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Why Is Northern Trust Corporation (NTRS) Down 0.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Northern Trust Corporation (NTRS - Free Report) . Shares have lost about 0.2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Northern Trust Corporation due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Northern Trust delivered an earnings beat of 6.63% for first-quarter 2022. Earnings per share of $1.77 surpassed the Zacks Consensus Estimate of $1.66. Moreover, the bottom line improved 4% year over year.
Higher revenues, aided by a rise in fee income and NII, were a driving factor. Most credit metrics also marked significant improvements. However, a rising expense base and weak capital ratios were headwinds.
Net income came in at $389.3 million, up 4% year over year.
Revenues Climb, Costs Shoot Up
On a fully-taxable-equivalent (FTE) basis, total revenues of $1.72 billion were up 9% year over year. The top line beat the Zacks Consensus Estimate of $1.69 billion.
The NII on an FTE basis in the first quarter, $387.7 million, gained 12% year over year, mainly on higher average earning assets and NIM.
NIM on FTE basis came in at 1.05%, increasing five basis points from the prior-year quarter’s level. This rise was driven by favorable balance-sheet volume and mix shift.
Non-interest income improved 8% from the year-ago quarter’s level to $1.34 billion. Trust, investment and other servicing fees summed $1.17 billion, up 10% year over year.
Non-interest expenses increased 8% year over year to $1.21 billion during the first quarter. This upswing stemmed from an elevation in all components.
AUM and AUC Rise
As of Mar 31, 2022, Northern Trust’s total AUC climbed 4% year over year to $12 trillion, while total AUM increased 3% to $1.49 trillion.
Improved Credit Quality
Credit metrics during the March quarter showed an improving trend. Total allowance for credit losses was $189.9 million, down 18% year over year. Total non-accrual assets plunged 19.4% to $101 million as of Mar 31, 2022. Net recoveries were $3.2 million compared with recoveries of $0.9 million reported in the year-ago quarter.
However, Northern Trust created provisions for credit loss of $2 million in the first quarter against reserves of $30 million reported in the prior-year quarter.
Weak Capital Ratios & Mixed Profitability Ratios
Under the Advanced Approach, as of Mar 31, 2022, Common Equity Tier 1 capital ratio, total capital ratio and Tier 1 leverage ratio came in at 12.6%, 13.4% and 6.1% each compared with 13.2%, 14.3% and 6.4%, respectively, witnessed in the prior-year quarter. All ratios exceeded regulatory requirements.
Return on average assets was 0.97% down from 0.99% witnessed in the year-ago quarter.
Nonetheless, return on average common equity was 14.2% compared with the year-earlier quarter’s 13.7%.
Capital Deployment Activities
During the quarter, Northern Trust returned $181.6 million to its shareholders through share repurchases and dividends. The company repurchased $33.8 million of common stock under its share-repurchase program and declared cash dividends totaling $147.8 million to its common stockholders. It also cleared cash dividends worth $16.2 million to its preferred stockholders during the current quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Northern Trust Corporation has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Northern Trust Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Northern Trust Corporation (NTRS) Down 0.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Northern Trust Corporation (NTRS - Free Report) . Shares have lost about 0.2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Northern Trust Corporation due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Northern Trust Q1 Earnings Beat Mark, Revenues Rise
Northern Trust delivered an earnings beat of 6.63% for first-quarter 2022. Earnings per share of $1.77 surpassed the Zacks Consensus Estimate of $1.66. Moreover, the bottom line improved 4% year over year.
Higher revenues, aided by a rise in fee income and NII, were a driving factor. Most credit metrics also marked significant improvements. However, a rising expense base and weak capital ratios were headwinds.
Net income came in at $389.3 million, up 4% year over year.
Revenues Climb, Costs Shoot Up
On a fully-taxable-equivalent (FTE) basis, total revenues of $1.72 billion were up 9% year over year. The top line beat the Zacks Consensus Estimate of $1.69 billion.
The NII on an FTE basis in the first quarter, $387.7 million, gained 12% year over year, mainly on higher average earning assets and NIM.
NIM on FTE basis came in at 1.05%, increasing five basis points from the prior-year quarter’s level. This rise was driven by favorable balance-sheet volume and mix shift.
Non-interest income improved 8% from the year-ago quarter’s level to $1.34 billion. Trust, investment and other servicing fees summed $1.17 billion, up 10% year over year.
Non-interest expenses increased 8% year over year to $1.21 billion during the first quarter. This upswing stemmed from an elevation in all components.
AUM and AUC Rise
As of Mar 31, 2022, Northern Trust’s total AUC climbed 4% year over year to $12 trillion, while total AUM increased 3% to $1.49 trillion.
Improved Credit Quality
Credit metrics during the March quarter showed an improving trend. Total allowance for credit losses was $189.9 million, down 18% year over year. Total non-accrual assets plunged 19.4% to $101 million as of Mar 31, 2022. Net recoveries were $3.2 million compared with recoveries of $0.9 million reported in the year-ago quarter.
However, Northern Trust created provisions for credit loss of $2 million in the first quarter against reserves of $30 million reported in the prior-year quarter.
Weak Capital Ratios & Mixed Profitability Ratios
Under the Advanced Approach, as of Mar 31, 2022, Common Equity Tier 1 capital ratio, total capital ratio and Tier 1 leverage ratio came in at 12.6%, 13.4% and 6.1% each compared with 13.2%, 14.3% and 6.4%, respectively, witnessed in the prior-year quarter. All ratios exceeded regulatory requirements.
Return on average assets was 0.97% down from 0.99% witnessed in the year-ago quarter.
Nonetheless, return on average common equity was 14.2% compared with the year-earlier quarter’s 13.7%.
Capital Deployment Activities
During the quarter, Northern Trust returned $181.6 million to its shareholders through share repurchases and dividends. The company repurchased $33.8 million of common stock under its share-repurchase program and declared cash dividends totaling $147.8 million to its common stockholders. It also cleared cash dividends worth $16.2 million to its preferred stockholders during the current quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Northern Trust Corporation has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Northern Trust Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.