Northern Trust Corporation’s (NTRS Quick QuoteNTRS - Free Report) third-quarter 2024 results are scheduled to release on Oct. 23, before market open. The company’s revenues and earnings are expected to have improved from the year-ago reported level. 

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In the second quarter, NTRS’ earnings surpassed the Zacks Consensus Estimate. Results benefited from a rise in fee income. Also, an increase in total assets under custody and assets under management balances supported financials. However, a rise in expenses and provisions were major headwinds.

Northern Trust has a decent earnings surprise history. Its earnings beat estimates in three of the trailing four quarters and missed once, the positive surprise being 6.62%, on average.

Key Factors & Estimates for NTRS’ Q3 Results

Net Interest Income (NII): On Sept. 18, the Federal Reserve cut the interest rates by 50 basis points to 4.75-5% for the first time since March 2020. While the rate cut is not expected to significantly affect NTRS’s NII in the quarter under review, greater clarity on the Fed’s rate cut path, along with a stabilizing macroeconomic environment, is likely to have aided the lending outlook.

The Zacks Consensus Estimate for NII is pegged at $526.4 million in the quarter under review, indicating a rise of nearly 1% sequentially.

Per the Fed’s latest data, the demand for commercial and industrial loans and consumer loans was decent in the third quarter of 2024, while commercial real estate loan was subdued.

The company’s lending book is likely to have been positively impacted by improvement in commercial and industrial loans, while the subdued commercial real estate loan demand might have offset growth to some extent.

The Zacks Consensus Estimate for average earning assets is pegged at $135.2 billion for the third quarter, stable from the prior quarter’s reported figure.

Non-Interest Income: Northern Trust uses a lag effect to calculate its asset servicing fees and wealth management servicing fees, as the company depends on computations of the prior-quarter end valuations.

Asset servicing fees comprise custody and fund administration, investment management, securities lending and other fees.

The strong performance of the equity market in the third quarter is likely to have supported NTRS by bolstering its custody and fund administration, as well as investment management fees. 

The Zacks Consensus Estimate for custody and fund administration fees is pegged at $453 million, indicating a sequential increase of 1.6%. 

The Zacks Consensus Estimate for investment management fees is pegged at $151 million, indicating an increase of 3.4% sequentially.

The Zacks Consensus Estimate for total wealth management fees is pegged at $519 million in the third quarter, indicating a sequential rise of nearly 1%.

In the second quarter, NTRS recorded a substantial visa-related gain of $878 million, which significantly increased its other operating income to $925 million, up from just $61 million in the first quarter of 2024. For the third quarter, the Zacks Consensus Estimate for other operating income is pegged at $59 million, indicating a 93.6% decrease sequentially. 

The Zacks Consensus Estimate for total fee income is pegged at $1.35 billion in the quarter under review, indicating a 38.5% decrease from the prior quarter’s reported figure.

Expenses: Northern Trust’s expenses are expected to have been high in the third quarter, given its rise in compensation and increased investment in equipment and software development. This is likely to have hindered bottom-line growth.

Management expects expenses to increase around 1% in the third quarter compared with $1.53 billion reported in the second quarter after adjusting for notable items.
 
Asset Quality: Northern Trust is likely to have set aside a substantial amount of money for potential bad loans, given the expectations of an economic slowdown.

The Zacks Consensus Estimate for non-accrual loans is pegged at $82.4 million in the third quarter compared with $38.5 million reported in the second quarter.

What Our Model Unveils for NTRS

Per our model, it cannot conclusively predict that Northern Trust will beat the Zacks Consensus Estimate this time around. This is because the company lacks the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Northern Trust is 0.00%.

Zacks Rank: NTRS currently carries a Zacks Rank #2.

The Zacks Consensus Estimate for third-quarter earnings of $1.73 per share has moved 1.2% upward in the past 30 days. The figure indicates a decline of 16.1% from the year-ago quarter’s reported number.

The Zacks Consensus Estimate for revenues is pegged at $1.87 billion, indicating a rise of 8.5% from the prior-year quarter’s reported figure.

Bank Stocks Worth Considering

Here are some banking stocks that you may want to consider, as our model shows that these have the right combination of elements to post earnings beat this time around.

The Earnings ESP for M&T Bank Corporation (MTB Quick QuoteMTB - Free Report) is +0.33% and it carries a Zacks Rank #3 at present. The company is slated to report third-quarter 2024 results on Oct. 17. You can see the complete list of today’s Zacks #1 Rank stocks here.

MTB’s quarterly earnings estimates have remained unchanged at $3.6 per share over the past seven days. 

F.N.B. Corporation (FNB Quick QuoteFNB - Free Report) has an Earnings ESP of +0.93% and a Zacks Rank #3 at present. The company is scheduled to release its third-quarter 2024 earnings on Oct. 17.  

FNB’s quarterly earnings estimates have remained unchanged at 36 cents per share over the past seven days.