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NORTHERN TRUST CORP (NTRS)·Q1 2025 Earnings Summary

Executive Summary

  • Northern Trust delivered Q1 2025 diluted EPS of $1.90 and total revenue of $1.94B; EPS rose 99% YoY and fell 16% QoQ, while revenue grew 18% YoY and declined 1% QoQ . Net interest income (GAAP) was $568M with NIM 1.69% on an FTE basis .
  • Management raised full‑year NII guidance from low single‑digit to low‑to‑mid single‑digit growth on stronger deposit levels and pricing discipline; full‑year total operating expense growth remains “below 5%” (excluding notables) .
  • Trust fee operating leverage remained positive YoY; Asset Servicing fees were $672M (+5% YoY) and Wealth Management fees $542M (+8% YoY) despite lagged market effects .
  • Capital ratios strengthened (CET1 standardized 12.9%); $435M returned to shareholders in Q1 via $148M dividends and $287M buybacks; payout ~116% .
  • Stock catalysts: raised NII guidance; deposit stability; continued progress on “One Northern Trust” (alternatives expansion, Family Office Solutions) and strong capital return .

What Went Well and What Went Wrong

What Went Well

  • Positive operating leverage for the third consecutive quarter; EPS excluding prior-year notables up 13% and ROCE 13% while returning $435M to shareholders .
  • Asset Servicing and Wealth Management fee growth (+5% and +8% YoY) on favorable markets and new business; capital markets activities up double digits YoY .
  • Full-year NII guidance raised to low-to-mid single digits on resilient deposits and disciplined pricing; average deposits rose to $116B (+3% QoQ) .
  • Quote: “We generated our third consecutive quarter of positive operating leverage… EPS excluding notables increased 13% and we generated a return on common equity of 13%… returning $435 million to shareholders.” — CEO Mike O’Grady .

What Went Wrong

  • Sequential decline in EPS (-16%) and total revenue (-1%) on higher seasonal comp expense and normalization of transactional items; noninterest expense rose 3% QoQ .
  • Other noninterest income down 9% QoQ, with lower supplemental compensation plan income and Visa swap expense; FX trading and brokerage down sequentially .
  • Trust fees declined 1% QoQ due to month/quarter lag pricing despite strong Q4 asset levels; management flagged continued lag impacts if markets weaken .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Total Revenue (GAAP, $USD Billions)$1.969 $1.960 $1.940
Diluted EPS ($USD)$2.22 $2.26 $1.90
Net Interest Income (GAAP, $USD Millions)$562.3 $563.8 $568.1
Net Interest Margin (FTE, %)1.68% 1.71% 1.69%
Trust, Investment & Other Servicing Fees ($USD Millions)$1,196.6 $1,222.2 $1,213.8
Noninterest Expense ($USD Millions)$1,359.4 $1,375.9 $1,417.6
ROACE (%)15.4% 15.3% 13.0%
Pre‑Tax Margin (FTE, %)30.8% 30.7% 27.1%

Segment breakdown – Trust fee detail:

Segment Fees ($USD Millions)Q3 2024Q4 2024Q1 2025
Asset Servicing – Total$667.1 $675.5 $671.9
• Custody & Fund Administration$453.1 $456.9 $453.3
• Investment Management$152.6 $156.9 $152.5
• Securities Lending$17.5 $20.4 $17.9
• Other$43.9 $41.3 $48.2
Wealth Management – Total$529.5 $546.7 $541.9

Key KPIs:

KPIQ3 2024Q4 2024Q1 2025
Total AUC/A ($USD Trillions, EOP)$17.423 $16.788 $16.924
Total AUM ($USD Trillions, EOP)$1.622 $1.610 $1.608
Average Deposits ($USD Billions)$113 $113 $116
CET1 (Standardized, %)12.6% 12.4% 12.9%
Share Repurchases ($USD Millions)$301 $254 $287

Q1 2025 Actual vs S&P Global Consensus:

MetricActualConsensus# of Est.Result
Diluted EPS ($USD)$1.90 $1.838*10*Beat
Total Revenue ($USD Billions)$1.940 $1.948*6*Slight miss

Values with asterisks retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Income growthFY 2025Low single‑digit growth Low‑to‑mid single‑digit growth Raised
Total operating expense growth (ex notables)FY 2025Below 5% Below 5% Maintained
Deposit mix outlookFY 2025Stable NIB % (point‑in‑time fluctuations) Stable mix; NIB absolute levels not expected to move materially Maintained tone
Capital returnOngoing~78% payout in 2024; aim ≥ peers Management comfortable around ~100% payout going forward (subject to flexibility) Raised aspiration
DividendsQ2 2025 payable$0.75 common; $0.29375 per depositary share (Series E) Reaffirmed Q2 pay dates/record dates Maintained (declared)

