How durable are profitability improvements with the CFO change?
A: Our medium-term targets stand firm and are embedded in our culture and incentives. We expect continued benefits from our clear plans across Investment Services, SSGA, Markets, and productivity initiatives. The CFO transition won't signal a change in strategy. "

Balance Sheet Deployment
Q: How are you putting the balance sheet to work to support clients?
A: We're deploying capital in lending activities like capital call financing and BDC lending, FX trading requiring balance sheet, and securities financing. These relationship lending efforts deepen client relationships and contribute to NII and fee growth. "

Alpha Platform and Fee Revenue
Q: Are Alpha and private market initiatives fee rate accretive?
A: It's a mix. We're delivering substantial fee wins, targeting $350–400 million. While deposits are part of relationships, clients understand the balance between services and pricing, leading to more business and support across areas. "

Servicing Fees and Backlog
Q: How quickly will new asset servicing business be onboarded?
A: We expect about half of the servicing fee backlog to come through over the fourth quarter and next year, continually installing revenues from our backlog into the P&L. "

New Business Wins and Alpha Clients
Q: Details on the $466 billion in new AUC/A wins?
A: Two Alpha wins dominate, totaling $380 billion. One client moved from being a Charles River-only client to a full front-to-back relationship, including moving asset servicing from a competitor to us, opening opportunities for deposits and FX services. "

Deposit Behavior After Rate Cut
Q: How did deposits react after the rate cut?
A: We saw no discernible change; deposit levels continued prior trends, operating around current levels for now. "

Expansion into Mexico
Q: Is State Street expanding into Mexico?
A: Yes, we're modestly building capabilities and activity in Latin America as investment markets develop, aiming for modest growth and establishing a foothold. Our core markets remain the U.S., EMEA, and APAC. "

Appetite for Acquisitions
Q: What's your stance on acquisitions after the Brown Brothers deal fell through?
A: While we consider M&A to accelerate strategy, we see significant promise in our organic plans and are cautious with capital stewardship, preferring to focus on organic growth. "