Northern Trust Corporation (NTRS): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Northern Trust's fourth-quarter 2013 earnings lagged the Zacks Consensus Estimate. However, this was favorable compared with the prior-year quarter earnings. Quarterly results benefited from top-line growth. Further, strong capital ratios and enhanced asset management and servicing fees based on a significant equity markets improvement and higher volumes is expected to support earnings in the coming quarters. However, increase in non-interest expenses reflected undisciplined expense management. Further, the thrust of banking regulations might act as deterrents to the company's fundamentals going forward.

Overview:

Northern Trust Corporation is the holding company for its main subsidiary, Northern Trust Company, as well as a number of other banking and non-banking financial service subsidiaries. The company derives majority of its revenue and earnings from the trust business and provides a number of related banking and financial services.

The company's main sources of revenue include two of its primary business units: Corporate and Institutional Services (C&IS) and Wealth Management (WM). Asset management and related services to WM and C&IS clients are provided primarily by a third business unit, Asset Management. Northern Trust emphasizes on quality through a high level of service with effective use of technology, delivered by a fourth business unit, Operations & Technology (O&T).

The Corporate and Institutional Services unit (accounted for 55.0% of 2013 total fees) provides asset servicing, asset management and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies and government funds a full range of commercial banking services to large and mid-sized corporations and financial institutions and foreign exchange services. As of Dec 31, 2013, total C&IS assets under custody (AUC) was $5.1 trillion and assets under management (AUM) was $662.7 billion.

The Wealth Management division (45.0%) delivers customized investment management and trust services to high net worth individuals and families through a network of 81 offices across 18 states of North America and Washington, D.C., as well as offices in London and Guernsey. As of Dec 31, 2013, total AUC was $496.0 billion and total AUM was $221.8 billion.

Asset Management, through the company's various subsidiaries, provides a broad range of asset management and related services and other products to clients around the world, including clients of C&IS and WM. The segment's activities also include overlay services and other risk management services.

Operations & Technology (O&T) supports all of Northern Trust's business activities, including the processing and product management activities of C&IS, WM, and Asset Management. These activities are conducted principally in the operations and technology centers in Chicago, London, and Bangalore.

As of Dec 31, 2013, the company had total assets of $102.9 billion, AUM of $884.5 billion and AUC of $5.6 trillion.

In Jul 2011, Northern Trust completed the acquisition of Omnium LLC, a leading hedge fund administrator, from Citadel. The acquisition of Omnium, which had around $70 billion in assets under administration, enhanced Northern Trust's capabilities and created an industry-leading hedge fund administration platform for institutional investors.

In Jun 2011, Northern Trust completed the acquisition of Bank of Ireland Securities Services (BoISS) from Bank of Ireland Group for 60 million ($82 million) as announced in Feb 2011. Through this acquisition, Northern Trust is combining the fund administration business with the existing activities in Ireland and providing outstanding consumer service and solutions to clients. The acquisition has improved and expanded Northern Trust's Global Fund Service capabilities, particularly in fund administration and ETFs.

Moreover, Northern Trust announced the expansion of its services in Australia. The company incorporated Unit Registry solutions to improve its fund administration capabilities in Australia. Northern Trust has signed an agreement with Computershare to provide such services, combining local expertise with a wide range of worldwide capabilities.


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NORTHERN TRUST (NTRS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: NTRS , WM

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