NII & Fee Income to Aid Northern Trust's Q4 Earnings Amid Rising Costs

Core Viewpoint - Northern Trust Corporation (NTRS) is expected to report improved revenues and earnings for the fourth quarter of 2024, with significant year-over-year growth anticipated in both earnings per share and total revenues [1][3]. Financial Performance Expectations - The Zacks Consensus Estimate for NTRS' fourth-quarter earnings is $2.02 per share, reflecting a 38.36% increase from the previous year [3]. - The consensus estimate for revenues stands at $1.93 billion, indicating a year-over-year rise of 24.84% [3]. - NTRS recorded a positive earnings surprise of 13.3% in the last reported quarter, benefiting from increased fee income and strong capital ratios, despite rising expenses [2]. Key Revenue Drivers - Net Interest Income (NII) is estimated at $551.3 million for Q4 2024, representing a 14.1% year-over-year increase, supported by recent Federal Reserve interest rate cuts [4]. - Average earning assets are projected to be $135.1 billion, an 8% increase from the prior year [6]. - Total fee income is expected to reach $1.38 billion, a 30.3% increase from the previous year, driven by robust equity market performance enhancing custody and fund administration revenues [9][7]. Expense and Asset Quality Outlook - Total operating expenses are anticipated to rise by 28.6% year over year to $178 million, primarily due to increased compensation and investments in equipment and software [10]. - The Zacks Consensus Estimate for non-accrual loans is $47.3 million, indicating a 25.6% decline year-over-year, suggesting improved asset quality [10]. Earnings Prediction Model - The earnings prediction model indicates a strong likelihood of an earnings beat for NTRS, supported by a positive Earnings ESP of +0.38% and a Zacks Rank of 3 (Hold) [11][12].