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Northern Trust Q3 Earnings Beat Estimates on Higher NII & AUM Growth

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Key Takeaways

  • Northern Trust's Q3'26 adjusted EPS of $3.20 beat the $2.86 estimate, rising 48% year over year.
  • NTRS' revenues rose 13% to $2.29 billion, driven by 14% growth in NII and an 8% increase in servicing fees.
  • Northern Trust's AUC rose 9% to $15.8 trillion and AUM climbed 11% to $1.96 trillion, aided by client inflows.

Northern Trust Corporation (NTRS - Free Report) third-quarter 2026 adjusted earnings per share (EPS) of $3.20 beat the Zacks Consensus Estimate of $2.86. The figure increased 48% from $2.29 in the prior-year quarter.

NTRS’ results benefited from a rise in net interest income (NII), trust, investment and other servicing fees, and other non-interest income. An increase in total assets under custody (AUC) and assets under management (AUM) balances also supported the financials. However, elevated expenses and provisions for credit losses were concerning.

Results excluded certain notable items. After considering this, net income (GAAP basis) was $642.9 million, up 40% from the prior-year quarter.

NTRS’ Revenues & Expenses Rise

Quarterly total revenues of $2.29 billion increased 13% year over year. The top line beat the Zacks Consensus Estimate of $2.26 billion by nearly 2%.

NII was $671.4 million in the quarter under review, up 14% year over year. The net interest margin was 1.80%, up 12 basis points from the prior-year quarter.

Trust, investment and other servicing fees totaled $1.37 billion, up 8% year over year.

Other non-interest income increased 48% year over year to $250 million from $169.1 million in the year-ago quarter.

Non-interest expenses rose 5% year over year to $1.49 billion in the reported quarter. The increase was primarily due to higher equipment and software expenses, compensation and benefits, and other operating expenses.

NTRS’ Segment Details

Asset Servicing income before income taxes (FTE basis) was $405.2 million, up 38% year over year. The segment’s pre-tax margin was 30.3% compared with 24.7% in the prior-year quarter.

Wealth Management income before income taxes was $391.6 million, up 14% year over year. The segment’s pre-tax margin was 41.1% compared with 40.5% in the year-ago quarter.

The Other segment recorded income before income taxes of $7.4 million against a loss of $11.8 million in the prior-year quarter.

Northern Trust’s AUC & AUM Rise

As of Sept. 30, 2026, Northern Trust’s total AUC increased 9% year over year to $15.8 trillion. Also, total AUM increased 11% year over year to $1.96 trillion.

The increase in AUC and AUM was primarily driven by favorable markets and net client inflows.

NTRS’ Credit Quality: Mixed Bag

Total allowance for credit losses was $184.7 million, down 11% year over year.

Total non-accrual assets were $57.1 million as of Sept. 30, 2026 compared with $78.8 million in the year-ago period.

NTRS reported provisions for credit losses of $5.4 million in the third quarter against provision benefits of $17 million in the year-ago quarter. The current-quarter provision primarily resulted from the charge-off of one Commercial and Institutional loan.

Northern Trust’s Capital & Profitability Ratios Improve

Under the Standardized Approach, as of Sept. 30, 2026, the Common Equity Tier 1 capital ratio was 12.4%, unchanged from the prior-year quarter. The total capital ratio was 15.8% compared with 15.1% in the year-ago quarter. The Tier 1 leverage ratio was 7.8% compared with 8% in the prior-year quarter.

The return on average common equity was 20.1% compared with the year-earlier quarter’s 14.8%.

NTRS’ Capital Distribution Activities

During the reported quarter, Northern Trust returned $514.2 million to common shareholders through share repurchases and dividends. The company repurchased approximately 1.9 million shares for $352.3 million at an average price of $185.27 per share and paid $161.9 million in common stock dividends.

The quarterly common stock dividend was increased 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 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 - Free Report) has posted adjusted third-quarter 2026 earnings of 73 cents per share, beating the Zacks Consensus Estimate of 67 cents. Also, this compares favorably with earnings of 63 cents in the year-ago quarter.

Increases in net interest income, service charges on deposit accounts, wealth management income and lower provisions supported RF’s results. However, higher non-interest expenses and lower mortgage income acted as a spoilsport.

U.S. Bancorp (USB - Free Report) has reported third-quarter 2026 EPS of $1.34, topping the Zacks Consensus Estimate by 1.5%. The bottom line increased 9.8% from $1.22 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 240 basis points. The BTIG acquisition also contributed to capital markets revenue growth. However, a rise in non-interest expenses and provisions for credit losses were concerning.

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