Northern Trust Corporation NTRS second-quarter 2026 adjusted earnings per share (EPS) of $2.97 beat the Zacks Consensus Estimate of $2.68. The figure increased 40% from $2.13 in the prior-year quarter.
NTRS’ results benefited from a rise in net interest income (NII) and trust, investment and other servicing fees. An increase in total assets under custody (AUC) and assets under management (AUM) balances also supported the financials. However, elevated expenses were concerning.
Results excluded certain notable items. After considering this, net income (GAAP basis) was $792.2 million, up 88% from the prior-year quarter.
NTRS’ Revenues & Expenses Rise
Quarterly total revenues of $2.62 billion increased 31% year over year. The top line beat the Zacks Consensus Estimate of $2.20 billion by 19%.
NII was $675.5 million in the quarter under review, up 11% year over year. The net interest margin was 1.79%, up 11 basis points from the prior-year quarter.
Trust, investment and other servicing fees totaled $1.35 billion, up 10% year over year.
Other non-interest income increased to $673 million from $156.3 million in the year-ago quarter.
Non-interest expenses rose 16% year over year to $1.64 billion in the reported quarter.
NTRS’ Segment Details
Asset Servicing income before income taxes (FTE basis) was $323.3 million, up 19% year over year. The segment’s pre-tax margin was 23.7% compared with 23.2% in the prior-year quarter.
Wealth Management income before income taxes was $333.5 million, up 8% year over year. The segment’s pre-tax margin was 37.4% compared with 37.2% in the year-ago quarter.
The Other segment recorded income before income taxes of $415.5 million against a loss of $11.5 million in the prior-year quarter.
Northern Trust’s AUC & AUM Rise
As of June 30, 2026, Northern Trust’s total AUC increased 12% year over year to $15.9 trillion. Also, total AUM increased 16% year over year to $1.9 trillion.
The increase in AUC were primarily driven by favorable markets, partly offset by unfavorable currency translation. The rise in AUM mainly reflected favorable markets and net client inflows.
NTRS’ Credit Quality Improves
Total allowance for credit losses was $190.3 million, down 15% year over year.
Total non-accrual assets were $71.3 million as of June 30, 2026, compared with $92.8 million in the year-ago period.
NTRS reported provision benefits of $5.3 million in the second quarter against provision for credit losses of $16.5 million in the year-ago quarter. The provision benefit reflected a decrease in the collective reserve, partly offset by an increase in individual reserves.
Northern Trust’s Capital & Profitability Ratios Improve
Under the Standardized Approach, as of June 30, 2026, the Common Equity Tier 1 capital ratio was 12.2%, unchanged from the prior-year quarter. The total capital ratio was 15.5% compared with 14.8% in the year-ago quarter. The Tier 1 leverage ratio was 7.6%, unchanged from the prior-year quarter.
The return on average common equity was 25.9% compared with the year-earlier quarter’s 14.2%.
NTRS’ Capital Distribution Activities
During the reported quarter, Northern Trust returned $499.4 million to common shareholders through share repurchases and dividends. The company repurchased 2.1 million shares for $350.6 million at an average price of $164.65 per share and paid $148.8 million in common stock dividends.
Following the successful completion of the Federal Reserve’s 2026 stress test, Northern Trust’s board of directors approved an increase in the quarterly common stock dividend at its July 21, 2026 meeting. The quarterly dividend was raised by 10% to 88 cents per share from 80 cents.
Our View on Northern Trust
A rise in NII, trust fees and capital markets income drove Northern Trust’s performance, while increasing AUC and AUM balances are likely to support financials. The planned sale of its guardianship services business reflects its strategy of concentrating resources on wealth management, asset servicing and asset management. However, elevated expenses will likely impede growth.
Northern Trust Corporation Price, Consensus and EPS Surprise
Northern Trust Corporation price-consensus-eps-surprise-chart | Northern Trust Corporation Quote
Currently, NTRS carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performances of Other Banks
Regions Financial Corporation RF has posted adjusted second-quarter 2026 earnings of 68 cents per share, beating the Zacks Consensus Estimate of 64 cents. Also, this compares favorably with earnings of 60 cents in the year-ago quarter.
Increases in net interest income, wealth management income, service charges and lower provisions supported RF’s results. However, higher non-interest expenses and securities losses played spoilsport.
U.S. Bancorp USB has reported second-quarter 2026 earnings per share of $1.35, topping the Zacks Consensus Estimate by 5.5%. The bottom line increased 21.6% from $1.11 in the year-ago quarter.
USB’s results were supported by higher net interest income, broad-based fee revenue growth and strong loan growth, while the company posted positive operating leverage of 400 basis points. The BTIG acquisition (completed in June 2026) also contributed to capital markets revenue growth and expanded the company’s institutional capabilities. However, a rise in provisions was concerning.
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This article originally published on Zacks Investment Research (zacks.com).