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NORTHERN TRUST CORP (NTRS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 diluted EPS was $2.26 and net income was $455.4M; GAAP total revenue was $1,959.6M, ROE was 15.3%, and the company returned $402.8M to shareholders including $253.7M of buybacks at an average $106.70 per share .
  • Net interest income on an FTE basis reached a record $574.3M and NIM (FTE) was 1.71%; consolidated trust, investment and other servicing fees rose 12% YoY to $1,222.2M .
  • Guidance: management guided Q1 2025 NII to $555–$575M, expects FY 2025 NII to rise low-single-digits, reaffirmed total operating expense growth at or below 5% for FY 2025 (excluding notable items), and reiterated medium-term targets of >30% pretax margin, 105–110% expense-to-trust fee ratio, and 10–15% ROE .
  • Dividend maintained: $0.75 per common share declared for Q1 2025; capital ratios remained strong (CET1 standardized 12.4%, advanced 14.5%) providing flexibility for continued repurchases .

What Went Well and What Went Wrong

What Went Well

  • Trust fee momentum: custody and fund administration fees +9% YoY to $456.9M; Wealth Management fees +14% YoY to $546.7M, with regional strength and GFO inflows .
  • Record NII and better mix: NII (FTE) set a new high at $574.3M; management cited improved deposit mix, pricing aligned with market conditions, and higher loan activity as drivers .
  • Operating leverage and productivity: expense-to-trust fee ratio improved to 113% in Q4; CEO emphasized “healthy trust fee and total operating leverage” with progress on One Northern Trust strategy and productivity initiatives .
    • Quote (CEO): “Northern Trust finished the year with strong fourth quarter results… we delivered healthy trust fee and total operating leverage… and generated a 15.3% return on common equity” .

What Went Wrong

  • Other noninterest income fell sequentially to $173.6M (down 17% QoQ), primarily due to the prior-quarter $68.1M equity investment gain and Visa escrow contributions not repeating .
  • AUC/A declined 4% sequentially (to $16.8T) due to unfavorable currency and weaker bond markets, despite being +9% YoY; management noted ~80% of the sequential decline was currency .
  • Noninterest expense rose 1% QoQ to $1,375.9M (compensation +6% YoY, equipment/software +9% YoY) amid ongoing modernization and resiliency spending .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Total Revenue (GAAP, $USD Millions)$1,545.3 $2,715.5 $1,968.5 $1,959.6
Net Interest Income (GAAP, $USD Millions)$483.1 $522.9 $562.3 $563.8
Noninterest Income ($USD Millions)$1,062.2 $1,026.5 $1,406.2 $1,395.8
Noninterest Expense ($USD Millions)$1,388.5 $1,533.9 $1,359.4 $1,375.9
Net Income ($USD Millions)$113.1 $896.1 $464.9 $455.4
Diluted EPS ($USD)$0.52 $4.34 $2.22 $2.26
NIM (FTE, %)1.59% 1.57% 1.68% 1.71%

Segment breakdown (trust, investment and other servicing fees):

Segment Fees ($USD Millions)Q4 2023Q3 2024Q4 2024
Asset Servicing – Custody & Fund Admin$420.4 $453.1 $456.9
Asset Servicing – Investment Mgmt$130.7 $152.6 $156.9
Asset Servicing – Securities Lending$22.0 $17.5 $20.4
Asset Servicing – Other$38.6 $43.9 $41.3
Total Asset Servicing$611.7 $667.1 $675.5
Wealth Mgmt – Central$171.9 $186.6 $195.3
Wealth Mgmt – East$121.5 $136.4 $140.7
Wealth Mgmt – West$97.3 $105.7 $110.0
Wealth Mgmt – GFO$87.6 $100.8 $100.7
Total Wealth Mgmt$478.3 $529.5 $546.7
Total Consolidated Fees$1,090.0 $1,196.6 $1,222.2

KPIs and capital:

KPIQ4 2023Q3 2024Q4 2024
AUC/A ($USD Billions) – Total$15,404.9 $17,423.0 $16,788.0
AUC ($USD Billions) – Total$11,916.5 $13,794.8 $13,349.2
AUM ($USD Billions) – Total$1,434.5 $1,621.8 $1,610.4
CET1 (Corp, Standardized)11.4% 12.6% 12.4%
CET1 (Corp, Advanced)13.4% 14.0% 14.5%
ROE (Avg Common Equity)4.0% 15.4% 15.3%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Income (FTE)Q1 2025n/a$555–$575M New
Net Interest Income (FTE)FY 2025n/aLow single-digit % increase New
Total Operating Expenses (ex-notables)FY 2025“5% or better” target referenced in prior commentary Reaffirmed at/below 5% with “very strong conviction” Maintained
Medium-term targetsMulti-yearn/a>30% pretax margin; 105–110% expense-to-trust fee; 10–15% ROE Maintained
Common dividendQ1 2025$0.75/share in prior quarters $0.75/share declared Maintained
Share repurchasesQ4 2024 cadenceElevated pace post-Visa monetization $253.7M in Q4; expect continued elevated levels in 2025 subject to capital/rules Maintained trajectory

