Shares of Northern Trust Corporation NTRS gained 4.9% as third-quarter 2024 adjusted earnings per share of $1.96 surpassed the Zacks Consensus Estimate of $1.73. In the prior-year quarter, the company reported earnings per share of $1.49.
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Results benefited from a rise in fee income. Also, an increase in total assets under custody (AUC) and assets under management (AUM) balances supported financials. Strong capital ratios were another positive. However, a rise in expenses acted as a spoilsport.
Net income (GAAP basis) was $464.9 million, up 41.8% from the prior-year quarter.
NTRS’ Revenues & Expenses Rise
Quarterly total revenues (GAAP basis) of $1.97 billion increased 19.5% year over year. The top line also beat the Zacks Consensus Estimate of $1.87 billion.
Net interest income (NII) on a fully taxable equivalent basis was $569.4 million in the quarter under review, up 23.1% year over year. The net interest margin (NIM) was 1.68%, up 23 basis points from the prior-year quarter.
Trust, investment and other servicing fees totaled $1.2 billion, up 7.6% from the year-ago quarter.
Other non-interest income increased 32.6% to $209.6 million from the prior-year quarter. The rise was primarily driven by a $68.1 million pre-tax gain related to the sale of an equity investment (after-tax $51.4 million) recorded in other operating income.
Non-interest expenses increased 6.4% to $1.36 billion in the reported quarter. The uptick stemmed from an elevation in all components except for occupancy and other operating expenses.
Northern Trust’s AUC and AUM Rise
As of Sept. 30, 2024, Northern Trust’s total AUC increased 25.2% year over year to $13.8 trillion. Also, total AUM rose 21.6% to $1.62 trillion.
NTRS’ Credit Quality: Mixed Bag
Total allowance for credit losses was $220 million, up 5% year over year.
Total non-accrual assets decreased 43.1% to $39.3 million as of Sept. 30, 2024. NTRS reported provisions for credit losses of $8 million in the third quarter, down 42.9% from the prior-year quarter.
NTRS’ Capital and Profitability Ratios Improve
Under the Standardized Approach, as of Sept. 30, 2024, the Common Equity Tier 1 capital ratio was 12.6%, up from 11.4% reported in the prior-year quarter. The total capital ratio was 15.6%, up from 14.5% in the year-ago quarter. The Tier 1 leverage ratio was 8.1% compared with 7.9% in the prior-year quarter.
Return on average assets was 1.26%, up from 0.93% in the year-ago quarter. Also, the return on average common equity was 15.4% compared with the year-earlier quarter’s 11.6%.
NTRS’ Capital Distribution Activities
In the reported quarter, Northern Trust returned approximately $453 million to shareholders through share repurchases and dividends.
Our View on NTRS
A surge in fee income uplifted the company’s third-quarter performance. Its increasing AUC and AUM balances are likely to support financials. Nonetheless, escalating expenses are likely to affect the bottom line in the near term.
Northern Trust Corporation Price, Consensus and EPS Surprise
Northern Trust Corporation price-consensus-eps-surprise-chart | Northern Trust Corporation Quote
Currently, Northern Trust carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
KeyCorp’s KEY third-quarter 2024 adjusted earnings from continuing operations of 30 cents per share beat the Zacks Consensus Estimate of 27 cents. Further, the bottom line reflected a 3.4% rise from the prior-year quarter. The reported quarter included the FDIC special assessment charge of $6 million, but its impact on earnings was negligible.
KEY’s results benefited from a rise in adjusted non-interest income, higher NII, and lower expenses. Improving deposit balance was another positive. However, lower provisions and a lower loan balance were undermining factors. Further, higher deposit costs weighed on NIM.
Comerica Incorporated CMA reported third-quarter 2024 adjusted earnings per share of $1.37, beating the Zacks Consensus Estimate of $1.18. However, the bottom line plunged 25.5% from the prior-year quarter.
CMA’s results benefited from a rise in deposit balance and a strong capital position. However, a decline in NII and fee income, along with increased expenses, was a major headwind.
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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 Nasdaq, Inc.
