On May 31, 2013, we reiterated our long-term recommendation on
Northern Trust Corporation
) at Neutral based on its well-managed global franchise, strong
capital base and expense reduction initiatives. However,
regulatory issues coupled with fundamental pressures on the
banking sector might act as deterrents to the company's
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NORTHERN TRUST (NTRS): Free Stock Analysis
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Northern Trust reported its first-quarter 2013 earnings of 71
cents per share, lagging the Zacks Consensus Estimate by a penny.
However, this compared favorably with the prior-year quarter
earnings of 67 cents per share.
Considering certain non-recurring items, Northern Trust reported
net income of $164.0 million or 67 cents per share in the first
quarter compared with $161.2 million or 66 cents per share in the
prior-year quarter. Results on a year-over-year basis benefited
from top-line growth, partially offset by a rise in operating
expenses. Further, improving credit quality and strong capital
ratios were the tailwinds.
Northern Trust successfully executed the Driving Performance
initiatives announced at the beginning of 2012, which contributed
about $160 million in pre-tax profit improvements in 2012, split
approximately 40-60 between revenue and expense items and boosted
pre-tax margin by about 375 basis points. Moreover, the company
remains on track to deliver $250 million of pre-tax benefits by
the end of 2013, recording a benefit of $55 million in
However, low short-term interest rates along with persistent
narrow spreads at the short end of the yield curve continue to
negatively impact net interest income and money market mutual
fund fees for Northern Trust. Though the U.S. economy posted
stable to improving economic data during the quarter, including
favorable developments in unemployment and housing, concerns
about the outlook for the global economy and continued political
For Northern Trust, the Zacks Consensus Estimate for 2013 and
2014 remained stable at $3.20 and $3.60 per share, over the last
7 days. Hence, Northern Trust carries a Zacks Rank #3 (Hold).
Other Major Banks to Consider
Some major regional banks that are worth considering include
The PNC Financial Services Group, Inc.
JPMorgan Chase & Co.
). All the 3 banks hold a Zacks Rank #2 (Buy).