Northern Trust Corporation
NTRS · NASDAQ-GS
NTRS · NASDAQ-GS
Expected to report Jan 21, 2027 — estimated from last year’s reporting date.
Consensus is $3.06 EPS for Dec 2026 across 5 estimates, ranging $3.00 to $3.11.
Northern Trust’s Q3 2026 showed solid underlying growth, though reported results were lower sequentially against an unusually large prior-quarter gain. The company reported $2.294 billion of revenue, $642.9 million of net income and diluted EPS of $3.40. Revenue was up 13% and net income up 40% from Q3 2025, but down 15% and 19%, respectively, from Q2 2026. The release reports EPS of $3.40; the supplied consensus snapshot lists $2.86 expected EPS but gives a conflicting $3.20 reported figure and 11.89% surprise. Using the release figure, EPS was about 19% above consensus.
The central story was growth in the fee franchise alongside disciplined costs: trust fees rose 8% year over year, FTE net interest income rose 14%, and expenses grew about 5% excluding notable items. Management said these trends generated over 600 basis points of positive operating leverage excluding notable items. Comparisons with Q2 were distorted by its $525.4 million Visa gain and several expense charges; Q3 included $48.7 million of pretax gains, including the sale of the guardianship business. The company also reported a 19.3% effective tax rate, down from 26.1% in Q2, and expects the rate to be closer to 25% in Q4. Its outlook calls for Q4 revenue growth of 6%–7% and FTE net interest income growth of 8%–9% year over year, assuming a relatively stable market and rate environment.
The headline sequential decline reflects a tough comparison rather than a sharp reversal in core momentum. Q2 included a $525.4 million Visa exchange-offer gain and a $73.9 million securities-sale loss, as well as $145.6 million of specified expense charges. Q3 included $48.7 million of pretax notable gains: $34.0 million from selling the guardianship services business and $14.7 million from the Visa exchange offer. On the company’s excluding-notable-items comparison, revenue was flat sequentially and up 11% year over year, while expenses were flat sequentially and up 4.9% year over year. Reported pretax income was $796.5 million, net income was $642.9 million and return on average common equity was 20.1%.
Trust, investment and other servicing fees rose to $1.373 billion, up 2% sequentially and 8% year over year. Favorable markets and organic growth supported fees across all three businesses. Asset Servicing fees were $761.5 million, up 8% year over year, including securities lending fees up 38% to $29.4 million. Wealth Management fees increased 9% to $611.5 million, with Global Family Office fees up 16% to $117.2 million. Assets under custody/administration totaled $19.9 trillion, up 9% year over year, while assets under management were $1.963 trillion, up 11%. Both client-asset totals were slightly lower or flat sequentially; management cited moderate equity appreciation offset by lower fixed-income values and outflows from short-duration strategies. Asset Servicing’s pretax margin reached 30.3%, up 5.6 percentage points year over year, and Wealth Management’s was 41.1%.
FTE net interest income was $679.1 million, down 1% sequentially but up 14% year over year. FTE net interest margin increased to 1.83%, from 1.81% in Q2 and 1.70% a year earlier. Year-over-year gains reflected higher deposits, favorable deposit mix and lower funding costs; sequentially, lower deposit balances more than offset higher securities yields. Average deposits fell 3% sequentially to $123.4 billion, which management described as typical third-quarter seasonality. For Q4, Northern Trust expects FTE net interest income to increase 8%–9% year over year, citing the September rate move, anticipated December rate increase, portfolio reinvestment yields of roughly 4%–5% and a seasonal recovery in deposits.
Reported noninterest expense was $1.493 billion, up 5% year over year and down 9% sequentially. The sequential comparison benefited from Q2 software-disposition, severance and employee-equity-grant charges; excluding notable items, expense was flat sequentially. Year-over-year cost growth reflected technology, compensation and account-servicing costs, partly offset by scale benefits. Management reported more than 600 basis points of positive operating leverage excluding notable items and an expense-to-trust-fee ratio below 109%, versus 112% a year earlier. It expects positive operating leverage in Q4 and at least 500 basis points for full-year 2026, while noting that the year-over-year comparison will be harder against a strong Q4 2025.