Earnings Call Themes & Trends

TopicQ3 2024 (Prev-2)Q4 2024 (Prev-1)Q1 2025 (Current)Trend
AI/Technology/ProductivityExpanded automation, AI tools; COO role to centralize ops Continued modernization; cloud, automation; operating leverage targets Early deployment of ML/NLP and generative AI (e.g., GitHub Copilot); digitization of documents; workflow automation Building, early wins
Deposits/NII/BetasBetter deposit mix; transactional items aided NII NII record; noninterest-bearing +7% QoQ; pricing improvements Raised NII guide; avg deposits $116B; institutional betas near 100%, wealth 60–70% Constructive/stable
Alternatives & ETFsNew products; liquidity flows strong; index pressure Positive inflows; alternatives expansion; strong performance On track to nearly double capital raise; 11 new fixed income ETFs filed; strong semi‑liquid fund servicing Accelerating
Family Office / UHNWGFO organic growth strong GFO strength; UHNW practice planned Family Office Solutions launched; UHNW focus (>$100M); hiring and tech builds; hundreds of target clients Scaling up
Regulatory (Basel III)Asset sensitivity and portfolio repositioning Strong capital; flexibility for buybacks Operational risk treatment trending more refined; SLR tweaks could add capacity; comfortable capital Neutral/favorable
Capital markets activityDouble-digit growth in capital markets Strong activity QoQ Elevated FX/brokerage/ITS on volatility; momentum carried into April Supportive

Management Commentary

  • Strategic progress: “Our performance reflects continued progress implementing our One Northern Trust strategy… optimizing growth, strengthening resiliency… driving productivity.” — CEO Mike O’Grady .
  • NII outlook: “Given our first quarter outperformance… we’re raising our full‑year guidance from low single‑digit growth to low‑to‑mid single‑digit growth.” — CFO Dave Fox .
  • Deposits & betas: “Deposit betas remain relatively stable… higher for institutional, closer to 100, and lower for wealth, 60% to 70%.” — Management .
  • UHNW push: “We formally rolled out Family Office Solutions… focusing on wealthy individuals and families with more than $100 million… adding resources and tech to scale.” — CEO .
  • Capital return posture: “We paid out 116% of earnings… going forward around 100% could be something we could aim more towards.” — Management .

Q&A Highlights

  • Deposits/NII sensitivity: Average deposits stable into April; a 25bp cut equates to < ~$1M/month NII impact; NIM compression only at much lower rates .
  • Expense discipline: Commitment to keep expense growth below 5% with levers in consulting, tech spend, and incentives; building a flexible model through cycles .
  • Fee lags: Billing lags roughly 25% quarterly, 60% monthly, 15% daily; Q2 will still reflect Q1 quarter-end marks, but weakness would catch up if markets don’t rebound .
  • Capital & buybacks: CET1 12.9%; flexibility to maintain higher payout (~100%) versus peers; Q1 payout 116% .
  • Visa position: Carrying value at zero; potential pretax unrealized gain ~$1.1B on remaining shares; future monetization subject to Visa windows .

Estimates Context

  • EPS beat: $1.90 vs $1.838* Consensus; 10* estimates .
  • Revenue slight miss: $1.940B vs $1.949B* Consensus; 6* estimates .
  • Estimate adjustments: Raised NII guide suggests upward revisions to NII/Net revenue trajectory; expense growth reiterated below 5% supports margin stability .

Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • NII trajectory improved; deposit levels/mix stable and disciplined pricing underpin raised full‑year NII guidance — supportive for net revenue and EPS momentum in 2025 .
  • Fee growth durable; Asset Servicing and Wealth Management both posting high single‑digit YoY growth despite lag effects — watch market path for near‑term fee prints .
  • Expense control credible; below‑5% guidance maintained with identifiable levers and COO-led centralization/automation — increases probability of sustained operating leverage .
  • Alternatives/UHNW vectors are scaling (capital raises, semi‑liquid servicing, Family Office Solutions), offering higher-margin growth optionality .
  • Capital return remains robust; CET1 12.9% and stated comfort around ~100% payout provide support — buybacks likely to continue, aiding EPS and ROE .
  • Near-term trading: Momentum from capital markets volatility (FX/brokerage/ITS) continued into April; could bolster Q2 noninterest income if volatility persists .
  • Medium-term thesis: Execution on One Northern Trust (tech productivity, scalable growth, UHNW) plus disciplined expense and capital return should drive low 30s pre‑tax margins and ROE in upper half of target range over time .

Sources

  • Q1 2025 press release and 8‑K exhibits: financials, segment data, capital ratios, trends .
  • Q1 2025 earnings call transcript: prepared remarks and Q&A .
  • Q4 2024 earnings call transcript: guidance baseline, capital return, NIB mix .
  • Q3 2024 earnings call transcript: capital markets, organizational changes, asset sensitivity .
  • Dividend press release: Q2 common and preferred dividends .

Values marked with asterisks retrieved from S&P Global.