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Northern Trust's NII Rises 11% in Q2: Can Momentum Persist in 2026?
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Key Takeaways
Northern Trust's Q2 NII climbed 11% y/y, while NIM expanded to 1.81% on lower funding costs.
Average earning assets rose 4% while loans rose 1%, supporting NII growth despite a 1% deposit decline.
Northern Trust raised 2026 NII growth guidance to 9-10%, citing favorable funding and deposit trends.
Northern Trust Corporation’s (NTRS - Free Report) net interest income (NII) maintained solid momentum in the second quarter of 2026, aided by margin expansion and favorable balance-sheet trends.
On a fully taxable equivalent (FTE) basis, NII increased 11% year over year. FTE net interest margin (NIM) expanded to 1.81% from 1.69% in the year-ago quarter. On a GAAP basis, NII was $675.5 million, while NIM was 1.79%.
Balance-sheet trends also remained supportive. Average earning assets totaled approximately $151 billion in the second quarter, up 4% year over year, although down 2% sequentially. Within the earning-asset mix, average debt securities increased 17% year over year to $61 billion, while average loans rose 1% to $42 billion. Other earning assets increased 15% to $10 billion. These gains were partly offset by a 12% decline in Federal Reserve and other central bank deposits to $38 billion.
Deposit trends were also relatively healthy across Northern Trust’s major businesses. Wealth Management average deposits were $27 billion, up 6% year over year and 1% sequentially. Asset Servicing average deposits totaled $101 billion, increasing 6% year over year despite a 1% sequential decline. NII growth has been robust on a year-to-date basis as well. Northern Trust’s NII growth improved from 6% in 2023 to 8% in 2024 and 10% in 2025, before reaching 13% in the first six months of 2026.
Will NTRS’ NII Momentum Continue in 2026?
Northern Trust’s improving margin and earning-asset mix indicate that NII momentum could continue through the remainder of 2026. The increase in debt securities and modest loan growth should remain supportive, while the reduction in lower-yielding central bank deposits suggests a more productive deployment of the balance sheet.
Moreover, the company entered the second half of the year from a position of considerable financial strength. Excluding notable items, first-half 2026 revenues increased 13% year over year, while expenses rose just 5%. Earnings per share jumped 40%, resulting in more than 700 basis points of positive operating leverage. Management also highlighted double-digit NII growth as one of the key achievements of its strategy during the first half.
Nevertheless, the trajectory of interest rates, deposit pricing and balance-sheet growth will remain important determinants of NII performance. Overall, Northern Trust’s 11% year-over-year NII growth, expanding NIM and 13% first-half NII increase provide a solid foundation for continued momentum in 2026.
How Other Banks Expect Their NII to Fare
Wells Fargo (WFC - Free Report) and Citigroup (C - Free Report) also anticipate their NII to grow in 2026.
Wells Fargo expects NII to be $50 billion. NII, excluding Markets, is projected to be $48 billion, driven by balance-sheet growth, a favorable loan and deposit mix and continued fixed-asset repricing, partially offset by the impacts of expected rate cuts.
Citigroup expects NII (excluding Markets) to increase 5-6% on a year-over-year basis in 2026, supported by stabilizing deposit costs and disciplined balance-sheet management. The outlook reflects the bank’s efforts to benefit from a more favorable rate and funding environment while continuing to reshape its business toward higher-quality growth.
NTRS Price Performance & Zacks Rank
Shares of Northern Trust have jumped 47.3% over the past year compared with the industry’s growth of 32.6%.
View the Zacks #1 Rank List
Image: Bigstock
Northern Trust's NII Rises 11% in Q2: Can Momentum Persist in 2026?
Key Takeaways
Northern Trust Corporation’s (NTRS - Free Report) net interest income (NII) maintained solid momentum in the second quarter of 2026, aided by margin expansion and favorable balance-sheet trends.
On a fully taxable equivalent (FTE) basis, NII increased 11% year over year. FTE net interest margin (NIM) expanded to 1.81% from 1.69% in the year-ago quarter. On a GAAP basis, NII was $675.5 million, while NIM was 1.79%.
Balance-sheet trends also remained supportive. Average earning assets totaled approximately $151 billion in the second quarter, up 4% year over year, although down 2% sequentially. Within the earning-asset mix, average debt securities increased 17% year over year to $61 billion, while average loans rose 1% to $42 billion. Other earning assets increased 15% to $10 billion. These gains were partly offset by a 12% decline in Federal Reserve and other central bank deposits to $38 billion.
Deposit trends were also relatively healthy across Northern Trust’s major businesses. Wealth Management average deposits were $27 billion, up 6% year over year and 1% sequentially. Asset Servicing average deposits totaled $101 billion, increasing 6% year over year despite a 1% sequential decline.
NII growth has been robust on a year-to-date basis as well. Northern Trust’s NII growth improved from 6% in 2023 to 8% in 2024 and 10% in 2025, before reaching 13% in the first six months of 2026.
Will NTRS’ NII Momentum Continue in 2026?
Northern Trust’s improving margin and earning-asset mix indicate that NII momentum could continue through the remainder of 2026. The increase in debt securities and modest loan growth should remain supportive, while the reduction in lower-yielding central bank deposits suggests a more productive deployment of the balance sheet.
Moreover, the company entered the second half of the year from a position of considerable financial strength. Excluding notable items, first-half 2026 revenues increased 13% year over year, while expenses rose just 5%. Earnings per share jumped 40%, resulting in more than 700 basis points of positive operating leverage. Management also highlighted double-digit NII growth as one of the key achievements of its strategy during the first half.
Nevertheless, the trajectory of interest rates, deposit pricing and balance-sheet growth will remain important determinants of NII performance.
Overall, Northern Trust’s 11% year-over-year NII growth, expanding NIM and 13% first-half NII increase provide a solid foundation for continued momentum in 2026.
How Other Banks Expect Their NII to Fare
Wells Fargo (WFC - Free Report) and Citigroup (C - Free Report) also anticipate their NII to grow in 2026.
Wells Fargo expects NII to be $50 billion. NII, excluding Markets, is projected to be $48 billion, driven by balance-sheet growth, a favorable loan and deposit mix and continued fixed-asset repricing, partially offset by the impacts of expected rate cuts.
Citigroup expects NII (excluding Markets) to increase 5-6% on a year-over-year basis in 2026, supported by stabilizing deposit costs and disciplined balance-sheet management. The outlook reflects the bank’s efforts to benefit from a more favorable rate and funding environment while continuing to reshape its business toward higher-quality growth.
NTRS Price Performance & Zacks Rank
Shares of Northern Trust have jumped 47.3% over the past year compared with the industry’s growth of 32.6%.
Image Source: Zacks Investment Research
Currently, NTRS carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.