It has been about a month since the last earnings report for Northern Trust Corporation (NTRS). Shares have lost about 1.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Northern Trust due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important drivers.
Northern Trust Q1 Earnings Beat Estimates on Higher NII & AUM Growth
Northern Trust's first-quarter 2026 earnings per share of $2.71 beat the Zacks Consensus Estimate of $2.37. In the prior-year quarter, the company reported an EPS of $1.90.
The company's results benefited from a rise in net interest income. Also, an increase in total assets under custody and assets under management balances supported the financials. However, elevated expenses were concerning.
Net income (GAAP basis) was $525.5 million, up 34% from the prior-year quarter.
Revenues & Expenses Rise
Quarterly total revenues (GAAP basis) of $2.21 billion increased 14% year over year. The top line beat the Zacks Consensus Estimate by 3.5%.
NII was $654 million in the quarter under review, up 15% year over year. The net interest margin was 1.73%, up 6 basis points from the prior-year quarter.
Trust, investment and other servicing fees totaled $1.34 billion, up 11% year over year.
Other non-interest income increased to $210.2 million from $158.1 million in the year-ago quarter.
Non-interest expenses rose 6% year over year to $1.51 billion in the reported quarter.
AUC & AUM Rise
As of March 31, 2026, Northern Trust’s total AUC increased 11% year over year to $14.8 trillion. Also, total AUM rose 11% year over year to $1.8 trillion.
Credit Quality Improves
Total allowance for credit losses was $195.2 million, down 6% year over year.
Total non-accrual assets were $55 million as of March 31, 2026, compared with $73.1 million in the year-ago period. The company reported provision benefits of $3 million in the first quarter against provision for credit losses of $1 million in the year-ago quarter.
Capital & Profitability Ratios
Under the Standardized Approach, as of March 31, 2026, the Common Equity Tier 1 capital ratio was 12.0% compared with 12.9% in the prior-year quarter. The total capital ratio was 15.3% compared with 15.7% in the year-ago quarter. The Tier 1 leverage ratio was 7.3% compared with 8.0% in the prior-year quarter.
The return on average common equity was 17.4% compared with the year-earlier quarter’s 13%.
Capital Distribution Activities
In the reported quarter, Northern Trust returned $509.7 million to shareholders through share repurchases and dividends.
Outlook
2026
NII is expected to grow in the low to mid-single digits.
Management aims to deliver positive operating leverage of more than 1 point.
The company intends to maintain a total payout ratio of more than 100%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in estimates review.
VGM Scores
At this time, Northern Trust has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock has a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Northern Trust has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Northern Trust is part of the Zacks Banks - Major Regional industry. Over the past month, State Street Corporation (STT), a stock from the same industry, has gained 1.1%. The company reported its results for the quarter ended March 2026 more than a month ago.
State Street reported revenues of $3.8 billion in the last reported quarter, representing a year-over-year change of +15.6%. EPS of $2.84 for the same period compares with $2.04 a year ago.
State Street is expected to post earnings of $3.14 per share for the current quarter, representing a year-over-year change of +24.1%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.9%.
State Street has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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This article originally published on Zacks Investment Research (zacks.com).