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
AI/technology/automationAccelerating modernization/resiliency spend; automation of manual processes; cloud migration plans Continued investments; “reducing manual processes meaningfully” and deploying additional AI tools; COO centralized operations to standardize/automate Improving
Deposit pricing/betasVery high betas to rate cuts; option to sweep into money funds; wealth deposit costs lower than institutional Pricing aligned to market; deposit mix improved (noninterest-bearing up 7% QoQ); strong institutional betas Improving
Capital returnElevated buybacks funded by Visa monetization; CET1 12.6% CET1 12.4%; $403M returned in Q4; comfortable modestly lower CET1 and maintaining elevated buybacks in 2025 Maintained
Asset Servicing strategy/pricingPivot to scalable growth; selective bidding; capital markets revenue up double-digits Pricing discipline maintained; organic growth at higher margins; pipeline solid; currency drove most AUC/A sequential decline Improving profitability mix
Alternatives/private marketsNTAM raised ~$2B in treasury-only MM fund; alternatives through 50 South Capital; platform build-out Alternatives highlighted across wealth/asset management; >$1B raised in 50 South funds; semi-liquid structures growth in Europe Accelerating
Currency/macro impactsNII lift from transactional items; caution about rate cuts headwinds in 2025 ~80% of sequential AUC/A decline due to FX; fewer rate cuts would be better for NII Mixed (FX headwind)

Management Commentary

  • CEO strategic message: “We made significant progress across all 3 pillars in 2024… deepened client relationships… invested in technology to eliminate legacy software, mature our cloud environment and bolster our cyber defenses… and laid the groundwork to generate efficiencies” .
  • Prepared remarks emphasize scalable growth and productivity: “We begin 2025 well-positioned… focused on accelerating growth, making further progress on our productivity initiatives, and investing for the future” .
  • CFO financial frame: “We generated over 600 bps of trust fee operating leverage, nearly 800 bps of overall operating leverage, and our expense-to-trust fee ratio improved… to 113%” .

Q&A Highlights

  • NII trajectory and durability: Q1 2025 NII guide $555–$575M; deposit mix/pricing under active management; fewer rate cuts would be better for NII .
  • Expense discipline: Strong conviction in 2025 OpEx growth at/below 5%; structural changes (COO role, centralization) to drive sustained efficiency .
  • ROE target context: Aiming for upper half of 10–15% range; balancing growth and returns rather than maximizing ROE at expense of growth .
  • Asset servicing pricing and margin: Selective bidding to ensure accretive business; pricing conditions improving; pipeline stable .
  • AUC/A and currency: Sequential declines driven ~80% by FX with exposure to fixed income and international markets .

Estimates Context

  • Wall Street consensus (S&P Global) EPS and revenue estimates for Q4 2024, Q3 2024, and Q2 2024 were unavailable due to access limitations; therefore, comparison to consensus and beat/miss assessment cannot be provided at this time. Values would ordinarily be sourced from S&P Global.

Key Takeaways for Investors

  • Strong quarter quality: record NII (FTE $574.3M) and NIM improvement to 1.71% alongside fee growth (+12% YoY), supporting positive operating leverage and ROE of 15.3% .
  • Revenue mix resilient: both Asset Servicing and Wealth Management fees grew YoY; custody and fund administration up 9% YoY, and WM fees up 14% YoY .
  • FX/macro watch: sequential AUC/A decline was largely FX-driven; with high deposit betas, NII sensitivity to the path/timing of rate cuts remains a key variable .
  • Expense trajectory improving: expense-to-trust fee ratio improved to 113% and management reaffirmed sub-5% OpEx growth for FY 2025, backed by structural changes and automation .
  • Capital strength/capital return: CET1 remains well above regulatory minimums (12.4% standardized), enabling continued buybacks; $253.7M repurchased in Q4 .
  • Strategic focus areas: scalable custody wins, capital markets growth, alternatives expansion (50 South platform, semi-liquids in Europe), and tighter pricing discipline should lift margins over time .
  • Dividend continuity: $0.75/share declared for Q1 2025 maintains income support while buybacks add per-share accretion .

Additional primary sources:

  • Q4 2024 earnings press release and 8-K exhibits (financial trends, presentation): .
  • Q4 2024 earnings call transcript: .
  • Prior quarters for trend: Q3 2024 press/call and Q2 2024 call .
  • Related press releases: Q4 2024 dividends and prime rate update .